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Friday, 03 October 2008 11:46

SIGN (SB 1371, Anti-Capping), VETO (AB 2825, Pro-Invoice), VETO (SB 1167, Steering Study)

Body Shops in California had a good month in the legislature with THREE in the "win" column, but more subtle problems remain

California Gov. Arnold Schwarzenegger signed Anti-Capping legislation, vetoed Pro-Invoice legislation and vetoed Steering Study requirements.  The first two actions are generally applauded by collision repairers, and the last one is positive, but more complicated because, although it would have required a task force study steering issues, it would have delayed action for up to two years, according to CAA.

CRA was one of the original sponsors of the Steering Study bill (1167), but does not oppose the veto because the bill was modified from its original version.

SIGNED Materials and Paint Anti-Capping Now Law

Governor Schwarzenegger signed SB 1371 (Correa) into law on September 28 prohibiting insurers from capping paint and material charges. Both state autobody associations—California Autobody Association (CAA) and Collision Repair Association (CRA) fought hard to support this legislation informally called the “Paint Capping bill.” This bill requires insurers to pay the reasonable cost of paint and material charges associated with automobile damage insurance claims. The bill makes it illegal for insurers to cap or limit paint and related material charges. The bill defines capping to mean offering or paying an amount that is unrelated to an accepted industry methodology used in determining paint and material charges.

Insurers can no longer cap, but they can underpay

Says Allen Wood, executive director of the CRA, "An insurer cannot be accused of capping if they use an industry accepted methodology. Currently the two methodologies are to use a paint cost calculator and itemize the cost or---and herein lies the problem---the second methodology is to use an time X an hourly rate as seen in most estimating systems currently. If the insurer employs either process they are not capping. The problem is the bill defines the process not the outcome.
The insurer can underpay the bill by simply using a lower hourly rate in the calculation. they underpay but they are not capping. We did support the bill and apprised the author of the loophole but there was reluctance to change the language.  So insurers will no longer cap just underpay. We did ask for the veto of 2825 and were glad it occurred, but they will be back.  We were not surprised or upset with the veto of 1167 as it wasn't what it once was."

VETO  (AB 2825, Pro-Invoice)

The governor vetoed Assembly Bill 2825 (Carter), which would have required repairers to provide customers who asked for them, wholesale invoices for crash parts exceeding $50 in value. The bill was fought against by collision repairers in California. Supporters of the bill said it would prevent parts switching on vehicles undergoing repairs and consumer groups gave it widespread endorsement.

“The bill is essentially similar to a bill I vetoed last year,” Schwarzenegger wrote to the California State Assembly. “The provisions in this measure are duplicative of existing law and therefore unnecessary. Requiring automotive repair dealers to provide additional paperwork is unnecessarily burdensome and would increase expenses that could be passed on to the consumer, with no additional benefit.”

VETO   (SB 1167, Anti-Steering Research)

The Governor also vetoed Senate Bill 1167, which would have required the Department of Insurance to convene a task force to study steering issues, and report its findings in writing to the legislature by Dec. 31, 2009. The CAA did not support this amended bill because, according to Executive Director, David McClune, "This bill would have required CDI to spend two years studying the issue. If it had passed, it would have potentially delayed any action on steering for at least two years."

The bill was introduced in February by Senator Pat Wiggins (D-Santa Rosa) and sponsored by the Collision Repair Association of California. The original language of the bill would have prohibited insurers from suggesting alternative repair choices to consumers if they had already selected a repair shop. The final version would have prohibited insurers from requiring that a vehicle be repaired at a specific shop, and required insurers to provide each insured with a copy of the Auto Body Repair Consumer Bill of Rights.

CRA lobbyist Richard Steffen said of the veto, "CRA supports the Governor's veto. If the task force were formed under this bill, there would have been delays in the adoption of new rules for steering and labor rate surveys by the Insurance Commissioner. I have been representing the CRA at Department of Insurance meetings involving lobbyists for insurers and repair associations (CRA, CAA and the new car dealers). We've met more than 10 times since October 2007 and are nearly finished with our work. The CRA is deeply appreciative of Senator Wiggins' efforts to toughen the anti-steering law through the initial version of SB 1167 which we sponsored. When the bill failed, it was amended into a study bill on an issue that was already under study by this working group. We removed our sponsorship when the bill was amended."

"The CRA is confident that the Insurance Commissioner's top representatives understand and support rules that clearly state, 'once the claimant has selected a shop, the insurer must cease all discussions regarding an alternative shop,' " continued Steffen.

In a letter to the State Senate, Schwarzenegger said: “The historic delay in passing the 2008-2009 State Budget has forced me to prioritize the bills sent to my desk at the end of the year’s legislative session. Given the delay, I am only signing bills that are the highest priority for California. This bill does not meet that standard and I cannot sign it at this time.”

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