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Tuesday, 31 December 2002 17:00

Texas senator pledges to fight tied shops

A Texas state senator promised at NACE in Dallas to introduce a bill in the Texas 2003 Legislature that would prohibit an insurance company from acquiring any financial interest in a collision repair facility and require that any insurer currently owning body shops divest their interest by Sept. 1, 2006. 

Texas State Senator John J. Carona (R-Dallas) stated at the NACE Town Hall meeting and again at a press conference that insurers owning body shops is a conflict of interest. In the Town Hall Meeting, attended by several thousand NACE delegates, Carona said, "There's only one reason for insurers to own body shops, and that's to save money, cut corners."
 

In the press conference, Corona stated, "This issue needs as much public awareness as possible because it's one of consumer trust and confidence. It's an enormous conflict of interest for insurance companies to own body shops." He called it "managed cars" and likened it to managed health care if a doctor worked directly for the healthcare insurer. "If you like managed care, you'll like insurers owning body shops."

Predicting that consumers will be alarmed to know of this latest development in the collision repair business, he said, "Consumers want to know that a body shop does not have at heart the best interests of the insurer." In addition to being in the best interest of consumers, he said "it's also an issue of fairness for business owners in Texas. It's in the best interest of consumers that (body shops) make a profit. Shops make money providing quality service. That balance is what makes it work."

Carona, a successful Dallas businessman involved in property management, represents 700,000 constituents in the Dallas area. He joked that his three teenage sons offer "vast support to the auto repair industry." He said that he is a Farmers insured, that he discovered the issue on his own, was not pressured to propose the legislation and that his only industry contact has been with the Texas-based Automotive Services Association (ASA).

Responding to a question, the senator said he has not solicited or received any significant campaign contributions from collision repair shops but that some new car dealers have in the past contributed to his political campaign.

Carona does not expect his bill to sail through the Texas legislature. "Allstate has hired a lobbyist for this matter as of November sixth." He told the Town Hall Meeting that "the bill will not pass without a huge groundswell of support. To get attention, it needs to be one of a half dozen or so key issues, aside from the budget...." Despite this, he expressed a high degree of confidence, noting that he has "one of the highest passage rates (for legislation introduced) in the Texas Senate. I assure you that I will work it to the fullest."

As to the timing of the bill, Carona pointed out that, because of the current turmoil in Texas over homeowners insurance, many consumers are less than enamored with their insurance companies, making this "an ideal time for one more abuse by insurance companies to be brought to consumers' attention."

To insure prompt consideration of his bill, Carona planned to preintroduce it before the legislature convenes in Austin on January 14. The bill will then go to committees in both the House and the Senate, although he said it is uncertain which committees it will be assigned to. Once that is determined, Carona will seek co-sponsorship of the bill from other legislators.

The ASA has sent letters to 4,650 body shops in Texas, asking for their support of the Carona bill. Robert Redding, ASA's Washington, D.C. lobbyist, said, "ASA supports Carona's efforts and we look forward to working with him as the bill makes progress in the legislature.

 

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