In June, Maine Governor Paul LePage (R) vetoed Legislative Document 1540, which sought to require insurers in ME to communicate a specific auto body shop choice disclosure. The House voted 102-41 to override the veto, but the Senate failed to acquire the two-thirds margin required to override the Governor’s veto with a vote of 20-14.
The bill, which passed ME’s House by an overwhelming margin and by a narrower margin in the Senate earlier in June, would have expanded upon the current shop choice language in the ME Revised Statutes, which prohibits insurers and their agents from recommending a specific shop without informing their claimant that they are under no obligation to use that repairer’s services.
Legislative Document 1540 would have required insurers recommending a shop to explicitly inform claimant of their legal right to choose a shop to fix their vehicle, stating that the policy will cover reasonable costs of repairing the vehicle to its pre-accident condition no matter where the consumer has their repairs made.
Governor LePage supported his veto by citing a lack of consumer complaints and evidence of a problem from the Department of Insurance, calling it a “solution in search of a problem” and claiming the added verbiage “micromanages ME businesses and creates more unnecessary regulations for ME’s automotive insurance industry.”
According to LePage during a May 10 testimony at a Committee on Insurance and Finances, “If automotive insurance companies were truly steering business toward specific collision repair businesses, this may be a discussion worth having, but over the course of the last nine years, ME’s Insurance Bureau has only received six consumer complaints regarding this issue; two of those complaints were that insurers did not direct [those insured] to shops participating in the insurer’s networks. Additionally, the Superintendent of Insurance conducted a study of the seven largest insurance carriers in ME and did not identify any instances of steering.”
Conversely, proponents of the bill argued that the issue deserves more attention. Representative Jonathan Kinney (R-Limington) wrote in his prepared testimony for the committee, “ME has an increasing population of elderly and young drivers who, in the event of an accident, may not be aware that they have the choice of business to get the repairs done. These folks are very susceptible to a ‘sales pitch’ for the body shop of the insurer’s choice. The claims report scripts section of this bill will create the same expectations for all who file a claim with their insurance companies.”
Bernadette Bolduc Papi also testified in favor of Legislative Document 1540. Papi works closely with her father, Peter Bolduc Sr., who owns Acme Body Shop. Using her background as an attorney, she helped formally organize the Maine Autobody Association (MAA) and navigated the group through the process. As DRP contracts began to negatively impact customers with insurance companies controlling repair processes and choices in order to increase profits over the years, Acme’s manager Jim Caron worked with a group of repairers and Bolduc to create the MAA in order to alleviate steering and safeguard consumers’ freedom of choice of repair shop for their auto collision repairs.
Dave Irving, another manager at Acme Body Shop, was involved with helping the current anti-steering legislation pass into law, but Papi noted, “While it was a step in the right direction, the current law is weak with no enforcement mechanism, and the insurance companies have easily navigated around the language. The MAA members were concerned that they were witnessing an erosion of consumers’ right to choose where to have their collision repairs handled. Consumers were (and still are) being communicated with in such a way as to make them believe that they do not have a choice about where to have their vehicle repaired.
“In working to safeguard consumers’ freedom of choice, the association readily admits that its members are in survival mode themselves. Shops independent of insurance company DRPs are in constant jeopardy, fighting every day for survival. They work hard to service customers’ needs and provide quality work and satisfaction. The loyal customer base – many spanning decades of service – is undermined in often blatant and insidious ways. It’s important to note that insurance companies that do not have DRP contracts do not steer customers. The problem is only with insurance companies that have DRPs.”
In July 2015, MAA met with ME’s Regulatory Fairness Board, who suggested they reach out to the Attorney General’s office and the Bureau of Insurance. The AG’s office directed them to the Bureau of Insurance, and they met with them in September of that year.
“Despite our conversations at that time and an attempt on their part to obtain the scripts used by the call centers from insurance companies and a tally of complaints on their part, we were not able to gain traction on the issue,” Papi recalled. “Since 2015 was a short legislative session, we decided to wait until the 2016-2017 session to put forth a bill. I prepared a draft bill based on reviewing legislation from other states and, in particular, Minnesota. I met with our local representative, and we submitted the Legislative Bill request. The Office of the Reviser drafted the bill from our suggestions, and our core members represented at the workshop sessions and gave testimony in support of the bill. I prepared a thick binder for each member of the Finance and Insurance Services Committee. We provided them with links of articles, links to YouTube pieces on steering, a sample DRP contract, letters from collision shops over the past few years reaching out to legislators with steering concerns and 32 examples of steering (statements and accompanying paperwork) gathered by our members.”
The original draft of Legislative Document 1540 was denser, according to Papi, including a mandate that insurance companies cease any attempt to influence a consumer’s choice of shop once a preference had been stated and offer a list of shops within 20 miles to the consumers, plus it had an enforcement mechanism and increased penalties for violations.
“The revised draft that the Governor vetoed was a much more watered-down version of what we started with,” Papi said. “Once testimony is done and the committee subsequently workshops the bill, it’s a frustrating process to see language that you know is important whittled away as a result of the process of conversations during the workshop and the give-and-take to find a mutually agreeable middle ground.”
The MAA is very disappointed in the Governor’s veto and the Senate’s failure to override that veto by three votes.
“The Governor’s veto letter took the exact posture of the Bureau of Insurance,” Papi said. “Across the country, complaints of steering are generally low. People are intimidated (either by the insurance company or the complaint process), or they just don’t have the time, or when the repair is finally finished, they are just done and move on… there are lots of reasons. In Maine, there were very few complaints filed with the Bureau of Insurance, so they just did not see it as a pressing issue. However, the veto did not help the consumer, and it did not help a large number of Maine’s small businesses. If the steering continues, more shops on the edge of financial viability will lose customers that they cannot afford to lose and may have to join other shops that have closed. Less competition means less choice for consumers. Fewer shops free from DRP contracts mean fewer shops looking out for the consumer ahead of the interests of the insurance companies.”
According to Papi, the MAA members strongly disagree with the Governor’s claim that steering is not a problem in ME.
“We are the feet on the ground seeing the issue firsthand,” Papi said. “Isn’t that how these kinds of things always happen? Unless it’s happened to you, as a consumer, as a shop, or as a person dealing with it from a policy perspective, you are likely oblivious to the issue. Collision shops see and deal with the issue constantly. In those 32 examples we gave the legislative committee, time after time you hear the customer say things like ‘I wanted to use your shop, but my insurance company said they would not warranty the work,’ or, ‘It would take more time,’ or, ‘It’s easier to go to the DRP shop.’ Vehicles already onsite for repairs are towed away to a DRP shop. The steering tactics are implying lesser quality work, no warranty, longer repairs, and more if the customer chooses a non-DRP shop. We have a large elderly clientele and many young drivers, and they have been very pressured and upset and confused by the tactics. They are not alone. You have to be fairly savvy about your rights or just have a good amount of gumption to insist upon a different choice against your insurance company’s suggestion.”
The MAA feels Legislative Document 1540 is vital to promoting consumer safety and will continue to fight for shops and consumers in their state. If the Bureau of Insurance has not already done so, the association intends to request that it send letters to insurance companies reminding them of the anti-steering laws and to write the Bureau of Insurance about the 32 examples of steering provided during the hearing. This was part of the agreed-upon plan, had the bill gone through. They will also talk to their representatives about the best strategy for pursuing the legislation in the future.
“In addition, we think the insurance cards that everyone keeps in their cars is the ideal place for a well-placed sentence or two about consumers having the right to choose their collision repair shop and the number to call the Bureau of Insurance with any complaints about that process,” Papi said. “It’s all about informing the consumer.
“Our association is not going away! Often, we call insurance companies with the customer on speaker phone – it helps us know how the customer is being treated or what information is being given to them and assists us in navigating the process with them. Don’t give up! Politely but firmly call out any script or conversation that violates the anti-steering law. Call or write the Bureau of Insurance on your own, and detail your concerns. Help consumers file their complaints. If the Bureau had 25 or more complaints on file, the end result of our efforts might have been different. Get in touch with our association (email firstname.lastname@example.org), and be proactive about steering situations – write down the details, collect the customer’s stories, call us if you want to use the form we made and help customers (maine.gov/pfr/insurance/complaint.html).”