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Friday, 28 February 2014 01:44

Maryland Reintroduces Insurer Parts Procurement Prohibition Legislation

Bills introduced this week in Maryland House and Senate seek to eliminate insurance company-mandated procurement processes. Bills also provide for “genuine” parts for three years after manufacture.

Bills prohibiting insurance companies and their employees from specifying specific collision repair parts procurement processes were reintroduced in both the Senate and House of the General Assembly of Maryland this week. Senate Bill 487, sponsored by Senator John C. Astle, and its companion House Bill 574, sponsored by Delegate John A. Olszewski, Jr., would prohibit “… a specified adjuster, appraiser, insurance producer, or employee of an insurer from requiring a motor vehicle repair facility to use a specific vendor or process for the procurement of parts or other materials necessary for the repair of a motor vehicle; requiring an insurer that issues or delivers in the state a policy of motor vehicle liability insurance that provides coverage for the repair of physical damage to the insured motor vehicle to authorize specified repairs to be made using genuine crash parts; etc.”

Cosponsors of the Senate Bill include Senator David Brinkley, Senator Richard Colburn, Senator Brian Feldman, Senator Katherine Klausmeier, Senator Mathias, Senator Catherine Pugh, Senator Ramirez, Senator Jamin Raskin, and Senator Norman Stone, Jr.

Cosponsors of the House Bill include Delegate Charles Barkley, Delegate Conway, and Delegate Kramer.

The bills largely mirror House Bill 1375 that was introduced by Delegate Mark Fisher, a former repairer, during the 2013 legislative session in Maryland.

In addition to prohibiting insurers from requiring specific procurement processes, the bill also requires insurers to authorize “genuine crash parts” that are defined as OEM, or authorized to carry the name or trademark of the OEM, for a period of three years after the date of manufacture. The 2013 bill required a five-year period. Consumers can, however, authorize the use of aftermarket crash parts.

The Washington Metropolitan Auto Body Association (WMABA) supported the 2013 legislative effort and will do so again.

According to Jordan Hendler, executive director of the WMABA, the association has met with sponsors of the bills and particularly supported what the association believes are the consumer protection aspects of the legislation.

“For members of the WMABA, these bills are about protecting consumers,” said Hendler. “Our members are seeing more and more people are opting out of rental coverage, so while any delays caused by insurance company parts procurement processes might not hurt the insurer, consumers will have to spend that money out of their pocket.”

Additionally, the three-year period where insurers must authorize OEMs helps consumers and is similar to consumer protection laws in other states. “Several other states have similar laws placing a timing restriction on aftermarket parts,” said Hendler.

The association had a lobby day scheduled to meet with representatives about this and other legislation. That meeting was postponed until March 2014 due to inclement weather. Details will be release by the association.

“Repairers need to get involved with the legislative process,” said Hendler. “They can send a letter to their legislator asking for their support of these consumer-oriented bills. Yes, it does help the repairer in the end, but the reason it matters most is that it protects the interests of the consumer to be made whole after an accident. Without it, they just simply are subject to insurer cost-containment tactics that have no regard for subsequent harm to that consumer.”

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