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Friday, 07 January 2011 23:43

Texas Insurance Commissioner Issues Biannual Report on DRPs With Help From Houston Auto Body Association Survey Data

Texas Insurance Commissioner Mike Geeslin issued a biannual report on DRPs in Texas earlier this month, the report is derived from claims and issues in the industry, some brought to light thanks to surveys issued by the Houston Auto Body Association (HABA), to make future legislative recommendations.

A statement issued by Commissioner Geeslin back in August set the scene for the recommendations made in this bulletin. In the statement Geeslin addressed all ... insurers writing property and casualty insurance in the state of Texas, agents and representatives when he said, "The purpose of this bulletin is to remind insurers of their responsibilities to claimants regarding payment for damage to a motor vehicle and the selection of a repair person or facility ... The Department has received information which causes it to be concerned that insurers may be providing claimants with additional notice regarding motor vehicle repairs that may be in conflict with the TIC and TAC." The full text of this statement can be seen at http://www.tdi.state.tx.us/bulletins/2010/cc30.html.

 

"All recommendations being made are being derived from information collected from the industry surveys HABA disseminated a few months ago," said James Brown with HABA.

In the 70 Page report, one of the items that specifically pertains to collision repair in TX can be found on page 39 of the report:
"Direct Repair Facilities:
• TDI conducted a survey in May, 2010 of the top five personal automobile insurers in Texas to obtain current information relating to automobile claim payments.
• Of the insurers surveyed, all had some sort of contract/agreement with di­rect repair facilities or had selected repair facilities to be on a preferred list (preferred shops).
• Based upon the survey responses, for calendar year 2009 the percentage of initial automobile claims with repairs made at direct repair facilities ranged from approximately 18% to 50%.
• The Insurance Code specifically addresses prohibited acts in connection with the repair of motor vehicles.
• The Texas Administrative Code addresses notice requirements and claim­ants’ rights regarding motor vehicle repairs.

TDI HAS RECEIVED COMPLAINTS that insurers improperly “steer” claimants to particular repair shops (direct repair facilities/preferred shops). Such action can restrict consumer choice. TDI has also received complaints that insurers are informing claimants that they may be re­sponsible to pay for certain repair costs if the claimant selects a repair facility that is not on the insurer’s list of direct repair facilities.

Current law does not provide consistent regulation among insurers. For example, county mutual insurers, which represent approximately 45% of the Texas personal automobile insurance market, are not re­quired to comply with the statutes and rules regarding the repair of motor ve­hicles.

Additionally, there may not be a clear un­derstanding among the participants of the requirements to become a contracted di­rect repair facility with an automobile in­surer.

82nd Legislative Session RECOMMENDATIONS:
Amend Texas law as follows:
• Require insurers to provide written notice to claimants outlining its policies and pro­cedures for claims and repair processes performed at direct repair facilities and non-direct repair facilities, including how those procedures, processes and claims payments may differ. This should provide claimants with a better understanding regarding the repair/claim process under an automobile insurance policy.
• Make county mutual insurers subject to Insurance Code §§1952.301-307. This would allow all claimants the right to select an automobile repair person or facility and the type of parts or products used to repair their vehicles.
• Require insurers to provide a written disclosure upon request to automobile repair facilities outlining the requirements to become a contracted direct repair facility. This would allow all automobile repair facilities an equal opportunity to understand the requirements of becoming a contracted direct repair facility."

The full report can be viewed at  http://www.tdi.state.tx.us/reports/documents/finalbie11.pdf

The impact of these recommendations on Texas state law remains to be seen.

For more information about the Houston Auto Body Association please visit www.habaonline.org.


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