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Wednesday, 19 October 2016 18:32

CAA Supports Changes to Anti-Steering and Labor Rate Survey Regulations

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Before any regulation goes into effect, it has to be carefully reviewed, re-written in many places, edited and tweaked before it becomes more than just text written on pieces of paper.

Until regulations are reviewed by all of the parties involved, they are discussed at public hearings while lawyers and other stakeholders go through the fine print word-by-word. After passing through various stages, a regulation is finalized and is hopefully on its way to becoming a rule, but obstacles can often impede it from reaching its ultimate goal.


Despite its most recent set of changes, the California Auto Body Association (CAA) still supports the new versions of the anti-steering and labor rate survey regulations that they have been working with in conjunction with California Insurance Commissioner David Jones for the past six years or more. With the enactment of both regulations now in sight, CAA Lobbyist Jack Molodanof is hopeful, but wary as well.


"The California Department of Insurance (CDI) received a ton of feedback in the form of comments and suggestions, many of which occurred after the DOI's April hearings about both regulations," Molodanof said. "Based on these, the department made a series of revisions in reaction to the input. A few weeks ago, they released the new regulations to the public, and now there is a 15-day period in which people can only comment about the proposed changes that were made."


From his many years as a lobbyist working in Sacramento, Molodanof has seen this process in action countless times. "This is the way things go, but there are usually fewer and fewer comments each time a regulation goes through this process," he said. "We never know how many comments CDI gets, but the general idea is to let everyone have a say in what the regulations will eventually do so that there is a consensus and a regulation that shops, insurers and consumers can all live with.


"This is the funnel approach, where they aggregate comments and consider them carefully," Molodanof continued. "There may be another round of changes after the designated 15-day period, or it could also be good to go and the CDI will proceed and get them implemented. So this stage is another bite at the apple, so to speak."


The final version of CDI's proposed anti-steering regulation lightens the requirement that insurers must support statements made to a customer about the policyholder’s decision to work with a specific body shop. But it also alters the scope of what can be considered as an unacceptable statement, according to the revised regulation.


The labor rate survey regulations, even with these latest changes, will clarify the situation and standardize these surveys in order to make certain that they will provide equitable claim settlement practices for consumers. "This regulation will finally enable insurers to conduct consistent and reliable auto body labor rate surveys," Molodanof said. "CDI provided more information and clarification about the geocoding aspect of the regulation in order to determine how many shops from one area will be included in the surveys."


With these most recent revisions to this regulation, CDI has expanded the number of shops to be included because they discovered that in urban areas, you're going to have more density. "They expanded it further to make it fairer for both the shops and insurers and make sure that the survey uses a representative sample," he said. "The geocoding is very accurate, so they can rather easily find the six shops closest to the shop surveyed by capturing their longitude and latitude and using this technology."


Will this be the last round for these regulations before they go into practice? "If I were to guess, I would say yes, unless there are some comments that for some reason will require a further response," Molodanof said. "I doubt it, but it can happen. There have been numerous workshops, hearings and several rounds of changes, so these things should be ready to roll. CDI has invested a lot of time and effort into working with all of the various stakeholders and have really reached out to everyone to get their feedback. They have been very thorough and fair, and these regulations have been well thought out, so I can't imagine that there would be another round of changes at this point. The next step is to send them to the Office of Administrative Law and get them reviewed there."


Perhaps most importantly, how are the insurance companies going to respond to the new regulations once they go into effect, we asked Molodanof. "Are they going to litigate; that is an excellent question. In the meantime, they are waiting on that Supreme Court case that questions CDI's authority to enforce regulations like these at all. Can that impact these regulations? Maybe. Will the insurance industry file a lawsuit to stop these regulations, like an injunction? They could do that as well. Or do they introduce new legislation next year to fight them? There are a lot of intangibles out there right now and only time will tell."


Molodanof said that the time to pull the trigger, light that candle and get these regulations implemented is now. "Overall, the package is not perfect, but the CAA is still supporting it because it goes a long way to address a lot of the concerns about steering and labor rate surveys in the auto body repair industry. So let's get these regulations done and implemented. At some point, there is only so much tweaking you can do."

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