AB 1200 Voted Out of Committee; Public Hearing Held Today
July 9, 2009
The California Senates Banking, Finance and Insurance Committee
voted AB 1200 out of committee this afternoon during a public hearing.
The bill will now move to the Senate for a vote.
The hearing, one of many held in the committee today, drew much
interestboth from those in favor of and opposed to the bill.
If passed by the Senate, the bill will add the following language
to the states insurance code:
"Nothing in this section restricts the ability of an
insurer to explain benefits the insurer provides as part of the
Those in favor of the bill argued that the bill provides insurers
the chance to inform consumers about their options.
The consumer will still hear about [his] options, said
Michael Gunning of the Personal Insurance Federation of California.
Steering is still illegal under AB 1200.
A State Farm representative agreed.
This bill still prohibits an insurance company from having
a claimant repair a car at a particular repair facility, she
said. This bill allows the insurer to provide basic information
to the claimant about the benefits available if the car was repaired
at a direct-repair shop or one of the shops on our network.
She added, Basically it puts the consumer in the position
of making an informed choice and comparing various programs.
An Allstate representative also spoke in support of the bill.
This is a benefit that is in our contract for our insureds,
said the Allstate representative. We believe it to be our
right to express the benefits of the program to the insured.
An American Insurance Association representative concurred.
We believe this bill is purely allowing the consumer to have
the information they need to make an informed choice, she
Brian Moss of the California New Car Dealers Association spoke
in opposition to the bill.
You have to ask yourself, why is a measure sponsored by insurance
companies going to be a pro-consumer measure, if the steering law
today prevents steering and this bill does nothing to impact steering
why is the bill even necessary? asked Moss.
He added, You have to ask yourself why the consumer attorneys
and car dealers are sitting next to each other opposing a bill sponsored
Moss also noted the specific concerns he and others have regarding
Our concern is that the language in the bill raises doubt
about when and what insurance companies can say at the time of extreme
stress, Moss said. The time of extreme stress is right
after an accident.
Moss proposed trying the bill again, but under a two-year process,
so all sectors of the industry could work together to develop other
ways to adapt the law.
In response to questions from various committee members who questioned
why insurers shouldnt be able to offer this information, Moss
explained, Theres a difference between having a right
to pick your own repair shopits a question of whether
youre going to be influenced or steered away from a particular
Moss also praised State Farms policy, which he said is to ask
consumers if theyve chosen a repair shop.
Unfortunately we suggested [adding that wording as] amendment
to this bill
and in both occasions that amendment was rejected,
One insurance company representative still advised the company
should be able to explain the benefits it has available to the insured,
even if a shop has been chosen.
The issue is, when you buy the policy, the language doesnt
say anything about in-network or out of network, Moss replied.
It says your car will be reasonably repaired.
Jack Molodanof of the California Autobody Association also spoke
against the bill.
The customer will say I want to go to so and sos shop,
he explained. Well, the insurer will say, That shop
didnt make our preferred list. Well, maybe the shop
didnt want to apply to be on that network
a negative connotation there.
Molodanof also urged the committee to hold off on the bill, so more
time could be spent on it.
The bill isnt ready. Its not cooked yet,
he said. Theres no urgency to move now.
Molodanof added, Its begging for a fix and wed
like to sit down and craft a solution with consumers, insurers and
body shops. Wed respectfully ask the author to step back and
make this a two-year billdont jam it through the legislature.
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