Bill That Would Lessen State's Steering Restrictions Under Review in Insurance
Committee; U.S. Congresswoman Opposes Bill
The California Assembly's insurance committee currently is reviewing a bill that would lighten the state's anti-steering law. The committee recently issued an analysis of the bill, which looks to "provide that nothing in existing law restricts the ability of an insurer to explain benefits the insurer provides as part of the claims process."
Though the insurance community is supporting the bill, U.S. Congresswoman Jackie Speier (D-Calif.), who sponsored the state's existing anti-steering law as a California Assemblyperson, has written a letter to California insurance commissioner Steve Poizner expressing her concern about the bill.
"Far from helping consumers make well-informed choices, the bill would allow insurers to continue to make sales pitches to consumers long after the consumer has decided to select his/her own shop," she writes.
She adds, "Any additional pressure by the insurance company has, historically, led to a simple act of steering the consumer toward the insurer-favored shop and away from the consumer's first choice. A consumer, however, who has made a choice should have that choice respected as a matter of contract and statutory right, and not have to endure spin."
Speier also notes that she sees the benefit of the bill as very clear-and nonexistent.
"The benefit of AB 1200 is obvious to most eyes: There is none," she says. "The truth is that it is a riddle wrapped in the enigma of insurance industry doublespeak."
Groups in favor of the law include the Personal Insurance Federation of California, which helped to get the bill introduced; the Association of California Insurance Companies; Farmers Insurance; National Association of Mutual Insurance Companies (NAMIC); the Pacific Association of Domestic Insurance Companies (PADIC); and State Farm.
Those in support of the legislation argue that existing laws are being used "to withhold information from customers about their auto repair options."
"For them, it is not enough to prevent auto insurers from requiring a specific auto body shop," reads the committee's analysis of the bill under the list of arguments in support of the bill. "They want to 'lock-in' a customer by depriving them of an informed choice about alternatives, including an auto insurer's [direct repair program]."
The analysis also cites an argument that a Texas Court of Appeals overturned a Texas law that prohibited an insurer from recommending insureds take their vehicles to insurer-owned shops in Allstate v. Abbott (2007). The following quote from the Allstate decision is included in the committee's analysis: "Consumers benefit from more, rather than less, information. Attempting to control the outcome of the consumer decisions following such communications by restricting commercial speech is not an appropriate way to advance a state interest in protecting consumers."
The California Autobody Association has provided a statement of concern to the committee, noting that, "under the bill, it is possible for insurers to make statements to claimants that either disparage or discourage the services available in a non-DRP shop."
CLICK HERE for full text of Rep. Speier's letter in opposition of the bill.
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