Belron US Suggests Revisions to Model Anti-Steering Legislation; Legislation Shelved for Future NCOIL Meeting
July 12, 2010

Officials from Belron US say a proposed draft of model steering legislation fails to address insurance integrity, hurts consumers, conflicts with many state statutes and insurance regulations, is unconstitutional and that "claims of systematic 'steering' are unfounded." These comments were made by Belron US senior corporate counsel Brian M. DiMasi in a letter to the group developing the model steering legislation, the National Conference of Insurance Legislators (NCOIL), which met last week in Boston. (CLICK HERE for related story.)

DiMasi says the main proponents of the legislation are "the repair facilities that do not want to be part of a network," rather than consumers, and that allegations of steering are unfounded, citing a January 2009 press release issued by the New York State Insurance Department (CLICK HERE for related story.)

"This is not a consumer-driven issue, but a matter of non-network glass shops wanting to charge more than network shops; they want to gain a competitive business advantage through legislation rather than through effective business practices," writes DiMasi. "An unintended consequence of this proposed Model Act would clearly be higher prices for consumers."

In addition, DiMasi says the items noted in the proposed model legislation already are covered by state laws requiring that insurers honor policyholder preference.

"Insurance companies must and do honor the policyholder's preference with respect to a glass repair facility," he writes. "In fact, most states already have existing laws which prohibit an insurer from requiring its policyholder to use a particular repair shop."

Belron US also alleges that the model steering legislation would keep insurers from "informing its policyholders as to the features and benefits available under their polic[ies.]"

"When insurers are not permitted to explain high-quality, low-cost alternatives under the policy, policyholders suffer," says DiMasi. "A glass repair should be a simple process for consumers, and it's currently working for consumers. Why would anyone want to add new layers of confusion and complication for a consumer who is already dealing with an unexpected repair?"

On the same topic, he adds, "If a consumer indicates the name of a repair facility, the insurer would no longer have the ability to explain the features and benefits of the insurance policy. Consumers would be justifiably outraged if they were blind-sided with an invoice from a repair facility, charging them the difference between what the insurance company paid and what the repair facility charged."

DiMasi goes on to say the proposed model act "is an unconstitutional restriction of commercial free speech under the First Amendment of the U.S. Constitution."

According to the letter, Belron also proposed its own specific revisions to the legislation.

The letter was addressed to Sen. Ruth Teichman (R - Kan.), who chairs the NCOIL property casualty committee developing the legislation. NCOIL is made up of state legislators from across the country who are involved in their own states' legislation insurance committees, and one of its goals is to create model laws that can be introduced as bills throughout the nation, in an effort to prevent further federal regulation of insurance, according to the group's website.

The proposed model act, as presented at an NCOIL meeting this spring, reads as follows, "In processing any such claim, the insurer shall not, unless expressly requested by the insured, recommend or suggest repairs be made to such vehicle in a particular place or shop or by a particular concern."

In addition, a substitute version of the model law had been proposed as well, and that revision would add several clauses, including language prohibiting insurers from "engag[ing] in any act of coercion or intimidation causing or intended to cause an insured or claimant to utilize a preferred repair facility." The substitute version of the model law also would address auto glass claims, though glass was omitted from the original version of the bill.

Independent Glass Association (IGA) executive director Mike Russo spoke during last week's meeting and provided those in attendance with copies of the IGA's comic book, "Don't Get Steered."

Russo advised™/AGRR magazine that the drafted legislation was shelved until the group's next meeting. Neither NCOIL officials nor Sen. Teichman could be reached for comment.

What do you think about the proposed model legislation? CLICK HERE to discuss.

CLICK HERE for full text of letter.

Need more info and analysis about the issues?
CLICK HERE to subscribe to AGRR magazine.