California AB 1200 Progresses, Continues to Face Opposition
June 24, 2009

A California bill that would ease the state's anti-steering law has been moved from the Senate rules committee to the committee on banking, finance and insurance, and is scheduled to be heard for the first time on Wednesday, July 1—just one week from today. The bill, which has already passed the state's Assembly, is designed 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." It has met much opposition from collision groups, and even from U.S. Congresswoman Jackie Speier (D-Calif.), who sponsored the state's existing anti-steering law as a member of the California assembly.

This week, the Collision Repair Association of California (CRA) released a statement calling the opposition to the bill a "defining moment in the collision repair industry."

"This short-sighted legislation, written by the Personal Insurance Federation of California, seeks to end the right of consumers to choose where their damaged vehicle is repaired," says CRA president Lee Amaradio. "In articulating our position, we have an opportunity to educate lawmakers on the harm caused by insurers that steer customers to their DRP shops. Conversely, if we fail, insurers will have a death lock on the process by which repair facilities are selected by vehicle owners."

If passed, the section of the state's insurance code regarding consumer choice of repair facilities, would now read, "Nothing in this section restricts the ability of an insurer to explain benefits the insurer provides as part of the claims process."

Current state law says that once a claimant has selected a shop, the insurer cannot make any recommendations or suggestions regarding shops. According to the CRA, the California New Car Dealers Association has proposed amendments to the bill that would limit an insurer's discussion to provisions of the auto policy once the consumer has selected a shop.

"The term 'benefits' opens the steering door a mile wide," adds CRA lobbyist Richard Steffen. "I don't care how you re-write this bill, if 'benefits' remains in the language, steering will be sanctioned by state law."

The bill has received much support from several insurance groups, including the Personal Insurance Federation of California, 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, who argue that existing laws are being used "to withhold information from customers about their auto repair options," according to the Assembly insurance committee's analysis of the bill. (CLICK HERE for related story.)

CLICK HERE for full statement from CRA.

CLICK HERE for current text of the bill.

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