Bill Defining "Deceptive Referrals" and Requiring
Notification of Consumer Choice Introduced in Kentucky House of
January 8, 2010
Bill Defining "Deceptive Referrals" and Requiring Notification
of Consumer Choice Introduced in Kentucky House of Representatives
A bill that would define the term "deceptive referrals"
and would require insurers to notify claimants of their right to
choose a repair facility during the initial report of a claim has
been introduced in the Kentucky House of Representatives. The bill,
sponsored by Rep. Jim Wayne (D), was introduced this week and was
referred to the banking and insurance committee.
H.B. 186 also would define the terms "request or require"
and "free market rate."
Under the text of the bill, deceptive referral would be defined
as follows: "any trade practice by which an insurer attempts
to persuade, convince, coerce, or intimidate a claimant into changing
his or her choice of repair facility after the insurer has been
informed that the claimant has selected a repair facility."
"Request or require" would be defined as "any act
to influence a claimant's decision."
The bill is designed to do the following:
- prohibit an insurer from steering a claimant to use a specific
person or business for motor vehicle repairs;
- prohibit an insurer from engaging in deceptive referral practices;
- prohibit an insurer or appraiser from steering a claimant to
use a specified facility for appraisals or repairs;
- require all appraisals to contain a notice regarding the provisions
of this section; and
- require insurance cards to contain a statement regarding an
insured's right to choose a repair facility;.
In addition, the bill addresses pricing, and would require the
labor rate for damages paid to be based on the "free market
rate," and would require insurers to pay claims within 30 days'
notice of the claim and would establish penalties for those who
fail to abide by this requirement. "Free market rate"
would be defined as "the labor rate the general public pays,
without the influence of the insurance industry, for repairs on
similar motor vehicles in the same geographic area of this Commonwealth."
HERE for the full text of H.B. 186.)
A similar bill also was pre-filed in late 2009 in the Kentucky Senate
by Sen. Gary L. Tapp (R). Tapp's bill, known as S.B. 16, also defines
the terms "deceptive referral" and "request or require,"
but rather than "free market rate," uses and defines the
term "usual and customary rate." (CLICK
HERE for related story.)
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