Bill Defining "Deceptive Referrals" and Requiring Notification of Consumer Choice Introduced in Kentucky House of Representatives
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." (CLICK 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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