NCOIL Property-Casualty Committee Votes to Reject Model Aftermarket Parts Law
March 7, 2011

Photo by Penny Stacey, glassBYTEs.com™/AGRR™ magazine.

The National Conference of Insurance Legislators (NCOIL)’s property-casualty committee voted 11-7 against a model law involving aftermarket crash parts yesterday during its spring meeting in Washington, D.C.

Though glass was excluded from the model law’s provisions, the model law would have provided states with a model that would have: required auto body shops to disclose the type of parts being used to consumers and to obtain their consent; established conditions in which insurers could limit their payment to the cost of aftermarket crash parts; and would have mandated permanent, transparent identification of crash parts.

Though the model law ultimately was rejected, a heated discussion preceded the vote. Much of the discussion surrounded an amendment recommended by Rep. Brian Kennedy (D – R.I.) that would have required insurers to “ensure that the specified aftermarket crash parts are warranted by the manufacturer or distributor to equal or exceed the car company’s warranty for the crash part.” Kennedy’s amendment also would have noted that “certified aftermarket crash parts shall be presumed to be capable of restoring a vehicle to its pre-loss condition.”

John Ashenfelter, representing State Farm Insurance, spoke in support of the bill as amended—but was against the bill without the amendment.

“If [the amendment is] not passed, we don’t think the model is needed,” he said.

He also stressed the need for testing of aftermarket parts. “Testing is good … This amendment is about testing parts upfront to ensure quality,” added Ashenfelter, who pointed out that “State Farm currently is not specifying non-OEM parts” (and he said it hasn’t been for approximately six years).

“If a customer requests a non-OEM part, we’ll go ahead and put that on,” he said. “But how do we as insurers know that there’s quality upfront? … You only get that with certification.”

Jack Gillis of the Certified Automotive Parts Association saluted the committee for continuing the discussion regarding aftermarket parts, which he said has been going on for approximately 12 years.

“What’s significant about the many years we’ve come before you is that we’ve been able to keep this conversation going in spite of the fact that the biggest industry in America doesn’t want this,” said Gillis.

Gillis advised the committee that the specification of non-OEM parts ultimately benefits the consumer.

“There is nothing wrong with generic products,” he said. “In fact, generic products are a consumer’s best friend.”

Gillis also alleged that OEM parts are not always what they may seem. “Last year alone the car companies were forced to recall 32 million vehicles … and yet you want to turn over the arbitration of quality to the car companies,” he said.

A General Motors (GM) representative in attendance questioned the model act’s reference to returning a vehicle to pre-loss condition with the use of aftermarket parts. “Just because the law says that doesn’t make it so,” he said. He also questioned the use of the word “presumed” in this portion of the amendment: “Certified aftermarket crash parts shall be presumed to be capable of restoring a vehicle to its pre-loss condition.”

“Presumption is a very hard word to overcome,” added the GM rep.

Assemblyperson Nancy Calhoun (R – N.Y.) urged the group to make a decision, and pointed out that talk about a model law for aftermarket parts had been tabled for the last five years. “That five years has passed, and here we are … today is the day to make a decision,” she said.

Calhoun voted in favor of the model law, though it ultimately was rejected.

NCOIL is made up of state legislators from across the country that 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 group is funded by its member state legislatures, which pay dues of $10,000 per year.

The group previously had considered a model anti-steering law, too, but had decided to table the debate temporarily after its November meeting.

NCOIL’s next meeting will be held in Newport, R.I., July 14-17.

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