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Proposition 33’s Price Setting Controversy, Lawsuit to Rewrite Proposition 33 Fails, Joseph Spends $8.3M A proposition on the November ballot in California is getting a lot of attention from people on both sides of the insurance pricing issue. However, a lawsuit filed by supporters of Proposition 33 in late July over the official wording of the measure has been thrown out by a California Superior Court judge. Proposition 33 is an initiative aimed at maintaining discount auto insurance for people that switch car insurance companies but still keep continuous coverage. And it happens to
be backed by the chairman of Mercury General Corp to the tune of $8.3 million. Basically, for each year you are with your insurance company and are continuously insured, you get a loyalty discount, but if you switch companies, you don’t. So, say you are with Allstate and you switch to Nationwide; even if you have been continuously insured since you were 16, you will not get a discount for continuous coverage. This See Proposition 33, Page 54
SEMA-AAPEX is Oct. 30-Nov 2 in Las Vegas For SCRS’ Repairer Driven Education, see p. 46-48
California Autobody Association ‘Has Concerns’ over State Farm’s PartsTrader Parts Bidding Program
For CAA members that are not aware of this program, State Farm launched a parts bidding pilot program earlier this year with 158 of their Select Service direct repair shops. These shops are required to source parts from vendors through PartsTrader, using their web-based parts procurement program in which vendors bid for the order. State Farm has stated that their new program should improve parts availability, process efficiency, order accuracy, and create a better experience for the customers. Although it is still in a pilot test, all indicators show that this program See PartsTrader, Page 61
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The California Autobody Association released the following statement titled: CAA Has Concerns with State Farm’s Parts Bidding Program; Will Shops Only Choice be to Adapt & Survive? CAA’s Executive Board has been evaluating the State Farm Parts Bidding program over the last few months and has concerns with the anticipated roll-out of their parts bidding program in California. This program is currently in a pilot test in four small regions, Grand Rapids, MI; Tucson, AZ; Birmingham, AL; and Charlotte, NC (but not in California as of yet).
VOL. 30 ISSUE 8 SEPTEMBER 2012
CDI Holds Hearing on “Workmanlike Repairs” and Aftermarket Parts, Insurers Object to Shop Benefits
The California Department of Insurance (CDI) held a hearing Aug. 9 in Sacramento to review newly proposed regulations to clarify “workmanlike auto body repairs” and the use of aftermarket crash parts. The Department says the proposed regulations, under Article 6.5 of the Insurance Code, Unfair Practices, are meant to provide increased protection for the public from “financial and physical harms caused by inferior repairs or defective aftermarket parts and to maintain insurer accountability in the process.” The Department of Insurance expects that the proposed regulations will create only insignificant cost impacts on insurers, but insurers dispute this.
The proposed changes are meant to clarify what it means to prepare an estimate in an amount sufficient to have repairs completed in a “workmanlike manner.” The existing problem, according to the department, is that when a manufacturer or estimating provider outlines a procedure to complete a particular repair, “the insurer may refuse to include the time or parts necessary to complete the repair in a way that is compliant with the repair standard in the estimate. This causes the estimate prepared by the insurer to be insufficient to comply with the statutory requirement.” The regulations clarify that insurer-written estimates must be preSee CDI Hearing, Page 12
NACE-CARS (ASRW) is Oct. 10-13 in New Orleans Full Schedule of Courses, see p. 27-31
Insurance Lobby Says Proposed Regulations from CDI “Damage Ability to Control Costs” Industry trade groups went to the California capital to protest the state Department of Insurance’s (CDI) proposed regulations governing autobody repairs and the use of aftermarket replacement car parts. Officials issued a notice in June (see autobodynews.com) that it was seeking to change state standards of repair and use of aftermarket parts by clarifying insurers’ obligations during the repair process. Officials called it an effort to address “disputes regarding the true cost of repairs of damaged vehicles and the applicable repair standard” that “continue to negatively affect the claims-handling process.” The Property Casualty Insurers Association of America issued the following news release in response to CDI’s proposed regulations: “New regulations proposed by the California Department of Insurance could severely damage automo-
bile insurers’ ability to contain auto body repair costs by removing checks and balances from the system. Consumers will pay the price for these biased regulations that favor body shops and original equipment manufacturers through more expensive auto repair costs that could eventually increase premiums, said the Association of California Insurance Companies (ACIC). ACIC testified in opposition to the regulations REG-2011-00024 during a hearing at the California Department of Insurance in Sacramento. “These regulations essentially allow the auto body repair shops to “name their own price,” charging whatever they want for auto repairs and insurers will be required by these regulations to pay,” said Armand Feliciano, ACIC vice president. “Insurers pay for approximately 90 percent of the auto body repairs in the nation. See PCI Objects to CDI, Page 10
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