California Regulation Limits Auto Policyholder Choice, ACIC

 

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February 26, 2009 Thursday 04:02 PM EST

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California Regulation Limits Auto Policyholder Choice, ACIC Says

Chad Hemenway

SACRAMENTO, Calif.

The insurance industry is attempting to stop a proposed California regulation that would prevent insurers from recommending an automobile repair shop to a policyholder after one is chosen by the claimant.

"This regulation would hurt rather than help consumers," said Jeff Fuller, vice president and general counsel with the Association of California Insurance Companies, in a statement. "(The regulation) could prevent consumers from being fully informed about all the options available to have their vehicles repaired after an accident."

ACIC testified against the regulation, which says "the insurer shall not suggest or recommend that the claimant select a different automotive repair dealer" except when a referral is requested by the policyholder.

"Consumers should have complete information so they may compare costs, quality and warranties of the work they will have done on their damaged vehicles," Fuller said. He added that it is California law that consumers be able to chose a repair shop.

It is not the first time industry trade groups have opposed the practice in California. A year ago, the ACIC, the American Insurance Association and the Personal Insurance Federation spoke out against a proposed bill to stop insurers from "steering" policyholders to specific repair shops (BestWire, Feb. 26, 2008). Ultimately, the governor vetoed the bill.

The industry recently came down against a similar anti-steering proposal in Connecticut that would place limits on insurers who offer guarantees on automobile body repairs completed in shops recommended by insurers (BestWire, Feb. 18, 2009).

In New York, Insurance Commissioner Eric Dinallo recently found that auto insurers have not systematically steered policyholders to certain repair shops though some did "engage in practices that could be considered violations." New Yorkers also have the right to chose repair facilities following a claim.

In 2007, the top five writers of private passenger auto insurance in California, based on A.M. Best Co. state/line data, were: State Farm Group, with 12.3% market share; Farmers Insurance Group, with 10.9%; Mercury General Group, with 9.8%; Allstate Insurance Group, with 9.1%; and Auto Club Enterprises Insurance Group, with 8.9%.

(By Chad Hemenway, associate editor, BestWeek: Chad.Hemenway@ambest.com)

February 27, 2009

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