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A proposed “anti-steering” regulation for California auto insurers has been revised, loosening a requirement that insurers back up statements made to a customer about the policyholder’s choice of body shop but also changing the scope of what could be an improper statement.
The new proposed regulation might take effect in as few as 15 days from the agency’s release of the document Monday while a final round of written public comment is solicited through 5:30 p.m. Oct. 11. Find out how to leave comments here or email Damon.Diederich@insurance.ca.gov
Democratic Insurance Commissioner Dave Jones’s administration this spring suggested the regulation as a response to complaints that insurers continue to steer despite a 2009 prohibition. Besides giving insurers better guidance on what the agency expected from the rules on the books, the proposal defined some nebulous terms like “reasonable” time or distance, restricted insurers from forcing an inspection to be done at a DRP shop before a customer could patronize a non-DRP shop, and demanded proof to back up any disparaging of non-DRP shops.
“After the passage of the current regulations, the Department continued to receive complaints that insurers engaged in steering consumers to specific automotive repair shops,” the agency wrote in its reasons for the regulation change.“From 2009 through present day, there have been over 160 complaints related to Ins. Code section 758.5. Based upon the Department’s investigation of these complaints, the Department concludes that in many cases, consumers’ rights to select a repair shop have been violated under the Ins. Code. When untruthful and deceptive information is conveyed by insurers, consumers are unknowingly forced to take their automobiles to shops they may not have wanted to go to in the first place, and other competitive automotive repair shops may lose potential business, stifling the free market and consumers’ rights to select a repair shop.”
Jones’ agency indicated Monday it also planned to add 16 complaint excerpts to the rulemaking file.
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Here’s some changes we noticed in the new proposal; see the full text here.
The new version of the steering rule makes it a little easier for insurers to comply — or steer? — as it trades formal proof for “reasonable” behavior.
Under the spring version, an insurer representative had to provide documentation to support whatever they were saying to dissuade a customer from using a particular shop.
The draft released Friday doesn’t require that paper trail. It only bars such speech “if the statement is known to be, or should by the exercise of reasonable care be known to be, untrue, deceptive or misleading.” That’s a different concept than having proof of whatever is being said.
‘Any other statement’
Another interesting proposed change involves rewording the description of prohibited unsubstantiated comments from “has a record of poor service or poor repair quality, or of other similar allegations against the repair shop” to “has a record of poor service or poor repair quality, or making any other statement to the claimant with respect to the chosen repair shop.”
This is interesting because one could sort of read it as barring misleading positive speech that an insurer makes about its own DRP shop selected by a customer.
The other major changes proposed for the document relate to rules intended to keep insurers from crankily inconveniencing customers who didn’t use a DRP shop with distant or delayed inspections.
One revision simply appears to close a loophole regarding third-party claims, adding a new paragraph giving third-party insurers a six-day time limit to inspect a vehicle. The older draft regulation simply discussed a generic “insurer,” and didn’t distinguish between third-party and first party claimants.
“(I)n the case of a third-party claim, should a third-party insurer exercise its right to inspect the damaged vehicle, the third-party insurer shall inspect the damaged vehicle within six (6) business days from the time the third-party insurer decides to inspect the third-party vehicle, provided the claimant makes the vehicle reasonably available for inspection by the third-party insurer,” the new subdivision states. “For purposes of the immediately preceding sentence, the third-party insurer’s decision to inspect the third-party vehicle shall be deemed to have been made on the date the third-party insurer provides the third-party claimant with the information required (under a separate regulation) … in the event the decision is not made prior to that date.”
Finally, restrictions on how far an insurer can require a claimant to travel for an inspection were slightly loosened to 15 miles (up from 10) in urban areas with 100,000 or more people. The inspection trip still can’t exceed 25 miles anywhere else.
Besides the Golden State’s importance to the national insurance and collision repair industries, what California does here should matter to collision repairers and regulators across the country. As Jones’ administration has done virtually all of the legwork for any other state considering steering regulations, the regulations offer some thought-provoking ideas and a possible solution for some questions being debated by today’s collision repair industry.
California Department of Insurance, March 2, 2016
California Department of Insurance, Sept. 23, 2016
California Department of Insurance, Sept. 26, 2016
Featured image: California’s license plate now comes with a hot rod and a palm tree. (Frank van den Bergh/iStock)