Update: The Iowa Insurance Division explained March 21 that spokesman Chance McElhaney went on paternity leave at about the same time as his initial March…
The Maine Legislature last week sent Republican Gov. Paul LePage a bill specifying the language an insurer must use in reminding a policyholder that the customer doesn’t have to use the shop the carrier recommends.
Legislative Document 1540 builds on the existing shop choice language found in the Maine Revised Statutes stating, “”A domestic or foreign insurer or its agent or employee may not recommend the use of a particular motor vehicle repair service or network of repair services without informing the claimant that the claimant is under no obligation to use the recommended repair service or network of repair services.”
The bill passed Wednesday by the House and Thursday by the Senate tacks on the following language:
If a domestic or foreign insurer or its agent or employee recommends the use of a particular motor vehicle repair service or network of repair services, the following advisory must be made to the insured or claimant at the time a claim for motor vehicle collision damage is reported:
“You have the legal right to choose a motor vehicle collision repair shop to fix your vehicle. Your policy will cover the reasonable costs of repairing your vehicle to its pre-accident condition no matter where you have repairs made.”
First draft went further
The initial draft of the bill, House Paper 1061, was sponsored by Rep. Scott Hamann, D-South Portland and cosponsored by Reps. Benjamin Collings, Portland, and Mark Lawrence, D-South Berwick.
It went much further than the final version, requiring the Maine superintendent of insurance to review any scripts or talking points an insurer gave customers, forcing an insurer to quite trying to persuade a customer who had selected a particular shop, and preventing insurers from talking about the benefits of their network shops (though it still allowed the existence of those benefits).
“Maine has an increasing population of elderly and young drivers who, in the event of an accident, may not be aware that they have the choice of the business to get the repairs done,” Rep. Jonathan Kinney, R-Limington, wrote in prepared testimony for a May 10 Committee on Insurance and Financial Services hearing. “These folks are very susceptible to a ‘sales pitch’ for the body shop of the Insurers choice. The claims report scripts section of this bill will create the same expectations for all who file a claim with their insurance companies.”
The Maine Autobody Association testified in favor as well, with attorney Bernadette Bolduc Papi offering links to examples of steering and other states’s antisteering measures.
“The methods used to steer are illegal, sometimes subtle but often blatent, and in disregard for the law in place,” the association wrote. “The insurance companies are interfering with the free market place. Consumers are losing their freedom of choice.” (Emphasis association’s.)
That first draft also set penalties starting at $1,000 and growing to $5,000 and license suspension for carriers who violated the bills once or multiple times.
But Insurance Superintendent Eric Cioppa opposed the first version of the bill, noting that Maine law already made steering illegal, little evidence of steering in the state existed — and if it did, the bill actually limited the penalties his office could take against steering carriers.
“In 2015 and 2016, in response to concerns raised by a group of body shops, the Bureau investigated the steering practices of the seven largest (by premium volume) motor vehicle insurer groups in Maine,” Cioppa wrote in submitted testimony. “In response to the Bureau’s requests, these groups submitted copies of training materials, scripts, and supporting materials concerning appraisals or repairs involving collision repairs, information about any complaints that alleged improper direction to direct repair programs, and descriptions of how their direct repair program and non-direct program payment processes differ. Our investigation did not find evidence of violations of Section 2164-C.
“… We have had few consumer complaints on this issue. Since 2008, the Bureau has received, to the best of our knowledge, only six consumer complaints related to collision repair steering, and the issue in two of them was that the insurers did not tell the complainants about their networks of repair shops.” (Emphasis Cioppa’s.)
State Farm attorney Amy Oflene was among others opposing the initial bill — noting that her carrier wouldn’t otherwise object to a shop choice protection law.
“Typically, we do not object to proposals which seek to protect consumers freedom of choice in selecting an auto repair shop or technician,” she wrote in State Farm’s prepared testimony. “At State Farm, we do not steer, meaning we do not limit the choices our insureds have in selecting an automobile repair shop. While there are select State Farm service shops, the company does not require the use of a particular shop, leaving that decision up to the policyholder.
“However, this bill does more than limit an insurer s ability to steer or coerce an insured into selecting a particular shop; it requires the use of mandatory talk tracks, increased administrative burdens on both the insurer and the Bureau of Insurance, and limits companies like State Farm from advising policyholders about the benefits of working with a select service provider. We do not see these additional restrictions as beneficial to anyone -not the insurer, the insured, or the Bureau.”
The Committee on Insurance and Financial Services in May voted 7-6 that the amended bill — which retained only the couple of sentences noted above — should be passed by the entire Legislature. That recommendation received a 6-4 vote in favor among the representatives and a 1-2 vote among senators.
The full House on May 31 voted 102-35, with another 13 absent and one excused, in favor of the amended bill. No Democrats voted against the bill; Republicans were divided on the measure.
The two parties had a similar split when the Senate on June 5 rejected with a 13-19 vote (and 3 excused) an attempt by Sen. Rod Whittemore, R-Somerset, to use the minority “ought not to pass” report instead. The amended bill thus passed the Senate.
Be heard: Gov. LePage’s contact information can be found here.
Call center operators must be careful not to run afoul of state antisteering laws. (webphotographeer/iStock)
Traffic passes the Maine Legislature. (DenisTangneyJr/iStock)