NAIC working group excludes repair shops from AOB prohibition in model act
By onBusiness Practices | Insurance | Legal
Proposed changes to the National Association of Insurance Commissioners (NAIC)’s Public Adjusters Licensing Model Act that, after final approval, would’ve eliminated the assignment of benefits (AOB) from customers to repairers will not apply to collision repair shops.
The changes initially would’ve prohibited repair facilities from acting as public adjusters for their customers in negotiating claims with insurers.
The language was amended by the NAIC Public Adjuster Licensing (D) Working Group to exclude collision repairers after concerns were shared by NAIC consumer liaison and Automotive Education & Policy Institute founder Erica Eversman and Society of Collision Repair Specialists (SCRS) Executive Director Aaron Schulenburg. They said the changes would’ve kept shops from advocating for following OEM repair procedures to complete safe and proper repairs and seek appropriate payment when the need to fight for fair payment arises.
“I see this as a serious and very concerning limitation on folks who work in the collision repair and the total loss industry who are going to be who, who have been assisting consumers,” Eversman told the group. “I see this language as extremely onerous and I think that you’re going to have scenarios in which people do not understand that, in fact, they are excluded.”
Schulenburg said allowing an insurance carrier underwriting a property insurance policy to alter policy language to prohibit assignment of benefits or proceeds from a claim to any other person, including a property repair contractor would be problematic.
“It strips consumers of one of a very limited number of recourses available to them in the event of a dispute about the amount owed for a loss,” he said. “Creating model language that standardizes the removal of consumer rights creates unnecessary obstacles to obtaining full indemnification for a covered loss.”
Schulenburg added that consumers often rely on property repair contractors to represent them on matters they otherwise wouldn’t be well-equipped to represent themselves on.
Concerns shared by Schulenburg about language in Section 16, which covers public adjuster licensing, weren’t addressed by the group. He asked if NAIC had considered that as the model act is written, in concert with an expectation that a repair business would negotiate repair value, would force a collision repair center into inappropriately performing the task of a public adjuster potentially opening them up to allegations of fraudulent insurance acts.
Added language to the purpose and scope section of the act that states “excluding claims for personal or commercial auto lines of insurance” was approved unanimously by the group Wednesday. A drafting note is also included in the revisions that states, “This Act is not intended to apply to the settlement of claims for personal or commercial auto lines of insurance.”
The approved revisions will be presented to the Producer Licensing (D) Task Force for consideration. Working Group Chair Trinidad Navarro said he aims to have the model act approved by the end of the year.
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