NCOIL to Revisit Collision Issues at Summer Meeting

Posted 7/8/2010
By Robert L. Redding Jr.

The National Conference of Insurance Legislators (NCOIL) has been around since 1969. With the summer NCOIL meetings upon us, it will be helpful to take a look at NCOIL's mission and interest in collision repair issues.

NCOIL's purpose is to: Help legislators make informed decisions on insurance issues that affect their constituents and to declare opposition to federal encroachment of state authority to oversee the business of insurance, as authorized under the McCarran-Ferguson Act of 1945.

Once NCOIL approves positions or model legislation, legislators still must choose to go back to their home states and offer the legislation that will then go through the normal legislative processes in their particular states. This is no easy task.

The Automotive Service Association has commented on NCOIL's positions for a number of years but to understand ASA's struggle with some of the policy positions that arise at NCOIL, it's important to look closer and understand better NCOIL as an organization. NCOIL serves as the "voice of state legislators" on insurance matters. Clearly there are some inherent conflicts with NCOIL's mission or purpose and ASA's policies.

Specifically, ASA has long supported a repeal of the McCarran-Ferguson Act. Since 1945, insurance companies have had a "limited" exemption from federal antitrust laws that apply to most other industries assured to them through an act of Congress. McCarran provides that federal antitrust law applies to the "business of insurance" only to the extent that such business is not regulated by state law.

ASA believes that the anti-competitive consequences of McCarran impact both consumers and small businesses that have to deal with insurers. ASA has worked with members of the U.S. House of Representatives such as Rep. Gene Taylor, D-Miss., and the Senate such as Sen. Patrick Leahy, D-Vt., Judiciary Committee chairman, to repeal McCarran-Ferguson.

ASA's most basic policy differences with NCOIL don't stop with the repeal of McCarran. NCOIL opposes the federal regulation of the insurance industry. NCOIL has passed resolution after resolution opposing almost every facet of the federal regulation of insurance. In summary, NCOIL wants the states to regulate almost all matters of insurance. This certainly includes property and casualty insurance. As Congress now moves to the conference on the financial services reform legislation, states will maintain their primary role as insurance regulators. Both the House's Restoring American Financial Stability Act of 2010 and the Senate's Wall Street Reform and Consumer Protection Act financial services reform bills contain legislative language requiring the administration to report back to Congress on insurance reform options, including the option of the federal regulation of insurance.

NCOIL's summer meeting will include two important collision repair issues:

1. Aftermarket Crash Parts

2. Auto Body Steering

Both crash parts and steering were on the most recent NCOIL agenda at the spring meeting but neither were resolved by the Property-Casualty Insurance Committee. ASA spoke against the model crash parts bill proposed by NCOIL and made suggestions for changes to NCOIL's Model Anti-Steering bill at the spring meeting.

The NCOIL Model Act Regarding Motor Vehicle Crash Parts and Repair still equates certified aftermarket crash parts with original equipment manufacturer parts (OEM). ASA highlighted three key points in its opposition to the NCOIL Model Act:

• Aftermarket parts certification

• The lack of a formal consumer written consent process for the use of replacement crash parts.

• Certified parts equivalency to OEM

In response to NCOIL's parts proposal, ASA conducted a survey of ASA collision members on several key questions relative to crash parts. Of the certified aftermarket parts purchased, one out of two was rejected because of fit, form or function. Of the non-certified parts purchased, one out of two was rejected because of fit, form or function.

In opinion questions, 58 percent of shop owners surveyed believed that aftermarket parts quality had a negative impact on their business. As to aftermarket parts fit, 43 percent believed that these parts had a negative impact on their business, 23 percent said no impact and 33 percent said they had a positive impact.

As for original equipment manufacturer parts, 83 percent of shop owners believed these parts impact their business positively.

ASA also submitted comments on the Proposed Substitute to the Model Act Regarding Insurer Auto-Body Steering bill. These suggestions included mandating that insurers' shop recommendations should be based on the level of training, equipment and certifications held by the repair facility and its staff. ASA also expressed concern with NCOIL's language on shop compensation. The current language proposed by NCOIL could encourage a system seeking the lowest common denominator within the marketplace; punishing those shops with higher standards, i.e. training and equipment.

It is anticipated that NCOIL will at least conclude its work on the Model Crash Parts bill at the summer meeting. Independent repairers are encouraged to go to ASA's legislative website, www.TakingTheHill.com, and send a letter to NCOIL Property and Casualty Committee members about their proposed legislation.

Bob Redding is the Automotive Service Association's Washington, D.C., representative. He is a member of several federal and state advisory committees involved in the automotive industry. For more information about the legislative activities of ASA, visit www.TakingTheHill.com.