WASHINGTON, DC — The Automotive Service Association (ASA) and the Automotive Service Councils of Michigan (ASC-MI) testified recently before the Michigan Senate Banking and Financial Institutions Committee on Senate Bill 819, Insurer Owned Repair legislation. Repair facility owners from throughout Michigan packed a Senate hearing room to show support for the legislation, according to ASA.
The legislation prohibits insurance companies from owning or acquiring a repair facility in the state of Michigan. If the legislation is passed, any insurer that has ownership of a repair facility must divest itself of that facility within two years of the effective date of the legislation. S. 819 was introduced by Sen. Laura Toy, R-Livonia. The bill has 16 co-sponsors.
Its companion bill in the Michigan House of Representatives, H.R. 5460, was introduced by Rep. Ken Daniels, D-Detroit. The House bill allows insurers who own repair facilities as of Jan. 1, 2004, to retain their ownership.
“ASC-MI opposes insurance companies having an ownership interest in automotive repair facilities and views such ownership as being in direct conflict of interest,” said Ron Meyer, president of ASC-MI. “It eliminates the checks-and-balances system that assures consumer protection. Direct ownership raises barriers for the consumer and forces them to choose the path of least resistance to assure prompt attention to their repair needs. ASC has historically supported the consumer’s absolute, unequivocal right to choose a repair facility for a collision or mechanical repair.
“When the body shop is owned by the insurance company, the consumer is the one who loses,” Meyer said. “If they have a problem with the repair, whom do they turn to?”
Bob Redding, ASA’s Washington, D.C., representative, said in his testimony, “We are now at a point where some insurers are determined to eliminate the last line of defense for the vehicle owner, the independent repair facility. Repairers in many states are asking policymakers to stop insurance companies from owning repair facilities. Legislation has been introduced in eight states already this year. ASA expects more to follow. Last year, Texas passed legislation halting insurance companies from owning repair facilities in their state.”