The Rhode Island Senate on Thursday backed a bill stating that insurers could not refuse mark-ups and other charges related to paint and equipment expenses and subleasing body shops.
Senate Bill 870, sponsored by Senate Majority Whip Maryellen Goodwin, D-Providence, would also require an insurer to notify customers when they’ve totaled a vehicle but don’t want one.
Thursday’s vote 28-9 follows a 8-0 Senate Judiciary Committee vote on June 21 in favor of the legislation.
Bill makes changes in Rhode Island Unfair Complaints Practice Law, General Laws 27-9.1-4.
Goodwin in the Senate said Thursday “Some insurers have decided to interpret the law themselves. This clarifies the practices they must follow.
Senator Samuel Bell, D-Providence, said these auto body related invoices tend to have “two business interests” – and “neither is legitimately interested in consumers”.
Sometimes insurers go too far and consumer protection was necessary, and sometimes “the body shop lobby goes too far and just wants to make a profit,” Bell said.
Bell said the SB 870 had two policies, one good and one that I think is bad. He said he supported the clawback changes but called the markups “primarily used to amortize body shop profits.”
“It’s kind of related for me,” he said.
Paint, material and sublease surcharges are not as arbitrary or cost effective as Bell is presenting them. After all, retailers and traders do not sell goods at cost, and charging the customer for measured and itemized materials spent on a specific repair can be seen as the customer buying more of the physical goods. Managing, planning, checking and possibly transporting the vehicle during sublease work requires effort from the staff that a body shop still has to pay for this time.
And the main national insurers generally reimburse the sublease surcharge, based on responses from a few hundred stores surveyed in the January 2020 edition of “Who pays for what?” »Survey carried out by Collision Advice and CRASH Network.
Bell called it a decision between which lobby he trusted the least: insurers or bodybuilders. He said the answer was body shops. He said he was misled by then-Senate Judiciary Committee chair Erin Lynch Prata by supporting a body repair bill he opposed in 2019.
“It wasn’t the bill we were told it was,” said Bell, who said it approved three more crash industry bills that year, but not the one. -the.
Thus, he would oppose this 2021 legislation, Bell said. “I don’t like the politics behind the way some of the bodywork bills are passed,” he said.
Lynch Prata is now a judge of the Supreme Court of Rhode Island. A court spokesperson said she had no comment on Bell’s allegation.
Goodwin agreed Thursday that insurers and bodybuilders have competing interests. “No doubt about it,” she said.
But Goodwin said she was sensitive to the concerns of body shops. “For the most part, these are very small businesses… trying to make a living. “
“… In my opinion, insurance companies have the deepest pockets in all of America. I don’t think they’re fair in general, for the most part – not all; don’t let me just say that – to consumers who pay big, big premiums year after year. “
Current Rhode Island law 27-9.1-4 states that an insurer who does not want to keep a car totaled “must notify the vehicle owner in writing of the requirements for obtaining a salvage title and a rebuilt title. “. This implies that the carrier does not keep the vehicle, but it does not specify this fact.
SB 870 would add a requirement that an insurer “must obtain, in writing, the owner’s consent and acknowledgment that the insurer is not retaining clawback and include a statement of the owner’s obligation and potential costs to dispose or keep recovery.
A large insurance business group – the National Association of Mutual Insurance Companies – told the House Corporations Committee in April that it had no problem with identical language in HB 6324. However, it objected. to the two other extensions of the State Law on Painting Materials and Subletting.
Goodwin said the bill made it clear that body shops would not own or take possession of such vehicles. “It’s up to the owner,” she said.
Another part of SB 870 also extends over an existing requirement. Currently, the Unfair Claims Practices Act states that insurers must “compensate an auto body shop for documented charges identified by software programs or industry-recognized systems for painting, painting, bodywork and finishing materials in auto body repair claims’.
Under SB 870, this wording would indicate that an insurer must “compensate an auto body shop for their documented charges as identified by the most recent version of the automobile industry recognized software programs or systems for paint, bodywork and refinishing materials in auto body repair claims, including, but not limited to, programs such as Mitchell’s RMC, PMC Logic, Paint, Micromix, or the programs of a paint manufacturer. An insurer should not discount documented costs by not using an entire system, including an industry standard markup. “(Emphasis added to show text added by the bill.)
Another clause in the bill would add whole new language related to subletting. It would be an unfair claim practice if insurers were found to “refuse to pay an auto body repair shop for the necessary documented sublease services paid to sellers or incurred by the body repair shop, for specialized services or repairs performed in the overall repair process, including the costs and labor incurred to research, coordinate, administer or facilitate the necessary sublease service, and automotive industry standard markup. Examples of sublease services include, but are not limited to, towing, hauling, suspension, alignments, electronic calibrations, diagnostic work, mechanical work, and fees paid to release a vehicle.
The virtually identical HB 6324, still sits before the House Corporations Committee after hearings in April.
Rhode Island Senate Majority Whip Maryellen Goodwin, D-Providence, speaks on June 24, 2021 about her Senate Bill 870. (Screenshot from Rhode Island Legislature video)
Rhode Island Senator Samuel Bell, D-Providence, opposed Senate Bill 870 on June 24, 2021. (Screen grab from Rhode Island Legislature video)
A summer 2020 “Who pays for what? A study by Collision Advice and CRASH Network found that many body shops charge a 25% markup on subleases. (Provided by Collision Advice and CRASH Network)