Consumer advocates are concerned about a bill that could ostensibly undo a current Calif. law preventing insurers from “steering” customers to auto body shops under contract with the insurer.

Calif. Assemblywoman Mary Hayashi (D-Hayward) is spearheading the proposal — AB 1200 — which would allow insurers to present reasons as to why customers should use “preferred” body shops at any time during the claim process. This would represent an obvious departure from the anti-steering law enacted in 2003 (SB 551 – Speier), which specifically prohibits insurance companies from dictating that customers get cars repaired at certain establishments. The state law actually goes one step further, stipulating that insurers must refrain from “suggesting or recommending” body shops once the person has selected a repair facility.

Consumer Watchdog, a nonprofit, nonpartisan group, recently sent a letter to Hayashi to not only voice its disapproval for the amendment but also urge that the current law be upheld. It believes, as do other consumer advocates, that “hard selling” can erode workmanship and driver safety because shops might be more inclined to cut corners in order to save the insurer money and potentially earn standing as a preferred provider.

“California legislators were right to stop this kind of anti-consumer steering six years ago, and nothing has changed that would make the relationships between insurers and body shops any better for consumers,” said Todd Foreman, Consumer Watchdog staff attorney. “If anything, lawmakers should be adding consumer protections to the anti-steering law, not gutting the existing rules.”

Of course not everyone agreed with Foreman's analysis, including a group of P&C insurance trade associations representing more than 95 percent of California auto insurers. The Personal Insurance Federation of California (PIFC), the Association of California Insurance Companies (ACIC), the American Insurance Association (AIA), and the Pacific Association of Domestic Insurance Companies (PADIC) argued that auto repairers opposing the bill were trying to limit information to the detriment of consumers and claimants.

“Existing law prohibits auto insurers from forcing a driver to use a particular auto repair facility,” said Michael Gunning, PIFC vice president. “Unfortunately, current law fails to ensure that drivers get a complete picture of their auto repair options. Some body shops want to use current law to keep consumers in the dark about their options. AB 1200 guarantees that drivers can make a fully informed choice when selecting a facility to fix their car after an auto accident.”

“Some in the auto repair business are spreading misinformation about direct repair programs and AB 1200,” said Janine Gibford, AIA assistant vice president, state affairs. “Their arguments lack credibility. Many insurers guarantee the work done by the shops in their direct repair programs. This serves as a strong incentive to get the job done right the first time. Insurers want informed claimants so they receive expert repairs from a shop with the necessary experience. The law will always allow the consumer to take their cars to the repair shop of their choice.”

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