Proposed Iowa Parts Reg. Worries Insurers
By Daniel Hays
NU Online News Service, Dec. 9, 12:45 p.m. EST ?An insurer group is voicing concern that language in a regulation proposed by Iowa's Insurance Division could permit some auto repair shops to charge a fee for modifying certified crash parts that need no modification.
The National Association of Independent Insurers in Des Moines, Ill., said that as a result, its counsel, Ann Weber, has asked the insurance division to delete the offending language.
Ms. Weber said the language is part of the second draft of an unfair claims practice rule that the division first put out in October
Ms. Weber said the NAII did not see the need for the rule and was unsure why the division wanted it. In meetings this past summer, she said regulators had mentioned a need for uniformity.
Bob Hurns, counsel with NAII's state government affairs section, said that use of aftermarket or generic parts that are produced by a maker other than the original manufacturer has been an issue in state legislatures now for 15-to-18 years.
He said he was unaware of any other state regulators who are currently taking action on parts usage.
Most states, he said, simply require notice, or a logo attachment when a part is used and two states require notice in insurance policy.
The sentence in the Iowa regulation would require insurers to "consider the cost of any modifications which may become necessary when making the repair" using parts not made by the original auto manufacturer.
Ms. Weber, in a letter to the division said: "The use of aftermarket parts, which are, certified by a reputable entity such as
the Certified Automotive Parts Association would fit just as a manufacturer's part would since the aftermarket part must be of at least equal kind and quality to the original manufacturer's part."
She added that "the inclusion of this sentence might encourage the inclusion of a 'modification' cost in a repair by unscrupulous entities when in fact no modification would be required when certified aftermarket parts are used."
Ms. Weber also objected to a proposed change in the definition of aftermarket crash parts to include automobile glass. She said that would be inconsistent with a state law that specifically excludes auto glass in that context.
She also asked the department to delete a provision that would require insurers to notify third-party claimants at least 60 days before the date that a statute of limitations will run out.
"The insurer does not hold a contractual relationship with a third-party claimant," she said. "Existing Iowa statutes and case law should amply cover the issue of third-party claims."
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