Insurers Doubtful Of Lott's Damaged Car Bill

WASHINGTON--A veteran Mississippi senator has reintroduced a measure aimed at preventing resale of flood-damaged automobiles that insurers say fails to meet its objective.

Sen. Trent Lott, R-Miss., who has introduced other legislation that has antagonized the industry, in his new bill would hold insurers responsible for creating a national clearinghouse for information on all cars they have declared total losses.

The "Consumer Access to Total Loss Vehicle Data Act" would make data available to consumers about vehicles carriers have declared to be totaled.

It was reintroduced Monday by Sen. Lott. Companion legislation was introduced Tuesday by Rep. Cliff Stearns, R-Fla.

The legislation would direct the National Highway Traffic Safety Administration to compel all insurers to commercially disclose information pertaining to total loss vehicles through various sources including online auto services like CAR-FAX.

The bill would also require insurance companies to reveal the reason for the total loss (flood, collision, stolen, etc.), the date of total loss, the odometer reading on that date, and whether or not the airbag deployed.

Sen. Lott said that consumers should not have to rely on the various states' titling processes because each state is different and the branding information is often not passed from one state to the next. When an insurance company declares a car totaled, the insurer assumes the title.

"The insurance industry should make this information available to protect the consumers, and we will be working to enact that protection in the 110th Congress," Sen. Lott said. "Buyers are entitled to truthful titles and complete information about a vehicle's history."

Sen. Lott has been a vocal critic of the industry since his Mississippi home was destroyed during Hurricane Katrina and his claim was rejected by his insurer, State Farm. The senator recently settled an action he brought against the insurers.

Sen. Lott has also agreed to co-sponsor legislation that would significantly roll back the insurance industry's exemption from federal antitrust laws.

He first introduced the total loss bill last December after Mississippi auto dealers complained that some of the estimated 500,000 damaged vehicles from Katrina were being resold.

The industry is divided on the bill, although the National Automobile Dealers Association has expressed support for the legislation because its members wouldn't have to assume liability for the paperwork needed to establish a nationwide clearinghouse or disclosure system.

Dennis Kelly, a spokesman for the American Insurance Association, said the AIA had "looked at the bill" and decided "to work to improve it as it works through the congressional process."

He noted, "We don't want cars that should not be on the road to ever be back on the road."

But the Property Casualty Insurers Association of America and the National Association of Mutual Insurance Companies both said they don't think the bill will solve the problem.

"We believe that disclosure alone will not solve the root cause of the problem, which is that loopholes in some states make title laundering possible," said Cliston Brown, a federal affairs spokesman for the PCI.

Specifically, Mr. Brown said, PCI supports provisions that would result in the carrying forward of state title brands when vehicles are registered in subsequent states. "This solution would brand salvage vehicles for the life of the vehicle," Mr. Brown said.

Marliss Browder said NAMIC "supports permanent title branding, so that once an automobile is branded a salvage vehicle in one state, "that title must carry forward to all other states where someone might try to register it."