Collision Week News

Fri, 1 May 2009
Montana Association Shares Hard Legislative Lesson
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Association-backed estimating bill defeated by opposition from insurance lobby and two information providers… but did it have to be?

The Montana Collision Repair Specialists (MCRS) are sharing a hard-learned legislative lesson with other repair associations after an MCRS supported bill was killed in the state Senate this year in the face of opposition from insurers and two estimating system providers.

"MCRS' hope is that our costly experience will help other association's recognize who the players are when they put forth their legislative efforts so they are aware of potential opposition before they proceed," the group wrote in a statement describing the details of their recent legislative defeat.

Montana introduced two MCRS-backed bills in the 2009 Legislative session. The first measure, House Bill 291, changed the words 'lowest prevailing rate' to 'average market rate' in the state's insurance code and passed through both houses of the legislature by a wide margin and was signed into law. (see related story below)

Excerpt: Minnesota 2008 SF3508

Under Prohibitions on Insurer:
(7) unilaterally and arbitrarily disregard a repair operation or cost identified by an estimating system, which an insurer and collision repair facility have agreed to utilize in determining the cost of repair.

Excerpt: Rhode Island 2007 H5549

Under "unfair claims practices" defined:
(19) Modifying any published manual (i.e. Motors, Mitchell, or any automated appraisal system) relating to auto body repair without prior agreement between the parties.

The second, House Bill 286, was designed as a measure to stem database abuse by requiring the use of estimating systems in their entirety. This bill was modeled after similar bills recently passed in other states, Rhode Island in 2007 and, more specifically, Minnesota in 2008. The MCRS bill however, was missing two words that the successful Minnesota bill contained. And it may have been those two words, and some miscommunication that likely caused the bill's failure.

In 2008, Minnesota passed a new law stating that insurers may not "unilaterally and arbitrarily disregard a repair operation or cost identified by an estimating system, which an insurer and collision repair facility have agreed to utilize in determining the cost of repair."

According to MCRS, "The only difference from the Minnesota bill was the exclusion of the words 'unilateral and arbitrarily'. These words were removed on the advice of the Bill writer at the State Capitol. This bill passed out of the House in a 95-5 vote which led Montana collision repairers and the MCRS lobbyist to be cautiously optimistic going into the Senate."

Following a hearing in the Senate, the vote was postponed due to intense opposition by the insurance lobby, according to the MCRS. In addition, MCRS claims that Audatex and CCC had been requested to send letters of opposition to the Senate committee. "It was made clear in writing and verbal communication from Montana Senators that the letters from Audatex and CCC affected their vote," the MCRS said. (Copies of both letters appear below)

Before the final vote, the bill was amended to once again include the words 'unilaterally and arbitrarily,' making it identical to the successful Minnesota legislation. However, the bill was still killed in committee.

Both CCC and Audatex pointed out that the original version of the bill did not allow anyone, insurer or repairers, to deviate from the estimating system, even if they both agreed it was the right thing to do.

According to Rick Tuuri, Associate VP, Industry Relations for Audatex, "The Audatex position statement, which refers to the bill prior to any amendments, was issued to ensure that users of the Audatex system are allowed by law to exercise their professional judgment when using the Audatex estimating system. Over the years, repairers have consistently complained that the Audatex system is not used as a guide or a flexible tool, as intended, but rather it is used by some as 'the Bible.' Ironically, the MCRS managed to draft and forward a bill that would have legislated that very position."

"When crafting legislation, every word is significant and important. It is incumbent upon the authors of proposed legislation to communicate with all parties that may be affected by any such proposition to try to reach mutual understanding and accord, prior to going to committee or to legislative session," Tuuri said.

CCC Information Services, also echoed that sentiment. "CCC does not believe Montana HB286 properly accounted for the role of the estimating systems in the collision estimating process," said Jim Dickens, General Manager of the Automotive Services Group at CCC. "We felt it important to inform the committee of our views, and our letter was submitted for that purpose only, not to serve or promote the interests of insurers over repairs. CCC would look forward to working associations in Montana and elsewhere ahead of time whenever possible to avoid this unfortunate circumstance in the future.

Tuuri likewise offered future cooperation, "Audatex welcomes the opportunity to work together with the MCRS and anyone in the industry on the legislative front.

"While their intentions may have been good, their effort at wording HB 286 certainly was not. I personally had no idea who had drafted the bill. Had I known, I would have gladly reached out to them and offered to work together, as I did after all of this transpired," Tuuri concluded.