Insurers Urge Pa. to Ban Charge-Backs on Fees for Police, Fire Services

March 28, 2007

Commissioners in Radnor Township, Pa. last month voted to end a plan to bill out-of-town motorists involved in traffic accidents for police services but insurers want to make sure other towns don’t try it.

The Property Casualty Insurers Association of America (PCI) is urging Pennsylvania lawmakers to support House Bill 131, which prohibits municipalities from charging a fee when a police department is called upon to respond to a motor vehicle accident. PCI testified on the bill before the House Local Government Committee.

Under Radnor’s plan, the fees were supposed to be recovered from insurance companies, but if they did not pay the company was seeking to collect from motorists.

Town leaders determined that the collection company was too aggressive in its collection practices. “It was time to admit it was a well-intentioned program, but it was implemented in the wrong way at the wrong time,” Commissioner William Spingler said.

Insurers are watching the trend of local governments seeking to charge-back or direct-bill property/casualty insurers for emergency response costs. They claim that some third party businesses are erroneously advising local municipalities that emergency service costs are covered under insurance contracts in all cases, and insurers, with the assistance of these third parties, are being billed directly by the emergency service providers.

House Bill 131 would end this practice for police department charges. However PCI is encouraging legislators to also expand the prohibition to fire and other emergency responder charges.

“PCI supports efforts to fight unilateral municipal government service fee charges backs for accident response services,” said John Eager, senior director of claims services for PCI. “Since communities base their tax structure on the cost of services provided, adding charge backs as a source of revenue amounts to a form of double taxation. Service fee charge backs are unfair to consumers and will result in higher insurance rates. The role of the police and fire department should be to serve and protect not serve and collect.”

Source: PCI

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