AAI Says Mich. Bill Would Restrict Aftermarket Parts

March 27, 2003

A Michigan bill that would place onerous restrictions on insurers ability to prescribe auto repair shops and use aftermarket parts would increase claims costs, ultimately hurting consumers, according to the Alliance of American Insurers (AAI), which represents 340 property/casualty insurers.

HB 4127 would prohibit insurers from recommending or suggesting an insured use a particular automobile repair shop or suggesting use of certain replacement parts.

Allowing insurers to recommend repair shops helps to ensure quality repairs. In an effort to control costs many insurers have developed lists of repair shops that they have pre-screened for quality and costs. Insurers typically guarantee the performance of recommended shops.

These relationships have improved efficiency and lowered the cost of automobile repairs while improving customer satisfaction, according to the Alliance. A 1998 study by the Insurance Research Council found that over half (55 percent) of respondents had confidence in the quality of service provided by a vehicle repair shop approved by their insurer.

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