PCI: Restrictive Ill. Auto Body Shop Bill Not Positive

February 25, 2005

An Illinois bill that would require auto insurers to pay whatever any given body shop demanded for repairs would reportedly result in skyrocketing loss costs for insurers and higher premiums for drivers.

H.B. 2330 is “anti-consumer and anti-competitive,” said Greg LaCost, senior counsel and regional manager for the Property Casualty Insurers Association of America (PCI), testifying at a Consumer Protection Committee hearing in Springfield. “It would sever the customer service relationship between consumers and insurers, and result in higher costs for everyone.”

The bill would also reportedly prohibit insurers from recommending a body shop unless requested by the policyholder; forbid insurers from limiting or discounting the reasonable basis of repair costs if the policyholder chooses another repair facility; provides civil penalties for violations, and makes insurers liable to claimants and repair facilities for damages from violations.

“It’s common practice to prohibit insurers from requiring that a specific repair be made at a specific repair facility,” said LaCost. “But this bill goes further by demanding that insurers pay whatever any given shop demands. The resulting loss costs in Illinois would skyrocket and consumers and insurers would feel the effects.”

Under current Illinois law, consumers benefit from the “physical damage repair option,” which allows them to choose their own body shop for vehicle repair. If they choose a shop their insurer recognizes as reputable, the insurer generally waives its own estimation process and allows the consumer to go directly to the shop. “If H.B. 2330 becomes law, more internal estimates will be required, which would slow down the repair process,” said LaCost.

Additionally, the bill’s restrictions on suggestions and recommendations compromise the contract between insurers and policyholders and appears to violate the insurers’ Constitutional right of commercial free speech, according to LaCost.

“This bill is woefully out of line with laws in the rest of the country and is not in the best interest of Illinois consumers or businesses,” said LaCost. “It would increase potential fraud and decrease competition. PCI hopes that lawmakers will retain Illinois’ current competitive insurance environment and reject H.B. 2330.”

Rep. Thomas Holbrook (D., 113th Dist.) testified at the hearing that he is willing to work with insurers and the business community to hone the bill’s language to avoid these problems.

“PCI looks forward to working with Rep. Holbrook in achieving a workable solution to the body shop issue,” added LaCost.

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