PCI Denounces Okla. Bill Promoted by Salvage Dealers

March 29, 2006

Property Casualty Insurers Association of America announced it took aim at a bill promoted by salvage dealers in Oklahoma that the association says would create an environment of collusion.

House Bill 3085 by Bill Case (R- Midwest City) would allow salvage dealers to know winners of Internet auctions as well as the names of the insurance companies that are selling the wrecked vehicles.

“This seems like a simple bill,” said Joe Woods, assistant vice president and regional manager for PCI. “But in reality, it creates an environment ripe for collusion, which could hurt every Oklahoman who buys auto insurance or used auto parts in the state.”

According to the United State Department of Justice, delineating suppliers and knowing winners of auctions are two key components of collusion. An example of collusion is bid rigging. Bid rigging drives down the cost of wrecked or salvage vehicles, thus lowering the amount insurance companies can recoup from their losses when they pay an insured for a total-loss vehicle. This inability by insurers to recoup claims losses could affect premiums paid by consumers.

“While not all salvage dealers seek to participate in collusion, it is difficult to identify any other reason for this bill,” said Woods. “Supporters of this bill claim it will help regulatory agencies monitor Internet salvage vehicle auctions. However, the information this bill requires to be disclosed to the general public is already provided to the relevant regulatory agencies. The Internet is a great tool for promoting the free market, but allowing a small group of auto dismantlers to corner the market on used parts for particular vehicles would hurt Oklahomans – both in insurance premiums and the amount they have to pay for used parts when they fix their vehicles. HB 3085 is simply bad public policy.”

Woods went on to say, “Publication of this information on the Internet will provide one stop shopping for auto theft rings that will be able to use the information to “clone” stolen vehicles with this handy new tool. State regulators already have access to this information so there is no need to provide this Internet cafeteria line for auto theft rings.”

HB 3085 has been passed by the State House of Representatives and was to be heard in the Senate Business and Labor Committee March 27.

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