PCI Pleased with Hawaii’s Decision Not to Pursue Auto Repair Shop Ownership Restrictions Study

April 7, 2004

A resolution that calls for a study of the need to prohibit insurance companies from owning auto repair facilities was deferred indefinitely following a hearing on the issue in Honolulu this week.

Senate Concurrent Resolution 94 would direct the Legislative Reference Bureau to conduct the study and submit it to the Legislature 60 days prior to the 2005 session.

Testifying before the Senate Commerce, Consumer Protection and Housing Committee, PCI Vice President and Western Regional Manager Sam Sorich said the resolution was based on inaccurate or incomplete assertions and was not justified.

“We are pleased with the committee’s decision not to act on this resolution,” said Sorich. “Efforts to prevent insurers from owning repair shops are not in the best interest of consumers. Insurers have every reason to want to deliver the highest quality service possible to the car owner and to make sure the job is done quickly and properly so that the customer is satisfied. Repairs by company-owned shops are guaranteed for as long as the customer owns the vehicle. The savings realized by these insurer-owned facilities result in lower costs which, in turn, helps to lower insurance premiums for the customer.”

Sorich noted that the resolution cites two states that have passed legislation dealing with insurance company ownership of auto repairs shops – Texas and North Carolina. Sorich pointed out that the Texas legislation was the subject of a court ruling which issued a preliminary injunction against the enforcement of several provisions of the bill and the court observed that the Texas law failed to advance its backers’ stated goals of consumer protection and the promotion of fair competition. The North Carolina law simply requires an insurer to notify customers that the insurer has an ownership interest in a repair shop. Sorich told the committee that this is a reasonable requirement that PCI supports.

PCI has 158 member companies doing business in Hawaii, including 25 that write about 44 percent of the auto insurance in the state.

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