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Letter to the Editor

California Autobody Association Sponsors SB 1648 (Speier), Which Makes It Illegal For Insurance Companies To Own Auto Body Repair Shops

California Autobody Association Sponsors SB 1648 (Speier), Which Makes It Illegal For Insurance Companies To Own Auto Body Repair Shops SACRAMENTO, Ca. -- Senator Jackie Speier has introduced SB 1648 at the request of the California Autobody Association.

SB 1648 would make it unlawful for an insurer to acquire an ownership interest in an auto body repair shop in the state of California. The bill would allow the insurer that has a current interest in a shop to divest itself within 3 years of the effective date. The bill would also make it unlawful for an insurer to offer an incentive or provide compensation to any person for the purpose of rewarding that person for referring an insured to an auto body shop that the insurer maintains an ownership interest in.

The recent purchases by Allstate Insurance in the Sterling collision facilities and the Auto Club of California in the Caliber Collision Repair Centers was one of the primary reasons that Senator Speier and the CAA took such action.

"The CAA recently surveyed its member shops and it was overwhelming that they felt this was a conflict of interest for insurance companies to own auto body repair shops," stated Executive Director David McClune. "Everyone we discuss this issue with, consumers, manufacturers, suppliers, say the same thing: 'Shouldn't that be illegal? It's similar to having insurance companies owning the doctors in the medical profession.' CAA believes that insurance ownership in repair shops is clearly not in the best interests of consumers."

The California Autobody Association is a not-for-profit organization comprised of approximately 800 collision repair businesses and associated professionals belonging to the collision repair industry.

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