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Letter to the Editor

Response to NAII Statement Accusing Body Shops of Fraud

In September 2002 the National Association of Independent Insurers (NAII) issued a statement about how "happy" they are that the California Senate Bill 1648- to outlaw insurer-owned shops- failed to pass.

The NAII spokesman, Sam Sorich, NAII vice president, said that "Collision repair shops do not deserve the protections from competition" that this bill provided, given their "characteristically high rate of fraud."

These remarks are most disturbing. What about the fraud committed daily by the powerful insurers in this country? How often do they commit fraud against body shops, auto glass shops and even their own policyholders?

Collision repair facilities- body shops and auto glass shops- are not asking for protection from competition. They are simply asking for a level playing field, which does not exist today due to the insurer-control of the collision repair process.

Study these words by Mr. Sorich. "SB 1648's focus was all wrong. Instead of protecting consumers, the bill protected existing repair shops from competition, which insurers' investments help to foster. Repair shops, which today are characterized by a 43 percent fraud rate, are not entitled to statutory protections."

Those are fighting words Mr. Sorich.

SB1648, which tried to outlaw insurer-owned collision repair facilities, failed after numerous previous successes in the California legislature. SB 1648 passed the Senate and the Assembly Insurance Committee, but failed to pass on the Assembly floor.

It failed because of the tremendous pressure exerted on legislators by insurance industry lobbyists. Some heavy arm 'twisting by the insurers, along with the multi-million dollar public relations firm hired by Allstate, defeated this bill SB1648 would actually help consumers receive more quality repairs if passed into law.

The situation that body shop owners and glass shop owners now face is being faced in large part because we allowed it to happen. Most of us sat on the sidelines and took care of our own business while the insurance industry was plotting a takeover of the collision repair industry. How active are you in your association? Nearly all insurance agents and adjusters are members of associations and they support those associations with sizable contributions.

The financial contributions from the insurance industry to the career politicians translate into political power used against the collision repair industry. The NAII, other insurance associations and individual insurance companies are politically active in all 50 states and at the federal level.

The insurance companies and their associations, such as NAII, have Political Action Committees (PACs) that hand out hundreds of thousands of dollars to their friends in state legislatures and in congress. This money is raised from insurance company employees and policyholders.

The NAII PAC raised about $340,000 during the 2000 election cycle. That money was given out in hundreds of state elections and about 135 congressional races. The NAII and other insurer groups are only giving this money to those candidates who will support the insurance industry and insurer control of the collsion repair process.

Follow the money. Then we can clearly see why SB1648 failed to pass the final vote in California.

Here in North Carolina, Nationwide Mutual Insurance Company contributes about $300,000 per election cycle (every 2 years) to their "friends" running for office. If the collision repair industry does not join forces and so something to offset this insurer political power, the current situation will only get worse.

Mike Causey is a lobbyist for the Independent Auto Body Association (IABA) and the North Carolina Glass Association. A Registered Lobbyist in North Carolina, South Carolina and Virginia, Mike is a writer and speaker on collision repair, insurance and consumer related issues and legislation.

©2002 Collision Repair Industry INSIGHT
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