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Letter to the Editor

Birthplace of State Laws

You are probably familiar with the organizations behind industry acronyms like I-CAR, ASA, and CAPA. But are you paying attention to NCOIL?

If you think your work in the collision industry is not likely impacted by “NCOIL” – an organization that may be largely if not entirely unfamiliar to you – think again.

In California this year, for example, legislation was introduced that would prohibit insurers from using non-OEM parts that are not certified to be "at least of like kind and quality to the part being replaced in terms of fit, function and finish." California Senate Bill 350 also states that all parts certified by any entity recognized by the American National Standards Institute are to be considered under the law as being of like kind and quality to OEM.

Like shop- and insurance-related bills in any number of states, California SB 350 – now on hold for further consideration until at least next year – can trace its roots back to NCOIL, the National Confer-ence of Insurance Legislators. NCOIL brings together state legislators from around the country to craft and discuss model legislation that those lawmakers can take home for possible introduction in their states. The California non-OEM parts legislation has elements of a model bill that NCOIL has been kicking around for more than a decade (see sidebar).

At its most recent meeting, held in July in Philadelphia, NCOIL tackled three topics that touch nearly every segment of the collision industry: airbag fraud and use of salvage airbags, non-OEM parts, and steering. Although it chose to take no action on either of the model bills under review – instead moving to continue the discussion at its next meeting – lawmakers on the committee drew some interesting conclusions from the testimony at the meeting.

Salvage airbags steal the spotlight

Much of the time scheduled for discussion of the two proposals at the meeting in Philadelphia focused on the airbag model bill, which would set felony penalties for airbag crimes; would require shops to show invoices to prove they had purchased new replacement airbag modules; and require shops to maintain (and make available to insurers or customers) records on airbags they install for at least five years.

Representatives of the Automotive Service Association (ASA) and the Society of Collision Repair Specialists (SCRS) pointed out that the language of the bill leaves open the possible use of salvage airbags, a subject that then became the focus of much of the rest of the discussion and clearly was a concern for some lawmakers on the committee. "Leading into the discussion, it appeared that the committee thought this airbag bill was good consumer protection and I don't think they anticipated too much opposition," Aaron Schulenburg, SCRS executive director, said. "After hearing our testimony - and the discussion focused more closely on the language that seemed to condone the use of salvaged airbags and the safety concerns around that - I think they realized it wasn't as cut-and-dried as they thought it might be."

In putting off further discussion of the model bill until NCOIL's next meeting on November 19-22 in New Orleans, committee chairman Rep. Charles Curtiss of Tennessee noted that rather than the model bill under consideration, it might be more effective just to make it illegal to install a salvage airbag; that, he said, might reduce not only fraud, but also airbag theft because it would reduce the market for stolen airbags.

A model nobody likes

The second model bill under consideration at the NCOIL meeting in Philadelphia focused on steering, using language similar to New York's anti-steering law, which prohibits insurers from recommending or suggesting a shop unless requested by the insured.

But the proposal also included seemingly unrelated language that would indicate that non-OEM parts certified by the Certified Automotive Parts Association (CAPA) are of like kind and quality to OEM parts.

The combination of the two elements gave virtually everyone testifying in Philadelphia something not to like about the proposal.

Pennsylvania shop owner Harry Moppert, representing ASA, told the committee that, "Aftermarket crash parts, certified or not, do not assure consumers or repairers that they are equal to OEM." With less than 3 percent of non-OEM parts being certified, he said, "there is little assurance from any data on quality and safety that can be gleaned for policy discussion."

In its opposition to the bill, SCRS focused on weaknesses in the anti-steering language that were also noted in a press release put out prior to the meeting by the New York State Auto Collision Technicians Association. Both associations were particularly critical of the portion of the anti-steering model that requires a "pattern of violations" before an insurer in penalized.

"We already have that scenario now and it's a debacle," Mike Orso, president of the association, said. "How many violations are enough? Ten or 100?”

SCRS Schulenburg echoed that sentiment when testifying at the NCOIL meeting.

"If the law identifies the practice as illegal, it should be illegal on every account," he said. "SCRS believes there should be a penalty involved in each violation, (a penalty) that increases if the violations continue."

Repairers were not the only one to find some aspect of the proposal unacceptable. The Property Casualty Insurance Association of America opposed the anti-steering potion of the bill, saying claims costs are 16.1 percent higher in states with more restrictive anti-steering regulation such as those in the proposal.

CCC Information Services opposed a section requiring some disclaimers about parts be included on the first page of an estimate (saying the programming required to move such disclosures from the end of the estimate where they are currently placed would require an "enormous investment of time, effort and expense").

Even some non-OEM parts industry representatives at the meeting opposed portions of the proposal.

"NCOIL has been working on aftermarket parts model legislation for about a decade, and after all that time they still have something that everyone opposes," one observer at the meeting noted. "Why don't they just let the issue die?"

As with the airbag model bill, further discussion of the proposal was put off until NCOIL's November meeting.

Deserving of attention

Given the outcome of the most recent meeting and NCOIL’s at-times plodding pace, it may be tempting to dismiss it as playing only a peripheral-at-best role in the industry. But even its failure to adopt model non-OEM parts legislation, for example, hasn’t prevented it from having an influence. Calfornia’s parts legislation this year – and similar legislation introduced but not passed in North Dakota in 2003 – are just two examples of state bills that can be traced back to even unfinished work at NCOIL. The fact that the topic resurfaced at NCOIL again this year at a time when many suspect State Farm is re-examining its stance on non-OEM parts cannot be overlooked.

NCOIL also has been quick to weigh in on the revived debates about federal regulation of insurance (something it opposes) and the continued value of insurers’ anti-trust exemption under the McCarran Ferguson Act (something NCOIL has supported).

So while you may not choose to make a trip to New Orleans to possibly be given only two minutes to testify at NCOIL’s next meeting, you may want your association representatives to attend and it may be an organization whose activities you want to track a little more carefully here and in other trade publications.   o

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