Parts restrictions, other issues can hamper prospects for OEM repair procedure mandates
The effort to enact state legislation this year calling for the use of OEM repair procedures for collision repair claims has had a rocky start.
The Automotive Service Association (ASA) and the Alliance of Automobile Manufacturers announced last summer that their legislative priority for this year would be new requirements in several states for shops and insurance companies to view automaker repair procedures as more than just a “recommendation.”
“There’s been this belief [by some] that somehow ‘accepted industry practices’ are good enough,” Wayne Weikel, senior director of state government affairs for the Alliance, said last year. “The auto manufacturers are here to say it’s not. It’s not good enough.”
Legislation incorporating OEM repair procedure mandates has been introduced in at least seven states so far this year, although not all have been based on the model legislation that ASA and the automakers drafted.
The Nevada Assembly Commerce and Labor Committee held a hearing in March on a bill (AB 173), for example, that would prohibit an insurer from requiring a shop “to repair a motor vehicle in a manner which is contrary to the recommendations of the manufacturer of the vehicle.” But the OEM repair procedures aspect of the legislation was hardly mentioned during the hearing, which focused primarily on the fact the bill also would prevent any insurer from requiring the use of non-OEM parts to repair any vehicle that is less than 60 months old.
The committee did not hold a vote on the measure, but instead asked the insurers opposing the bill to return to the committee with any safety data they have showing whether non-OEM parts affect safety in subsequent crashes, and what effect there has been on premiums in any states that have already passed similar limits on non-OEM parts use.
Also this year, a Montana Senate committee tabled a bill that would have required shops to “conduct vehicle repairs in accordance with directives by the OEM,” including automaker directives related to choice of parts.
Legislation introduced in Texas (and backed by the Auto Body Association of Texas) would prohibit insurers from disregarding “a repair operation or cost identified by an estimating system,” or any process or procedure recommended by the automaker. But the sweeping bill also places new restrictions on the use of non-OEM parts, and seeks to strengthen the state’s anti-steering regulation by prohibiting insurers from “intimidating, coercing or threatening” anyone (or offering an incentive other than a warranty offered by a shop) to induce them to use a particular repair facility.
It’s this incorporation of other issues beyond mandated use of OEM repair procedures that may hurt some of the state bills’ chances, according to Aaron Schulenburg of the Society of Collision Repair Specialists (SCRS). He said the industry could have more success in enacting legislation calling for the use of OEM procedures if such proposals aren’t coupled with attempts to address other industry issues like steering or non-OEM parts. Doing so, he said, “opens the door to opposition that might not enter into the conversation if we focused just on the need to follow [OEM repair] procedures.”
Indeed, one such narrowly focused bill was passed by the New Hampshire House in March. It would require insurers to pay all claims based on repairers’ use of OEM repair procedures. The bill specifically states, for example, “If the repair procedure or specification from an original equipment manufacturer includes a directive to conduct a scan, calibration or diagnostic test of a vehicle’s electronics systems before or after the commencement of repairs, such directive shall be considered as a required part of the repair procedure. The insurer shall reimburse the repairer if the repairer follows the directive.”
In some cases, the automakers have attempted to lessen opposition to bills perceived as mandating use of OEM parts in addition to OEM procedures. The Alliance suggested an amendment to a bill (HB 7266) introduced in Connecticut this year that would prohibit any insurance policy from requiring a shop to deviate from the “guidelines, procedures, recommendations and service bulletins” issued by the automakers, and would prohibit shops from deviating from that OEM information as well. Weikel urged Connecticut lawmakers to amend the bill to make it clear it is not an effort to limit the use of non-OEM parts.
“Based on our advocacy for this issue in other states, I am aware that some will argue that automaker interest in this issue is only to sell more genuine OEM parts,” Weikel said at a hearing in Connecticut. “While [automakers] absolutely believe all consumers would be best served by using genuine OEM parts on their vehicle, that is not our fight on this bill. This legislation is about safe and proper repair for all vehicles after a collision.”
The automakers’ suggested amendment states that “regardless of any language contained in an OEM repair procedure to the contrary, the use of replacement parts in an insurance-funded repair shall be governed solely by Connecticut’s existing law on the subject.”
Still, there are examples of bills narrowly focused on procedures that haven’t moved forward. The Alliance of Automotive Service Providers of Minnesota, for example, in March said the state lawmaker sponsoring an association-backed bill, — which would have made it an unfair claims practice for an insurer to refuse payment for a repair procedure called for by an OEM — pulled the bill from a committee’s agenda citing “a lack of agreement between the insurance industry and the repair industry.”
Conversely, some bills that also tackle issues beyond just OEM repair procedures have seen at least some forward progress. An Illinois Senate committee in March passed a bill (SB 2104) that addresses both OEM repair procedures and parts. The bill states, “No repair facility or installer may use repair specifications or procedures that are not in compliance with the original equipment manufacturer for those parts.” It also would require written consumer authorization for any use of non-OEM crash parts.
Weikel has said he doesn’t believe OEM procedure mandates will need to be enacted in every state to change behavior nationally.
“It is ridiculous that we have to go pass a law to get proper repairs to be made in the marketplace, and to have proper repairs paid for in the marketplace,” he said. “I don’t think we need to pass a law in all 50 states. All we need is insurance companies to change what they are doing and how they are handling these repairs. In the short term, we are going to push this legislation, but we are hoping this is something that corrects itself and will not require going to every single state just to get the repairs that consumers deserve.”