Jan. 26, 2012—The California Department of Insurance (CDI) on Wednesday held a workshop in Sacramento, Calif., to discuss proposed labor rate survey and steering regulations, according to the Property Casualty Insurers Association of America (PCI).
CDI’s proposed labor rate survey regulations create new standards on how insurers conduct surveys, which could increase costs for auto repairs, according to PCI. CDI's proposed steering regulations also inhibit insurers from informing policyholders where they can obtain repair estimates.
PCI said one of its affiliates, the Association of California Insurance Companies (ACIC), testified in opposition to the proposed regulations. ACIC requested that CDI provide information on its rationale for considering the regulation, and the number and types of consumer complaints CDI has received related to the regulation.
"Absent this consumer data from CDI, we don't understand how the regulations benefit consumers," said Armand Feliciano, vice president of ACIC. "It appears these regulations would merely benefit vendors, like auto body repair shops. Given California's shaky economy, now is not the time to propose laws that could increase the cost of auto repairs."
Labor rate surveys are voluntary under current California law, according to PCI. Insurers conduct the surveys in order to determine how much auto body shops are charging for labor in certain markets, which helps insurers to predict repair costs and establish premium levels. PCI said current California law also prohibits insurers from telling policyholders which specific repair shops they must attend. Policyholders have the choice to take their car to any shop they choose.
"CDI is attempting to legislate through the regulatory process with these proposed labor rate survey and steering regulations,” Feliciano said. "Regulations must have statutory authority granted by the legislature for them to be valid; CDI does not have legislative authority to make these policy changes. Any major policy changes like what CDI is contemplating should be considered through the legislative process.”
PCI said it is comprised of more than 1,000 member companies, which represent a broad cross-section of insurers affiliated with national trade associations.
PCI said its affiliate, ACIC, represents more than 300 property and casualty insurance companies in California. ACIC member companies write 41.8 percent of the property and casualty insurance in California, including 57.3 percent of personal auto insurance, 45.7 percent of commercial automobile insurance, 40 percent of homeowners insurance, 32.5 percent of business insurance and 43.4 percent of private workers compensation insurance.
