Davis Signs Senate Bill (SB) 1988 (Speier)

October 23, 2000

Sacramento, Calif - After many hours of lobbying efforts, Senate Bill (SB)1988 was signed into law by Governor Gray Davis and will take effect on January 1, 2001. The California Autobody Association (CAA) testified in support of the legislation and worked closely with Senator Jackie Speier to ensure its successful passage. The CAA thanks Senator Speier for her efforts in supporting the autobody industry.

SB1988 (Speier), the bill supported by the CAA this year, encompasses a variety of insurance issues. Provisions affecting the auto body industry are a result of hearings conducted last October and November by the Senate Insurance Committee (which Speier heads). The hearings focused on auto body repair fraud, auto insurance fraud and vehicle thefts. SB 1988, among other things, provides the following:

• Requires the Bureau of Automotive Repair to implement a pilot program to inspect insured vehicles to ensure the repairs match the final invoice. The bill allocates $100,000 to the BAR to complete the study that is to be completed by June 30, 2003. A vehicle owner can request that his or her vehicle be included in the study, but it will have to meet certain criteria. The criteria require that the auto body repairs to the vehicle were completed within 120 days of the request to participate in the pilot program, and the repair bill was in excess of two thousand five hundred dollars ($2,500).
• Makes it illegal for an insurer to require a shop to pay the cost of an insured's rental vehicle or towing charges as condition of participation in a direct repair program. However, the insurer and the auto body repair shop may agree in writing to terms and conditions under which the rental vehicle charges become the responsibility of the auto body repair shop when the shop fails to complete work within the agreed-upon time for repair of the damaged vehicle.
• Allows a registered auto body repair shop that is denied participation in an insurer's direct repair program to report a denial to the insurance department, which shall maintain a record of all those denials for the purposes of gathering market conduct information. An insurer, upon the request of the department, shall disclose the fact that a denial was made.
• Requires insurers that conduct a labor rate survey to determine and set a specified prevailing auto body rate in a specific geographic area to report the results of that survey to the insurance department, which shall make the information available upon request. The survey information shall include the names and addresses of the auto body repair shops and the total number of shops surveyed.
• Requires insurance companies to provide each insured with an Auto Body Repair Consumer Bill of Rights, which shall, at a minimum, advise consumers that they have the right to select an auto body repair shop of their choice and that an insurer may not require this work to be done at a particular shop.
• Requires an insurer to inspect vehicles, either during the repair or after completion. The number of vehicles inspected shall be a statistical sampling sufficient to demonstrate to the department the insurer's efforts to reduce fraudulent auto body work during a calendar year.

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

DaimlerChrysler Canada Raises Crash Parts Prices

Oct.3, 2000 Hamilton, Ontario

On October 2, 2000 DaimlerChrysler Canada quietly and significantly raised the prices of many of the company's collision repair parts. According to a report from HARA (Hamilton District Autobody Repair Association) Chrysler dealership parts managers say that the price increases will have a chilling effect on the sales of some of their parts, but advise that a number of parts prices have only had a small change. They have not been supplied any "weighted" averages by Chrysler.

One popular example is part #GN05-SS8, the rear bumper cover for the 1996 to 2000 Chrysler minivan - one of the most popular vehicles on the road today. The price jumped from $120 (Cdn) to $523 (Cdn) - an increase of over 435 percent.

According to the HARA report, Chrysler has been traditionally very competitive with aftermarket collision repair parts in Canada, but dealership parts managers say that may be history now. One manager noted that many of the Chrysler parts that have a comparable aftermarket part that is a close match have remained at the same price but parts that only Chrysler makes have been increased substantially.

Dealers advise that they have been told that Chrysler wants to follow other OEM manufacturers, or that they want to have world price on their products and are working to cut down on American customers buying at low Canadian prices and reselling in the U.S. at higher dollars. Either way, observes HARA, Chrysler appears to have opened an opportunity for aftermarket manufacturers to be more aggressive in Canada, just at a time when lawsuits over the ability of aftermarket parts to repair a vehicle to pre-accident condition are before the courts.

It is expected that aftermarket manufacturers and suppliers will showcase the Chrysler parts price increase as a reason to continue sales of aftermarket parts in Canada to maintain competition in the marketplace. Ironically, CTV National News featured the Chrysler bumper cover in its news segment on June 12, 2000, identifying that the aftermarket part appeared to not have the same strength, number of welds, weight, or bolt holes as the original equipment part.