American Property Casualty Insurance Association
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Contact:

Brooke Kelley-Hunt

Phone:

847-553-3671

Email:

Brooke.kelley-hunt@pciaa.net

 

 

FOR RELEASE ON RECEIPT

February 18, 2014

PCI Testifies Against Maryland Auto Body Repair Legislation that could Drive Costs Higher for Consumers

ANNAPOLIS, Md.- The Property Casualty Insurers Association of America (PCI) testified before the Maryland Senate Finance Committee today expressing concerns over Senate Bill 487, which could hurt consumers by limiting insurers’ ability to manage auto body repairs and control costs.

Senate Bill 487 would prohibit insurers from requiring a repair shop use a specific vendor or process for obtaining repair parts and materials. Additionally, the bill would prohibit insurers from requiring the use of aftermarket crash parts on vehicles that are less than three years old.

“Senate Bill 487 could have negative repercussions for consumers, by making it difficult for insurers to enter into contractual relationships with body shops and use systems or procedures that are designed to control costs, increase efficiency, and deliver a better quality repair experience,” said PCI’s Regional Counsel Oyango Snell. ”Everyone, consumers, body shops, and insurers, stand to benefit by improving the repair and claims handling process. However, this legislation would stand in the way of insurers putting in place processes that will provide high quality repairs at reduced costs.”

Although there are very few aftermarket crash part options available when a one or two year old car is damaged in an accident, Senate Bill 487 prevents their use within three years of the date the vehicle was manufactured. This ban will force many vehicles to be repaired with more expensive original equipment manufacturer (OEM) parts made by the car companies.

“Aftermarket parts are a cost effective alternative to car company parts, which can be as much as 60 percent more in price,” said Snell. “Given the lower cost of aftermarket parts, unnecessary limitations on the use of these parts could result in higher repair costs and higher insurance prices for consumers.”

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $195 billion in annual premium, 39 percent of the nation’s property casualty insurance. Member companies write 46 percent of the U.S. automobile insurance market, 32 percent of the homeowners market, 37 percent of the commercial property and liability market, and 41 percent of the private workers compensation market.

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