At the state level, a broad array of legislation is introduced annually concerning issues that impact our industry such as anti-steering, Direct Repair Facility, aftermarket parts, and claim practices. At the national level, the "Motor Vehicle Owner's Right to Repair Act of 2003" is pending in the U.S. House of Representatives and, the "Insurance Consumer Protection Act of 2003" is pending in the U.S. Senate, among other federal initiatives.

Generally, the federal government has deferred to the states on issues of importance to our industry. But the federal government is beginning to play a more prominent role. Is it preferable that the states handle regulatory issues for the collision repair industry on their own? This would ensure that laws are passed that are appropriate for businesses and consumers in a given state-what's good for Florida may not be right for Oregon. Or should the federal government play a more prominent role to ensure a level playing field and more standardization? The outcome may have ramifications for all segments of our industry. 

Historically, the McCarran-Ferguson Act has provided a limited exemption to the insurance industry from federal antitrust laws. The act provides that the Sherman Act, the Clayton Act, and the Federal Trade Commission Act apply to the business of insurance to the extent that state law does not regulate such business. The act also provides that the business of insurance shall be subject to regulation and taxation by the states. After passage of the act in 1945, all states enacted some form of rate regulation to qualify for the exemption and now have a wide array of statutes and administrative regulations enforced by local regulatory agencies.

So, just what are the issues in the debate over state versus federal regulation?

They are many and varied, depending upon whom you ask. There are those who favor federal intervention in the hope it will bring uniformity to the regulatory arena instead of the existing patchwork of differences among the state statutes and regulatory agencies. On the other hand, there are those who want no part of a distant federal bureaucracy. Similarly, not everyone may desire state regulation, but state regulators are more likely to know the local issues and be receptive to what is best for home-state people and businesses, even when difficult decisions have to be made. 

A collision repair shop owner who does business exclusively in one state would most likely prefer to be governed by local regulation rather than have to deal with the federal government, or worse yet, with both governing entities! But one must also consider federal efforts like HR 2735, the Motor Vehicle Owner's Right to Repair Act, which would enable public access to information that is necessary to diagnose, service, or repair a vehicle if enacted. That would be a good thing for consumers, repair facilities, and for insurers.

Different rules and regulations in the various jurisdictions pose a great burden for insurers doing business in multiple states. The dual charter, or federal charter approach, may appeal to such insurers. The Insurance Consumer Protection Act of 2003 (S1373) introduced by Senator Hollings (D, South Carolina) would establish the "Insurance Regulatory Commission" within the Department of Commerce. It would have far reaching regulatory authority over many aspects of insurance operations from approval of rates, to market conduct examinations, licensing, and to the pre-emption of state laws, including claims and trade practices regulations which often touch on the collision repair industry and auto insurers.

Such federal rules could either help solve the uniformity issue or simply add another layer of regulation to what already exists at the state level. No matter what the outcome, in the long run the message to state regulators is clear-more uniformity is needed to simplify compliance issues and to minimize administrative costs while still providing necessary protection for consumers. That protection includes financial stability of insurers as well as reasonable and fair underwriting and claim practices.

Federal involvement in insurance and related matters is not new, though direct intervention in collision repair issues has been infrequent. Consider federal legislation on product liability, asbestos, medical malpractice, punitive damages, class action lawsuits, toxic waste and the Superfund, health insurance, etc. There have been federal studies on auto replacement parts and aftermarket parts, recycled air bags, salvage titles, homeowners insurance availability, mold, insurance fraud, agent licensing, market conduct examinations, etc.

No matter where you stand on federal versus state regulation, it is not all good or all bad. Striking the right balance that enables businesses to freely operate and that provides appropriate consumer protection while minimizing duplicative or conflicting local jurisdictional rules and reducing compliance costs should be the overarching goal.

So far, the federal government has deferred to the states on most issues. The federal government has intervened in areas where consistency is required in matters that cross state lines and on national problems that one state cannot effectively regulate. Encouraging uniformity in regulations among states where it makes good business sense and seeing that consumers are treated fairly in a broad sense is desirable and may require federal regulation if it is to be achieved. The NAIC, ASA, and various industry trade groups can work toward these goals and continue involvement at the state level to bring about needed reforms.

Mike Barber director of regulating affairs at CCC Information Services Inc. For questions on industry legislation, please contact Mike Barber at mbarber@cccis.com.