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| Industry Roundtable Interview with Ron Pyle/ASA and John Eager/NAII |
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| By Michelle Hellyar |
 Just about every state has passed or is considering legislation that affects the collision repair industry. From anti-steering laws to Direct Repair Facility restrictions to aftermarket part disclosure, this new legislation is destined to play a large role in the evolution of our industry. As the governing body for some of the most important segments of the collision repair industry, CCC sits down with Ron Pyle, president of the Automotive Service Association (ASA) and John Eager, senior director of claims services, of the National Association of Independent Insurers (NAII) to understand their respective organization's views on the current legislative environment.CCC UpFront: Is there a trend toward increased regulation of the industry? If so, is that a positive development in your view? Why? Ron Pyle for ASA: There is a trend toward increased regulation. I don't think this trend is unique to our industry, but rather it reflects a natural evolution of government in our society. Government does not grow smaller it grows larger. I cannot make a general statement that increased regulation is either good or bad. As government entities propose legislation and regulation, each proposal has to be analyzed on its own merits. From ASA's perspective, if legislation will truly improve the business environment for independent repair professionals, or ensure motorists have the freedom to make their own decisions about the repair of their vehicles then legislation can be positive. John Eager for NAII: Regulation of the industry has gone in cycles. Disclosure legislation and regulation, for the most part, has been supported by the industry. Also, legislation favoring consumer options for auto repair, such as direct repair programs (DRPs), has been supported by the industry. NAII supports approaches to provide prompt and efficient service to the consumer. For example, the use of integrated databases (with multiple data sources) to help determine vehicle evaluations and provide tools for the adjuster to settle claims is a positive. So to answer the question, some areas of the industry have seen increased regulation and others have not. What do you believe to be the primary factor driving the current wave of legislation? ASA: Fear. If legislation is generated from a special interest representing a particular business sector, there is most likely a threat to that sector's existence or, at the very least, status quo. If it's a consumer-driven or populist form of legislation, it's likely a sizable group of individuals felt one or more of their freedoms was being threatened by entities against which they felt powerless. When that's the case, the government is often looked to as the protector; the thing that will save us from our fears. NAII: Current legislation, as it always has been, is driven by consumer issues and parties that have an interest in the outcome of a given legislative bill or regulation. Sometimes current events can push the legislative agenda in response to catastrophes, such as in the September 11 disaster or the California Wildfires. What key pieces of recent legislation do you think may have a significant impact on the industry? In what way? ASA: The insurer-owned shop legislation in Texas could have a significant impact. First, the legislation was enacted. A majority of Texas legislators determined insurance companies should not be allowed to open any more collision shops in their state. Insurance companies owning shops presents a conflict of interest. Second, the law is being challenged in court. The decision that is ultimately reached in this case could impact the 49 other states' decisions on whether or not to enact similar laws. Because Texas is one of the most populated states, it is one of a handful of bellwether states that significantly influences the nation's agenda. NAII: Disclosure legislation and regulation has helped spawn competition in the marketplace by further informing consumers of choices they have during the adjustment process. Some current legislative discussions have been pointed toward towing and storage abuses. These abuses impact the cost of the claim and the efficiency and effectiveness of the automobile repair. Salvage legislation that provides the consumer and the insurer with clear notice requirements can help make the adjustment process more consumer-friendly, while improving efficiency. What are the possible long-term effects of increased legislation and regulation for collision repair-related businesses? ASA: Collision repair professionals will be impacted by the ever-increasing amounts of compliance regulation. Regulation covering important issues such as worker health and safety, zoning and the environment all impact our industry. Compliance regulation will consume more of a shop owner's or manager's time on a daily basis than any legislation governing direct repair programs or aftermarket parts will. NAII: Depending on the type of legislation and regulation, especially if it is onerous, competition can be blunted and repair costs can be driven up, along with insurance premiums. Do you think there are industry issues that should be addressed through legislation and regulation? If so, what might those issues be? ASA: Ideally, issues or conflicts would be resolved outside the legislative realm. A great example of this is the service information agreement whereby automobile manufacturers agreed last year to make available to the aftermarket complete repair and training information. Working outside government's realm is not always possible, though. Sometimes, in our capitalist environment, any legislation is considered bad legislation. I don't believe that is an absolute. Legislation that truly protects the health and safety of individuals is good. Legislation that ensures fair and equitable commerce is good. What's vital, however, is that those who stand to be most directly impacted by proposed legislation or regulation must interject themselves in the governing process. I can assure you legislators and regulators don't know the collision repair industry as well as we do. ASA commits significant human resources to monitor federal and state regulatory activities. When we see something that could potentially impact our members, either positively or negatively, we issue a call to arms and develop a groundswell response to the issue at hand. NAII: Many times industry issues can be addressed through trade groups and industry forums such as CCC UpFront. Other forums such as those carried out by NAII, CIC, I-CAR, and ASA help address industry issues as well. Do you think some existing legislation or regulation needs to be changed? If so, what is the issue and why do you think it should be changed? ASA: One issue of concern to ASA is aftermarket parts disclosure. ASA is not opposed to aftermarket parts. ASA believes a motorist should have a choice when selecting parts for the repair of his or her car. ASA believes a motorist should be informed of the various types of parts available for a repair and their differences. Armed with that information, the vehicle owner should have the right to make a knowledgeable decision on which parts are used in the repair process. NAII: Currently NAII tracks over 10,000 pieces of legislation a year and has legislative initiatives in the area of class action lawsuits, fraud, and unfair claim practices laws and regulations. What type of recent legislation or regulation may affect consumers as they go through the collision repair experience? ASA: Notice and consent legislation has a significant impact on consumers, many of whom do not even know that there is such a thing as aftermarket collision parts. Notice and consent empowers vehicle owners to make their own decisions about their own cars. It's not arbitrary. It's not bureaucratic. It's motorists making the best decisions for themselves by weighing all the factors - appearance, cost, safety, and quality - at a given point in time. NAII: One example of legislation affecting consumers is onerous proposed changes to the California unfair claims handling laws and regulations. Do some recent regulations affect the relationship between insurers and repairers? If so, how? ASA: I think the insurer-owned shop legislation in Texas puts a minor strain on the insurer-repairer relationship. In the long term, it will prove beneficial because both sectors will be able to focus on their core businesses. Insurance companies can continue underwriting policies and handling claims and collision repairers can fix cars. Both sectors will be the better for it and, consequently, so will the mutual customers they serve. NAII: Yes, by dismantling the claim adjusting process. If consumers cannot work with their insurance companies to successfully resolve their claims then both the consumer and the insurance company lose. What is the ideal role for the federal government in the collision repair industry? ASA: This question can be answered in one word: safety. The federal government has been the entity that has required most of the safety features on cars today. We have no way of knowing how many lives have been saved by all the federal automobile safety requirements. Are those safety features ever compromised as a result of a collision? How can we ensure collision repairers have everything at their disposal that's needed to return safe cars to our roads? Although this is not the only role of the federal government in the collision industry, it is certainly the most important. NAII: The federal government's role is one of primarily setting, maintaining, and enforcing safety standards. What is the ideal role for state and local governments in the collision repair industry? ASA: Generally, in the United States, insurance is regulated by the states. Since the vast majority of collision repairs are paid for by insurance claims, the greatest impact states can have is to enable insurance companies to insure and collision shops to perform quality repairs. Issues such as environment and safety are really everyone's responsibility. We should all be conscientious in our care for one another. NAII: The role of state or local government is insuring good business practices and reviewing compliance with the state unfair claims practices laws and regulations. Since 1951, the Automotive Service Association (ASA) has been the leading organization for owners and managers of automotive service businesses that strive to deliver excellence in service and repairs to consumers. The National Association of Independent Insurers (NAII) is the nation's largest full-service property/casualty trade association representing more than 715 members. Michelle Hellyar is a strategic manager at CCC Information Services Inc. |