Anti-steering legislation varies from state to state. Some states allow recommendations provided the insurer gives notice to the vehicle owner that the owner may still choose the repair facility; some allow insurer recommendations only when asked; and some prohibit recommendations altogether.

When an insurer owns or has an interest in a repair facility, some legislation requires disclosure of that interest to a vehicle owner. Other laws outright prohibit ownership of repair facilities by insurers. Texas passed such legislation in September 2003, and similar bills have been introduced in a number of other states subsequent to that time.

Texas House Bill 1131 amended Title 14 of the Texas Occupations Code by adding Chapter 2306, “Dealing with Insurer Interests in Repair Facilities.” The law prohibits an insurer from owning or acquiring an interest in a repair facility unless that facility was open for business or construction had commenced on April 15, 2003. The law also requires that certain notices be posted in those repair facilities that remain insurer owned and prohibits certain other practices.

This legislation has resulted in litigation challenging the law's legality, which has yet to be concluded. The outcome may influence efforts in other states to enact legislation concerning insurer ownership of repair facilities, though there is some thought that such ownership is not likely to become widespread regardless of the outcome of the litigation. Anti-ownership bills that resemble the Texas law have been introduced in Arizona, Hawaii, Iowa, Michigan, Minnesota, Missouri and New York in the past few years. Indiana 2005 Senate Bill 271 and Washington State 2005 House Bill 1620 are recent proposals that would prohibit insurer ownership and require divestiture of any such interest.

Some owners of repairer facilities believe that insurer ownership of repair facilities is in conflict with the consumers' right to choose where they have their vehicles fixed. On the other hand, some insurers believe they should not be denied the choice of serving their customers by providing their own repair facilities that help control the cost of repairs and the ultimate cost of insurance.

In addition to the developments described above with respect to repair facility ownership, the following anti-steering laws have been enacted in the various states since July 1, 2003.

• Arizona House Bill 2468—Effective 08/25/04
• California Senate Bill 551—Effective 01/01/04
• Colorado House Bill 1253—Effective 04/01/03
• Michigan House Bill 4127—Effective 07/08/04
• Nevada Assembly Bill 367—Effective 10/01/03
• North Carolina House Bill 986—Effective 01/01/04
• Texas House Bill 1131—Effective 09/01/03
• Virginia House Bill 2267—Effective 07/01/03

Similar anti-steering bills were introduced in the 2003/2004 legislative sessions of a number of states, including Nebraska and Pennsylvania. This year, Oregon 2005 Senate Bill 210 would require repair shops to disclose any DRP relationship with insurers.

This article is not intended as legal advice. Readers should seek specific legal advice before acting with respect to the subject mentioned here.

Mike Barber is director of regulatory affairs at CCC Information Services Inc. For questions on anti-steering bills, please contact Mike Barber at mbarber@cccis.com.