If history serves as any kind of accurate indicator, there is a well-developed picture of future legal issues that relate to the automotive claims and collision repair industries. Or, in the words of Property and Casualty Insurers Association of America (PCI) Head Counsel Robert Hurns: “The more things change, the more they stay the same. That adage seems to be a good fit.”

Both Hurns and PCI Senior Director of Claims, John Eager, have spent a lot of time gathering information about issues facing the industry. That information is amassed through local counsel in all 50 state capitals keeping an eye on the issues. While it is understood that each state has its own areas of focus and agenda, this article highlights legislation on a national level.

Current Issues—Some Fade, Some Stay
A handful of current legal issues—most notably diminished value, steering and aftermarket parts concerns, seem to be reaching a certain level of resolution. “In respect to top issues, the trend for the last three years or so seemed to be diminished value,” said Eager. “That seems to be falling to the wayside. Only 10 states have laws allowing recovery for diminished value, and many of the class action suits filed have been dismissed.”

Steering legislation, also at the forefront of the legislative docket for several years, seems to be fading away as well. “That issue has seemed to tail off quite a bit,” said Hurns.

Aftermarket parts, however, does seem like a perpetual concern, said Eager. “It’s been around since the ’80s—there’s an ebb and flow to it. At one point in the ’90s, there were 29 states tackling the matter.” Some of the aftermarket parts issues included: federal safety standards compliance; part-type definitions; a written estimate identifying the type of part used; and, written owner consent.

New to the Table
A handful of new topics have a strong likelihood of gaining national prominence—most of them borne out of 2005’s catastrophic weather events. One of the first concerns to surface was vehicle salvage. In an incredibly short amount of time, Louisiana was faced with a “to-date” estimate of 570,000 salvage vehicles—a vast majority of them flood-damaged. What made this event unique is that the flooding brought along the unfortunate byproduct of health contamination concerns.

And while it is important as to what Louisiana ultimately does with the salvaged cars, the first concerns coming to light as a result of the hurricane have been VIN cloning and title washing. Cloning is when the VIN number is stolen from a legitimate vehicle and attached to a stolen vehicle of the same make and similar model. The problem of cloning is the result of two outside factors: the OEM standardization of VINs to a 17-character format; and the ease with which a VIN could be obtained over the Internet through vehicle sales sites. In the last decade, VIN cloning has had a negative consumer and insurance impact of more than $4 billion.

Title washing—when a vehicle moves from one state to another and the salvage brand is not carried forward by the subsequent state—is also a sizable concern. And while the impact of title washing cannot yet be measured, 1999’s Hurricane Floyd can provide some insight: more than 75,000 flooded vehicles returned to the roadways.

“We are going to find ourselves going back to the issue of salvage and title laws for quite some time,” said Eager.

The upside in all of this, Eager said, is that it will most likely force the consolidation of existing VIN databases. There have been federal efforts at standardization and uniformity, such as the Federal Anti Car Theft Act of 1992 that provided for increased law enforcement against auto theft, combating title fraud, ‘chop shop’ thefts and inspecting exports for stolen vehicles. Part of this effort required the United States Department of Transportation to implement a National Motor Vehicle Title Information System—known as NMVTIS—no later than January of 1996. The NMVTIS was to facilitate the electronic interchange of title information between states in order to deter auto theft and related issues. While the interchange was solid in theory, it was an unfunded mandate and only an estimated 20 states are sharing VIN information.

The American Association of Motor Vehicle Administrators (AAMVA)—a non-profit association comprised of US and Canadian motor vehicle and law enforcement agencies responsible for administration and enforcement of motor vehicle laws—has also been working on the development of a database. The National Insurance Crime Bureau (NICB) has been working with law enforcement and insurers to identify and catalog vehicles and make this information available to motor vehicle administrators, state fraud bureaus and state and local law enforcement and through its Web site, nicb.org.

“Ultimately, groups such as NICB and ISO have good clean reporting within 20 states. That database can be a good pointer to AAMVA,” added Eager. “In the next five to 10 years, I can see the consolidation of one database as something that is out there. Databases are expensive to maintain and, really, how many times is someone going to have to enter the same information?”

What Else in Ten Years?
Another kind of data—automobile event data recorder (EDR) or ‘black box’ information—is a growing legislative concern. In 2004, the National Highway Traffic Safety Administration (NHTSA) proposed standard requirements for EDRs, and that manufacturers choose to install into light vehicles. The National Transportation Safety Board (NTSB) has since endorsed the proposal, which is where the issue sits today.

One of the main reasons for concern is the impact of EDR data as it relates to privacy laws. Data taken from EDRs has been used in criminal court cases, even leading to homicide convictions for the driver of the vehicle in question. In Massachusetts vs. Zimmerman, the defendant was found guilty of misdemeanor motor vehicle homicide when the front seat passenger was killed following an accident. The jury, who was provided access to the EDR data, concluded that the driver was speeding and failed to apply the brakes prior to the accident.

“More than 10 states have enacted or proposed legislation on the issue of EDR information, making it a very substantial issue, and will continue to be in the years to come,” said Hurns.

Mike Barber is Director of Regulation Affairs at CCC Information Services Inc. For questions regarding industry legislation, direct e-mail to mbarber@cccis.com.