NCOIL Avoids Action On Car Parts

By Steve Tuckey
National Underwriter News
March 7, 2005

State lawmakers once again have failed to move on a controversial measure that would set requirements for the use of generic, after-market parts to repair damaged vehicles.

By a 13-9 committee vote Friday the National Conference of Insurance Legislators delayed consideration of a proposed model law that would require disclosure when parts not produced by the car's original maker are used.

The model would also endorse certification of non-original manufacturer parts by organizations such as the Certified Automotive Parts Association (CAPA).

NCOIL will again debate an after-market crash parts model bill at its summer meeting. The organization's official posture on its decision was that it "moved legislators several steps forward to voting on the model."

Parts usage has been a front-and-center issue for insurers since 1999 when a jury returned a $1 billion verdict against State Farm, later reduced, for the company's arrangements for repair of customers' damaged vehicles that allowed use of generic parts without the policyholders' knowledge.

In the fall of 2002, the last time NCOIL took up the parts act, members tabled it after failing to reach consensus on the divisive issue.

At Friday's session veteran NCOIL members opposed looking at the issue again while some newcomers thought the proposal had merit.

The issue pits the auto industry, as the Original Equipment Manufacturers, against independent after-market parts producers represented by CAPA, with the insurance industry generally favoring the greatest number of options in using repair parts.

Michigan Sen. Alan Sanborn, R-Richmond Township, was one of seven lawmakers from his state on the committee opposing taking up debate again.

"NCOIL has looked at this before and decided these parts were not of sufficient quality," he said.

But South Carolina Rep. Dan Tripp, R-Greenville, said that as a relative newcomer he looked forward to an opportunity to cut auto repair costs.

NCOIL's president, Texas Rep. Craig Eiland, D-Galveston, said he was concerned by the presence of several new members from Michigan on the Property-Casualty Committee for the seeming purpose of defeating the bill. But, he said he had decided there was nothing that could be done to alter the situation.

The proposed model would set up a mechanism to certify independently produced after-market auto parts through CAPA.

Auto industry representatives on hand Friday asserted that such parts actually increased costs since at times they were more difficult to install than those produced for the car by the auto manufacturer.

But CAPA spokesperson Jack Gillis said that such claims were merely attempts by the car makers group to maintain a monopoly that was costly for consumers.

Vermont Rep. Virginia Milkey, D-Brattleboro, said she opposed the measure because she did not feel it was right to legislate a monopoly on CAPA to certify independently produced after-market parts.

"Plus, I don't think they are that good, she said.

Insurance trade groups for the most part remained silent at the meeting with the exception of American Insurance Association vice president Dave Snyder, who said he favored a third option put into the bill that would allow any parts to be used and have the insurance company provide a lifetime warranty on them.

"Because current law in most places allows for more option for consumers and insurers than would be provided under this model, we urge NCOIL not to act on this proposal," he said.

The current model will most likely face revision over the next few months before the summer hearing at which time final action would seem unlikely, said NCOIL executive director Susan Nolan.

Copyright 2005 by The National Underwriter Company. All rights reserved.


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