Montana Legislators To Evaluate Auto Repair, Bad Faith Bills

March 10, 2009

The Montana legislature will hear bills this week related to auto body repair and what the insurance industry is calling bad faith legislation that could drastically affect the state’s insurance market and insurance consumer costs.

The Senate Business, Labor and Economic Affairs Committee will hear the following bills this week.

HB 286 would require insurers to use auto repair costs identified by an estimating system, and HB 291 would require insurers to use the average market price for glass and auto body repair.

“These auto repair bills are a direct result of some auto body repair shops’ efforts to circumvent the role of competition in setting prices and force insurers to pay amounts reported in surveys and estimating systems,” said Kelly Campbell, PCI regional manager. “These practices remove the checks and balances in establishing reasonable rates, which opens the door to drivers and insurers being hit by inflated auto body repair rates, and ultimately higher repair costs.”

“Insurers want to make sound decisions about repair claims by taking into account the many factors that should be included in determining a fair labor rate,” said Campbell. “Efforts to make sure repair costs are reasonable benefit all consumers because they help contain the cost of auto insurance.”

Additionally, the committee will evaluate HB 345, which narrowly passed in the House, would amend the state’s existing third-party bad faith law to allow for punitive damages and attorney fees.

“This is another example of trial lawyer attempts to expand their ability to bring lawsuits and absorb more fees on disputed insurance claims,” Campbell said. “Unfortunately, it’s ultimately Montana consumers who will have to pay the price to enrich the attorneys.”

“Montana already has unfair claims handling laws and regulations on the books, and the competitive nature of the insurance industry places strong pressure on insurers to deliver good customer service when a claim must be settled,” said Campbell. “This is an unnecessary amendment that will do nothing to help consumers.”

Insurers take very seriously their obligation to uphold the terms of the insurance contract and to act fairly with policyholders and individuals who file claims. Insurers are also committed to thoroughly investigating claims to reduce fraud. Those investigations ultimately help to keep insurance costs in check by ensuring that only legitimate claims and charges are paid.

Source: PCI

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