AIA URGES VETO OF RECKLESS AUTO BODY LEGISLATION
WASHINGTON, D.C., June 13, 2012 – The American Insurance Association (AIA) views the passage of H. 7782A, adverse legislation which allows for nationally unprecedented private rights of action for auto body shops directly against insurers, by the Rhode Island General Assembly as poor public policy. The bill enables auto body shops to unilaterally set rates and sue insurers who do not agree to pay a shop’s rates and related repair costs. AIA urges Governor Lincoln Chafee (I) to veto this legislation.
“No other state in the nation allows auto body shops to set non-negotiable rates and attempt to force them on third party payers under threat of litigation,” said Gary Henning, AIA Northeast region vice president. “This legislation represents poor public policy which could lead to an explosion of litigation. It should be vetoed when it reaches the governor’s desk.”
Rhode Island is already one of the most expensive states in the nation for auto body repairs. Currently, drivers pay the sixth highest collision insurance premiums in the nation due in large part to higher than average claim costs including labor costs which exceed the national average by 26.7 percent.
“Rhode Island’s drivers should say ‘no’ to increased litigation and increased repair costs,” said Henning. “H. 7782A pads the wallets of auto body shops at the expense of consumers.”
H. 7782A was passed by the House on June 11 by a vote of 38 to 20 with 17 members not voting. It passed the Senate late last night by a vote of 24 to 11 with 3 members not voting just prior to the General Assembly’s adjournment. It now heads to the governor for consideration.