An insurance trade group including major national carriers on Monday told Texas lawmakers it had no issue with the idea of requiring OEM repair procedures.
But the Texas Coalition for reasonable Insurance Solutions still opposed House Bill 1131 on grounds including a desire for parts competition, Executive Director Beaman Floyd explained throughout a House Insurance Committee hearing Monday. His organization includes State Farm, Allstate, USAA, Farmers, Nationwide and Texas Farm Bureau Insurance as members.
HB 1131, which remains pending before the Insurance Committee, would require insurers to follow along with OEM repair procedures and P-pages. It does carve out an exemption for OEM requirements associated with a replacement “part or product,” though any alternative components must satisfy the bill's meaning of “like kind and quality.”
It states neither an insurer nor their agent can “disregard a repair operation or cost recognized by an estimating system, such as the system’s procedural pages and then any repair, process, or procedure recommended by the original equipment manufacturer of a part or product.”
But HB 1131 says that regardless of this rule, “a motor vehicle covered under an automobile insurance policy may be repaired having a part or product that is of like kind and quality being an original equipment manufacturer part or product as authorized by Section 1952.301.”
That section under consideration says for any part to be considered “like kind and quality,” the insurer or the part manufacturer should have “conclusively demonstrated” the part:
HB 1131 also defines “Reasonable and necessary amount” as “the total amount based on the original equipment manufacturer’s manufacturer and estimating systems required to repair a vehicle to the condition prior to the covered harm to the automobile occurred.”
Sponsor Rep. Travis Clardy, R-Nacogdoches, on Monday referenced a prior comment by Rep. Dennis Paul, R-Houston, asking “‘Is that this the parts bill?'”
“This really is more than just a parts bill,” Clardy said. “This is much more about the procedure and the procedures” and the way to repair vehicles “safely and correctly.” Vehicles were more complicated, and the time of the “shade-tree mechanic” was over, he said.
Paul later in the hearing drew a distinction between parts and operations and asked Floyd if his group were built with a problem with the bill’s OEM procedure requirement.
“No, we have a trouble with the fact that the balance seems to lead inexorably to some very restricted oligopoly – on parts,” Floyd said. “Because the procedures including parts are intermingled together.”
Floyd then continued to say direct repair program shops. “We’re actually quite stringent regarding their technology, and the kind of repairs and just what they need to do,” he explained.
“It does not behoove us to possess substandard repairs,” Floyd said. “And also the concept of cost control in that space isn't antithetical to quality, we don’t think.” His insurers didn’t want to create a monopoly on parts or “particular shops,” he said.
Other insurers may not be as supportive of OEM procedures, though. Bill advocate Texas Watch Executive Director Ware Wendell said he stayed at Pflugerville, Tex.-based Berli’s Body & Fine Auto Finishes, and “I had been amazed by how freely the adjusters speak on these problems.”
Wendell said in a single instance, an OEM had issued instructions to exchange the “steering gear … a very important safety part.”
Wendell said the insurance adjuster agreed, stating, “‘I know that we should . But corporate’s not authorizing it for me personally. They’re not gonna pay it off upstream. So I’m sorry, we’re just not gonna do that.’
“That’s what’s happening here,” Wendell continued.
Wendell said consumers do not know if their repair is protected until a subsequent wreck.
Clardy known as the matter “a safety issue” and referenced the Seebachan v. John Eagle Collision case. A jury in 2021 found that the defendant repair shop exacerbated the effects of the Honda Fit crash by deviating from OEM procedures for reattaching the car’s roof.
LKQ central regional legislative manager Kevin Fisk, who opposed the balance, portrayed the Seebachan case as a repair procedure issue, not an alternative parts one. John Eagle Collision installed an OEM roof around the Seebachans’ Honda Fit.
“It wasn’t about the roof,” Fisk said. “It was about the process .”
Fisk said LKQ felt HB 1131 as written would “stifle healthy competition” and demand alternative parts meet specifications that OEMs would never reveal. “There might be a much better approach,” he said of the bill.
“When we allow people to make changes that will change up the structural integrity of these vehicles, it undermines the process when they’re approving insufficient repairs,” said John Eagle Collision plaintiff Marcia Seebachan.
Seebachan told lawmakers that as a licensed social worker, she’s only able to use validated techniques. She said “I cannot imagine creating a choice in my profession that affects the life, safety and health of others” based on her opinion alone.
Seebachan’s attorney Todd Tracy called the bill a “business-friendly bill” but argued it should also “immunize” repairers from litigation if OEM procedures were followed.
“Representative Clardy, I don’t think your bill goes far enough,” he explained.
