Tex. bill requires OEM procedures, proof of 'like kind and quality,' neutral labor rate surveys
A sweeping auto insurance reform measure approved by the Texas House Insurance Committee in 2021 is back for that Lone Star State’s 2021 legislative session.
House Bill 1131 contains virtually identical language towards the substitute version of HB 1348 the committee reported favorably inside a 6-1 vote. But the 2021 bill never received a vote on the House floor that year.
Both bills were sponsored by Rep. Travis Clardy, R-Nacogdoches. No other representatives have signed on as co-sponsors yet this season to HB 1131, but 2021’s HB 1348 ultimately drew four other authors: Reps. Leo Pacheco, D-San Antonio ; Julie Johnson, D-Farmers Branch; Stan Lambert, R-Abilene; and Hubert Vo, D-Alief. All of them serve in the Legislature this session.
HB 1131 declares that the carrier can't “disregard a repair operation or cost recognized by an estimating system, including the system's procedural pages and any repair, process, or procedure recommended through the original equipment manufacturer of a part or product. “
In addition to demanding insurers acknowledge repair procedures, the bill defines “easonable and necessary amount” as “the amount determined by the initial equipment manufacturer 's manufacturer and estimating systems required to repair an automobile to the condition before the covered harm to the automobile occurred.”
But it enables insurers to disregard OEM measures in the case of installing a component “that is of like kind and quality being an original equipment manufacturer part or product.” The insurance coverage Committee added this language back in 2021 towards the predecessor HB 1348.
The bill also defines “like kind and quality” and what constitutes an acceptable “prevailing rate” survey. It bans certain steering tactics, although it grants insurers an exemption with regards to repairers who exclusively handle auto glass.
Defining ‘like kind and quality’ and prevailing rate
“ike kind and quality” is understood to be follows:
“Prevailing rate” would involve a “transparent and unbiased” one “conducted with a third party” that utilizes the “posted retail labor rates and never direct repair program shop rates that operate within contract by having an insurer.”
Antisteering measures
Besides clearing who actually is charging a prevailing rate, HB 1131 would fight steering by banning insurers from requiring claimants to use preferred shops “in order for the beneficiary to get the repair without owing any out-of-pocket cost other than the deductible.” Additionally, it says a carrier can’t be:
The bill also restricts what insurers will easily notice claimants. They aren’t allowed to “offer, communicate, or suggest by any means that the particular repair person or facility will give you faster repair times, faster service, or even more efficient claims handling than another repair person or facility.”
Insurers get an exemption in relation to “an individual who exclusively provides automobile glass replacement, glass repair services, or glass products.” The “repair person or facility” definition specifically excludes those glass-only shops.
The bill could face a constant fight this session not due to its content but due to misfortune and timing.
Texas’ Legislature only meets every two years, and COVID-19 made it more difficult to lobby lawmakers throughout the off-session year of 2021.
This year, lawmakers will need to tackle “super-high priority stuff” like COVID-19, redistricting and the catastrophic Texas winter weather and power outages, Auto Body Association of Texas Executive Director Jill Tuggle said Thursday. It’ll be considered a “really, really tough” session, she said.
However, the trade group continues to be sharing consumer auto insurance complaints with lawmakers. Tuggle said legislation will require consumers and constituents — be they shops or customers — contacting legislators.
The bill was delivered to the Insurance Committee on Thursday.
ABAT Vice President Eric McKenzie said “I feel confident” HB 1131 would a minimum of get a hearing this session. House Insurance Committee Chairman Tom Oliverson , served as vice chairman throughout the 2021 hearing on HB 1348 and voted for the bill, according to McKenzie.
Vo, who co-sponsored that bill, is now the Insurance Committee’s vice chairman, which is probably another positive sign.
The 2021 hearing memorably included a look and feel by John Eagle Collision plaintiff Marcia Seebachan, who testified meant for the bill. “It is unconscionable that companies can undermine this method by approving insufficient repairs,” Seebachan told the committee then.
