January 11, 2008

Kentucky/Ohio: Emerging Accident Response Fees a Form of Double Taxation

We have been informed by the Ohio Insurance Institute, a NAMIC state advocacy partner, that there has been increased media attention in the Cincinnati area regarding accident response fees. The city of Erlanger, Ky., recently passed an ordinance authorizing local officials to charge consumers for accident responses, and officials in New Richmond (Clermont County), Ohio, are considering a similar ordinance. The OII is in the process of contacting area media outlets to rebut claims being made by Cost Recovery Corporation.

Action Requested:

NAMIC member companies domiciled in or writing in Kentucky and Ohio are asked to alert area insurance agents about the adverse impact of accident response fees and to ask local agents to encourage consumers who are or could be negatively affected by these fees to contact their local officials in Erlanger and New Richmond.

NAMIC believes accident response fees to be a form of double taxation applied only to responsible citizens carrying insurance. In 2006, NAMIC authored an Issue Brief to inform members about the topic.

When contacting local officials, consider the following points:

According to our unofficial tally, municipalities in the following 18 states currently charge for accident response fees or are considering ordinances to allow for such fees: Alabama, Connecticut, Florida, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Maine, Michigan, Missouri, New Hampshire, New York, North Dakota, Ohio, Pennsylvania, Rhode Island and Wisconsin.
Pennsylvania recently adopted legislation (HB 131) banning accident response fees.
These ordinances may constitute local taxation of insurance companies and may be contrary to state constitutional or statutory law.
These ordinances target only insurance companies. If there is no insurance, there is no billing.
An administrative determination by a law enforcement agency as to who is an "at fault" driver is inappropriate and may usurp the state judicial process.
In most cases, the municipalities attempting to impose these ordinances are supported by tax dollars that are intended to provide the very services for which the municipalities are billing.
These services being billed to insurance companies may or may not be covered by insurance, but if more and more political subdivisions undertake these billing practices, more insurers will be paying out more in claims and, ultimately, those claims will result in higher premiums.

For more additional talking points review the information provided by the OII. For more background go to www.accidentresponsefees.com.

Thank you in advance for assisting with this important effort. If you have questions or require additional information, contact Director of State Affairs Joe Thesing at jthesing@namic.org.

You are receiving this NAMIC Alert because your company is a member of NAMIC.

COMMENTS: Please direct all requests or comments to Director of Communications Jon Gorman at jgorman@namic.org, or NAMIC Advocacy Alert, 3601 Vincennes Rd., Indianapolis, IN 46268.

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