The California Department of Insurance held a public rulemaking hearing Aug. 9 on a Proposed Regulation on Standards for Repair and Use of Aftermarket Parts (REG-2011-00024). NAMIC testified in opposition to the revised proposed regulation and submitted written comments in conjunction with its state advocacy partner, the Pacific Association of Domestic Insurance Companies, raising concerns about the CDI's lack of authority to impose the proposed regulations and the anti-consumer nature of them.
The proposed regulation would amend the Unfair or Deceptive Acts or Practices in the Business of Insurance Regulations so as to create a clear regulatory preference for the use of only OEM parts produced by automobile manufacturers, and would impose costly administrative burdens and legal notice duties on insurers that want to offer their consumers the benefits of market competition between OEM parts manufacturers and aftermarket parts manufacturers.
The proposed regulation would also improperly empower OEM parts manufacturers and auto repair shops to unilaterally and conclusively establish auto repair guidelines and standards, and would create liability for insurers that deviate from these auto repair guidelines and standards, even if departure from the accepted repair standards was in the best interest of the insurance consumer.
At the end of the rulemaking hearing, the chair of the Senate Insurance Committee submitted written comments raising 20 concerns/questions with the proposed regulation for the CDI to answer. Many of the chair's questions pertain to issues raised by NAMIC, PADIC, and other members of the insurance industry at the rulemaking hearing. The chair's written comments also raised questions about the alleged necessity of the proposed regulation.
Contact: Christian J. Rataj
State Affairs Manager
Posted: Wednesday, August 15, 2012 2:10:13 PM. Modified: Wednesday, August 15, 2012 2:16:04 PM.
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