Rhode Island Auto Body Shop Regulations Could Limit Consumer Choice

Proposed regulations restricting the operations of direct repair auto body shops (DRPs) would hurt Rhode Island consumers by limiting choice and creating an opportunity for insurance fraud.

"DRPs give consumers an option to utilize a program that can offer fast and efficient service by using pre-selected repair shops," said Joseph J. Annotti, assistant vice president of the National Association of Independent Insurers (NAII) in testimony before the Rhode Island Department of Business Regulation (DBR). "They also help reduce fraud by allowing insurers to develop long-term business relationships built on trust with quality-oriented repair shops. This lowers costs and increases reliability for consumers."

NAII members oppose several elements of the proposed regulations, which deal with motor vehicle body repair shops and glass installation. Of primary concern is a section prohibiting auto body shops from dismantling any vehicle before inspection by a licensed insurance appraiser, whether or not the owner authorized the job. While NAII recognizes the provision as an attempt to prevent fraud, the current wording could "severely hinder insurers from operating and consumers from benefiting from Direct Repair Programs (DRP)," Annotti said. DRPs allow insurers to contract with a network of auto body shops that can repair vehicles more quickly and cost effectively.

To protect DRP arrangements, NAII recommended that the DBR consider providing insurers with a waiver in the regulation that would allow them to continue operating DRPs without requiring appraisal inspection before repair.

NAII also opposes a requirement that auto glass repair practitioners maintain a fixed location and have shops, vehicles and tools worth at least $5,000. This would hinder the operation of mobile glass repair units, which complete a large percentage of emergency glass repairs at the homes or businesses of policyholders. Another section requiring insurers to inspect or reinspect 10 percent of all completed glass repairs "adds another step to a streamlined process that is working for both insurers and consumers," Annotti said.