C.D.A.A.

Capital District Autobody Association

C/O Chris Williams

90 Adams Street
Delmar, New York 12054 (518)439-2574

STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004
Circular Letter No. 16 (2000)
May 10,  2000
TO: All Motor Vehicle Self-insurers and Insurers Licensed to Write Motor Vehicle Physical Damage Insurance in New York State
RE: Application of Section 2610(b) of the Insurance Law

This is to advise all insurers licensed to write motor vehicle physical damage coverage in New York State of the decision issued by Judge Richard Conway Casey of the United States District Court (Southern District of New York) in the companion cases Allstate Insurance Co. v Serio and GEICO v. Serio on May 4, 2000. These actions challenged the constitutionality of Section 2610(b) of the New York Insurance Law, which prohibited insurers from recommending or suggesting that repairs to a damaged vehicle be made in a particular place or shop unless expressly requested to do so by their insureds.

Judge Casey ruled that Section 2610(b), as applied to Allstate and GEICO, violated the First Amendment of the United States Constitution as an unjustifiable burden on commercial free speech. In both instances, the use of the programs by insureds was voluntary.

It is clear from the decision that the First Amendment protection of commercial speech would extend to recommendations made by insurers that were not parties to the above-referenced actions. It is equally clear that in the opinion of the court, attempts by the Department to enforce the provisions of Section 2610(b) run afoul of First Amendment protections. Insurers are, therefore, now free to recommend or suggest that repairs to a damaged vehicle be made in particular places or repair shops regardless of whether the insured expressly requested such recommendations. In all such instances, insurers are reminded that their insureds retain the right, pursuant to Section 2610(a) of the Insurance Law, to choose which shop will repair their damaged vehicle. Section 2610(a) remains in full force. In addition, any new programs implemented as a result of this decision remain subject to the requirements of Article 23 of the Insurance Law.

This Circular Letter repeals and supersedes Department Circular Letter No. 4, dated April 7, 1994.

Any questions regarding this Circular Letter should be directed to Lawrence Fuchsberg at (212) 480-5279.


Very truly yours,


_____________________________
Kevin M. Rampe
Senior Deputy Superintendent
and General Counsel

 

Legislative Memo in opposition to:
6180/S6408-A
Sidkman/Velella
In relation to a threat to the consumer and
Small business in New York State.

DATE: June 10, 1998

TO: Members of Legislature

I am writing you in strong opposition to this legislation. If passed it would, in the long run hurt the consumer and jeopardize the future of the auto-repair industry.

This bill offers the consumer an unknown "actuarially appropriate" discount on automobile insurance premiums in exchange for surrendering the freedom of choice, and having any auto claim repaired from a list of shops designated by the insurance company. Senator Velella calls this "managed repair". Actually this is nothing more than an attempt to control consumers and the repair industry by strangling the competition.

The right of free Enterprise and the welfare of small business will be threatened. The insurance companies will dictate many professional people how to, and how not to repair automobiles. {If they meet their criteria, and get on these programs.} Those that do not meet the (Big Brother’s) criteria will not be able to repair vehicles from customers that choose these (wolf in sheep’s clothing) policies.

The right of a consumer will loose the right to have someone negotiate a claim on their behalf, and make them whole. Instead it will be replaced with "ma’am just bring your car to our shop and we’ll fix it". Not knowing, or being explained the different types of repair procedures. Yes there are many. You can bet that the insurance companies will instruct the selected shops to repair cars the cheapest way possible. Discounted labor, discounted or non-original parts and junk parts that do not now meet many of the standards for a safe and quality repair. Who will set the new lower standard? The consumer will in the end lose with low standard repairs that will be prevalent at trade-in and or lease turn in time. How is a consumer to know? This purposed savings in premiums that will cost an insured in the long run.

Is this what the insurance companies mean by an actuary appropriate?

Without free enterprise and independent shops out there on the consumer’s side (not the insurance side), we all must submit to a Capitol Corporate society.

Accordingly I strongly urge you to oppose this legislation. Any questions on regarding this Memo may be directed towards, Christopher Williams, secretary of C.D.A.A.at (518) 439-2574.

 

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