PROVIDENCE – A new research report by an insurance group claims that bills now before the state House and Senate could raise Rhode Island auto insurance rates to the highest in the nation, in this case by banning the use of high-quality aftermarket parts for collision repairs.
The Property Casualty Insurers Association of America said the legislation (H-8013, S-2679) is supported by the Auto Body Association of Rhode Island, which also supported 20 earlier bills that have become law since 2003, all of them contributing to the highest property damage liability and second-highest collision premiums in the country.
A spokesperson for the auto body association said the insurers’ group has skewed the facts of the proposed legislation.
Under law that has been in effect for 20 years, said Jina Petrarca, a car owner is entitled to demand a new, manufacturer’s part for a body repair if the car is 30 months old or newer. Most – but not all – Rhode Island insurers now force their customers to accept aftermarket parts for cars older than 30 months, she said. These insurers refuse to pay for new parts for repair of the older cars.
The proposed legislation, Petrarca said, would simply increase to 48 months the age of the car for which an owner can demand new parts. The purpose, she said, is to bring the law into line with most warranties. She asserted the bill would not “ban” aftermarket parts.
“Body shops have no stake in this,” Petrarca said. The hourly labor rate that body shops may charge is not affected by this bill.
Petrarca said Rhode Island car insurance rates are high compared to neighboring states because of a false comparison. The National Association of Insurance Commissioners categorizes Rhode Island as a 100 percent metropolitan region, which places its road conditions, repair needs and insurance costs into the category of places such as New York City, New Jersey and the District of Columbia.
Petrarca said auto insurance profits in Rhode Island are above the national average. The profit margin to insurance companies for the portion of an auto insurance policy that covers just physical damage is 4.2 percent in Rhode Island, compared to a national average of 1.6 percent, she said.
“More than a decade of special-interest bills promoted by the Auto Body Association of Rhode Island have resulted in Rhode Island’s 700,000 licensed drivers paying some of the highest auto repair costs and auto insurance premiums in the nation,” said Frank O’Brien, vice president of state government relations for PCI.
He added, “This has absolutely nothing to do with safety, and everything to do with increasing auto body shops’ profits at the expense of Rhode Island drivers.”
PCI’s research brief estimates the bills banning aftermarket parts and forcing body shops to use costlier original manufacturers’ parts could drive the cost of repair parts up by 10.8 percent and overall repair costs by 5.2 percent. This, in turn, could drive premium increases. Aftermarket parts provide a $1.5 billion benefit to consumers, PCI said.
Looking back, PCI’s brief asserts the collective impact of 20 auto body shop bills passed since 2003, all of which limit the ability of auto insurers to provide “checks and balances” in the claims process, has jacked up auto body repair costs and insurance premiums.
The report states:
- From 2006 to 2017, average auto body repair labor rates in Rhode Island increased 19.6 percent, while neighboring states’ rates increased 11.2 percent.
- Rhode Island’s average auto body repair labor rate is 7.8 percent higher than neighboring states’ rates.
- Over the past five years, the average claim rose from $3,347 to $4,130, a 23.4 percent increase.
- The average claim in Rhode Island is 26 percent higher than in neighboring states.
Mary Lhowe is a PBN contributing writer.
