2017 -- H 5896

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LC002039

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO INSURANCE -- UNFAIR COMPETITION AND PRACTICES

     Introduced By: Representatives Corvese, Azzinaro, Ucci, Winfield, and Kazarian

     Date Introduced: March 09, 2017

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 27-29-4.4 of the General Laws in Chapter 27-29 entitled "Unfair

Competition and Practices" is hereby amended to read as follows:

     27-29-4.4. Auto body repair labor rate surveys.

     (a) Every insurance carrier authorized to sell motor vehicle liability insurance in the state

shall conduct an auto body repair labor rate survey, subject to, and in accordance with, the

following provisions:

     (1) When used in this section the following definitions shall apply:

     (i) "Auto body labor rate survey" is an analysis of information gathered from auto body

repair shops regarding the rates of labor that repair shops charge in a certain geographic area.

     (ii) "Prevailing auto body labor rate" means the rate determined and set by an insurer as a

result of conducting an auto body labor rate survey in a particular geographic area and used by

insurers as a basis for determining the cost to settle automobile property damage claims.

     (iii) "Independent auto body repair facility" means any auto body repair facility that does

not have a formal agreement and/or written contract with an insurer to provide auto body repair

services to insureds and/or claimants.

     (iv) "Direct repair program" means any methods through which an insurer refers,

suggests, or recommends a specific auto body repair facility, with whom the insurer has a formal

agreement and/or contract to provide auto body repair services, to insureds and/or claimants.

     (v) "Contract rate" means any labor rate to which an auto body repair facility and an

insurer have agreed in a formal agreement and/or written contract.

     (2) Each insurer must annually conduct a separate and distinct written auto body labor

rate survey for each classification of auto body shops as established by the department of business

regulation pursuant to § 5-38-5, to determine a separate and distinct prevailing auto body labor

rate for each classification of fully licensed auto body repair facilities.

     (3) Insurers may not use an auto body labor rate survey; contract rates from auto body

repair facilities with which it has a formal agreement or contract to provide auto body repair

services to insureds and/or claimants; rates paid as a result of subrogation, rates obtained from

auto body repair facilities in a different classification than that being surveyed, or rates from a

repair shop facility holding a limited or special use license.

     (4) Each auto body labor rate survey shall include the following:

     (i) The name and address of each shop surveyed in the labor survey;

     (ii) The total number of shops surveyed;

     (iii) The prevailing rate established by the insurer for each classification of full collision

licensed auto body repair facilities; and

     (iv) A description of the formula or method used to calculate or determine the specific

prevailing rate reported.; and

     (v) The signature of an authorized representative executed under the penalty of perjury.

     (5) Each insurer must report the results of their auto body labor rate survey to the

department of business regulation insurance division.

     (6) The department of business regulation must promulgate regulations related to auto

body labor rate surveys by October 1, 2006, establishing the following:

     (i) A questionnaire that must be used by all insurers in their labor rate survey;

     (ii) Date of reporting; and

     (iii) Number or percentage of shops to be surveyed.

     (7) The department of business regulation shall review all surveys submitted for

compliance with this section and any rules and regulations promulgated by the department.

     (8) An insurer authorized to sell motor vehicle liability insurance in the state shall not

adopt the prevailing labor rate established by another insurer or insurance group. Any insurer

exempted by the department of business regulation from the requirements of subsection (a)(2) of

this section, due to market share, must negotiate the payment of auto body labor rates in good

faith with each licensed auto body repair facility or voluntarily comply with the requirements of

this section.

     (b) Nothing contained in § 27-29-4.4 shall require an insurer to establish the prevailing

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rate for each classification of full collision licensed auto body repair facilities based solely on the

survey results.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- UNFAIR COMPETITION AND PRACTICES

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     This act would require all valid auto body labor rate surveys to be signed by an

authorized representative executed under penalty of perjury. It would also prohibit motor vehicle

insurance carriers from adopting the prevailing labor rate established by another insurer or

insurance group.

     This act would take effect upon passage.

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