Chapter 173

2006 -- H 7167 SUBSTITUTE A

Enacted 06/23/06

A N A C T

RELATING TO INSURANCE - UNFAIR COMPETITION AND PRACTICES

Introduced By: Representatives Moura, Long, Corvese, and Schadone

Date Introduced: February 08, 2006

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 27-29 of the General Laws entitled "Unfair Competition and

Practices" is hereby amended by adding thereto the following section:

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, 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 conduct an auto body labor rate survey, in writing, annually to

determine a prevailing auto body labor rate for 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, or rates from a repair facility holding a 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; and

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

prevailing rate reported.

(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.

27-29-4.5. Penalty. – An insurer's failure to comply with any requirement of section 27-

29-4.4, or any rule or regulation promulgated by the department of business regulation shall result

in a fine in a sum of up to five thousand dollars ($5,000).

     SECTION 2. This act shall take effect upon passage.

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LC01218/SUB A

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