NY State Senate Bill 2009-S2041

Archive: Last Bill Status - In Senate Committee Transportation Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to transportation
Feb 11, 2009	referred to transportation

co-Sponsors

2009-S2041 (ACTIVE) - Details

See Assembly Version of this Bill:: A686
Current Committee:: Senate Transportation
Law Section:: Vehicle and Traffic Law
Laws Affected:: Add §398-j, V & T L
Versions Introduced in 2011-2012 Legislative Session:: S4733, A960

2009-S2041 (ACTIVE) - Summary

Provides that on or after September 1, 2011, an insurer may not hold nor acquire interest in a motor vehicle repair shop; insurers that before September 1, 2011 owned an interest in a motor vehicle repair shop must disclose to each insured that the insured has the right to use any motor vehicle repair shop selected by the insured.

2009-S2041 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S2041

 TITLE OF BILL :
An act to amend the vehicle and traffic law, in relation to insurer
interests in certain motor vehicle repair shops


 PURPOSE :
To prohibit an insurer from having an ownership interest in an auto
body shop.

 SUMMARY OF PROVISIONS :
Section 1 -- Adds section 398-j to the Vehicle and Traffic Law.
States that, effective on or after September 1, 2009, an insurer may
not hold or acquire an interest in a motor vehicle repair shop.
Defines for purposes of this section, the term "insurer."

Section 2 -- Effective date.

 JUSTIFICATION :
This bill reflects a movement across the nation (Texas, California and
Virginia, to name a few states) to protect consumers from the inherent
conflict of interest presented when an insurer that pays for the
repair of a vehicle has that repair performed at a facility from which
it derives income as an investor. Such an apparent conflict will lead
to reduced oversight of auto body work by the insurer and fewer

choices for consumers regarding where they may take their vehicles for
auto body repairs.  Currently, § 2610 of the Insurance Law provides
that an insurance company cannot require that repairs be made to a
motor vehicle in a particular place or repair shop. A consumer has the
right to have their vehicle repaired in the shop of their choice.
However, over the years, this anti-steering consumer protection has
been eroded by the use of Direct Repair Programs -- agreements whereby
insurers offer certain select repair shops an opportunity to increase
business through insured direct referrals in exchange for the repair
shops agreeing to fix the vehicle under conditions specified by the
insured.

The current anti-steering protections in insurance law are too weak to
withstand these operations. This bill will protect consumer interests
by preventing insurers from institutionalizing through shop ownership
those practices that undermine quality work.

 LEGISLATIVE HISTORY :
2007-2008 - S/1822/A.1063
2005-2006 - S.5052/A.159
2003-2004 - S.2785/A.5487

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
This act shall take effect on the one hundred twentieth day after it
shall have become a law, provided, however, that effective
immediately, the addition, amendment and/or repeal of any rule or
regulation necessary for the implementation of this act on its
effective date is authorized and directed to be made and completed on
or before such date.

2009-S2041 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2041

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            February 11, 2009
                               ___________

Introduced  by  Sens.  DeFRANCISCO,  MORAHAN,  VOLKER  -- read twice and
  ordered printed, and when printed to be committed to the Committee  on
  Transportation

AN  ACT  to  amend  the  vehicle and traffic law, in relation to insurer
  interests in certain motor vehicle repair shops

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The  vehicle  and  traffic law is amended by adding a new
section 398-j to read as follows:
  S 398-J. INSURER INTEREST IN MOTOR VEHICLE REPAIR SHOPS PROHIBITED. 1.
PROHIBITION. ON OR AFTER SEPTEMBER FIRST, TWO THOUSAND ELEVEN, AN INSUR-
ER MAY NOT HOLD NOR ACQUIRE ANY OWNERSHIP INTEREST IN  A  MOTOR  VEHICLE
REPAIR SHOP.
  2.  DISCLOSURE  REQUIREMENTS.  (A)  AN  INSURER THAT, BEFORE SEPTEMBER
FIRST, TWO THOUSAND ELEVEN, HAS AN OWNERSHIP INTEREST IN A MOTOR VEHICLE
REPAIR SHOP MUST DISCLOSE TO EACH INSURED THAT THE INSURED HAS THE RIGHT
TO USE ANY MOTOR VEHICLE REPAIR SHOP SELECTED BY THE INSURED. THE INSUR-
ER SHALL MAKE THE DISCLOSURE IN WRITING IN THE MANNER PRESCRIBED BY  THE
DEPARTMENT AND SHALL PROVIDE THE DISCLOSURE:
  (1)  AT  THE  TIME  THE  POLICY  IS DELIVERED, ISSUED FOR DELIVERY, OR
RENEWED; AND
  (2) WHEN AN ACCIDENT CLAIM COVERED BY THE POLICY IS  REPORTED  TO  THE
INSURER BY THE INSURED.
  (B)  AN  INSURER MAY NOT OFFER AN INCENTIVE OR PROVIDE COMPENSATION TO
ANY PERSON TO REWARD THAT PERSON FOR REFERRING AN  INSURED  TO  A  MOTOR
VEHICLE REPAIR SHOP IN WHICH THE INSURER HAS AN OWNERSHIP INTEREST.
  3. DIVESTMENT. ANY INSURER THAT HOLDS OR ACQUIRES ANY OWNERSHIP INTER-
EST  IN  A MOTOR VEHICLE REPAIR SHOP PRIOR TO SEPTEMBER FIRST, TWO THOU-
SAND ELEVEN, SHALL DIVEST ITSELF OF ANY SUCH INTEREST ON OR BEFORE  SUCH
DATE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03315-01-9

S. 2041                             2

  4.  DEFINITIONS.  FOR  PURPOSES  OF  THIS  SECTION, "INSURER" MEANS AN
INSURER AUTHORIZED AS SUCH TO PERFORM  AN  INSURANCE  BUSINESS  IN  THIS
STATE  IN  COMPLIANCE  WITH  THE  INSURANCE  LAW, BY REASON OF A LICENSE
ISSUED AND IN FORCE PURSUANT TO THE LAWS OF THIS STATE OR OF A CORPORATE
CHARTER GRANTED AND IN FORCE PURSUANT TO THE LAWS OF THIS STATE, BUT NOT
INCLUDING ANY INSURER EXEMPTED FROM COMPLIANCE WITH THE REQUIREMENT THAT
IT OBTAIN A LICENSE TO DO BUSINESS UNDER THE PROVISIONS OF THE INSURANCE
LAW.
  S 2. This act shall take effect on the one hundred twentieth day after
it shall have become a law; provided, however, that effective immediate-
ly,  the  addition,  amendment  and/or  repeal of any rule or regulation
necessary for the implementation of this act on its  effective  date  is
authorized  and  directed  to  be  made  and completed on or before such
effective date.

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Senate Bill S2041

Sponsored By

Archive: Last Bill Status - In Senate Committee Transportation Committee

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co-Sponsors

2009-S2041 (ACTIVE) - Details

2009-S2041 (ACTIVE) - Summary

2009-S2041 (ACTIVE) - Sponsor Memo

2009-S2041 (ACTIVE) - Bill Text download pdf

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Sponsored By

John A. DeFrancisco

Archive: Last Bill Status - In Senate Committee Transportation Committee

Actions

co-Sponsors

Martin J. Golden

Andrew J. Lanza

Thomas P. Morahan

Dale M. Volker

2009-S2041 (ACTIVE) - Details

2009-S2041 (ACTIVE) - Summary

2009-S2041 (ACTIVE) - Sponsor Memo

2009-S2041 (ACTIVE) - Bill Text download pdf

Comments