Friday, September 4, 2009

Hayashi's Bill Passes - A Defeat for Consumer Rights

Unfortunate news - the auto insurance industry was able to pick up a few more votes from Democrats in the State Senate to join with the Republicans and pass Hayashi's bill. Below is a message today from the Consumer Attorneys of California.
We go up against the insurance industry’s lobby every day. In the face of the industry’s seemingly limitless money and influence, we hold our own and then some most of the time. Despite our best efforts, the Senate on Friday narrowly approved legislation by East Bay Democrat Mary Hayashi that takes the side of the auto insurance industry against the consumer.

Hayashi’s bill would gut a consumer protection measure by Rep. Jackie Speier that was signed into law only a few years ago when Speier was in the state senate. Opposed by virtually every consumer group, including Consumer Attorneys of California, Hayashi’s AB 1200 would water down a prohibition barring insurers from “steering” consumers to the insurance company’s preferred auto body shops — shops that cut costs by installing knock-off and ill-fitting parts.

The bill had stalled two votes short of the majority earlier this week. But the insurance industry is powerful and its team of lobbyists managed to convince three more Democrats to take their side — Sen. Negrete McLeod, Sen. Curren Price and Sen. Rod Wright. To get an idea of what we’re up against, just two of the insurance companies backing the bill and their trade group, the Personal Insurance Federation of California, spent more than $812,000 on campaign donations and another $650,000 on lobbying in the first half of the year. We lost this vote. But we were proud to stand up for consumers and against the insurance industry — and we’d do it all over again.

The source of Hayashi's bill as noted in the legislative analyst's report is the Personal Insurance Federation of California.

What is the PIFC? It is the political lobby of the California insurance industry:
In 1989, two leading insurers in the state, Farmers Insurance Group and State Farm Mutual, formed the Personal Insurance Federation of California (PIFC) to serve as the principal advocate for the property-casualty insurance industry before the California Legislature. Today PIFC represents six insurance company groups and one national trade association which collectively provide more than half of the personal lines property and casualty insurance written in California.

These are the same folks that have fought every industry reform, including Prop. 103. They also have a PAC and Hayashi has taken $2,600 in contributions from it this year. Other insurance companies Hayashi has taken funds from this year include Allstate, Farmers Insurance Group, Liberty Mutual, and Mercury Insurance.


Here is a link to a Los Angeles Times article on the bill and vote in State Senate.


  1. While Hayashi states those in opposition to AB1200 are supplying disinformation, she quotes a 42% fraud rate in the autobody industry-an absurd figure that was derived from a flawed study completed over six years ago, and probably supplied to her by her insurance “partners”.

    Making the assumption the fraud rate was accurate, Ms. Hayashi called her Business & Professions Committee to a hearing entitled "Ongoing Fraud in the Autobody Repair Industry". Surprisingly, the testimony from the State Bureau of Automotive Repair (BAR) was not what she expected nor wanted.

    The BAR Chief testified that fraud was not 42%, but in fact only 2% (two percent) of the repairs BAR reinspected from consumer's requests. When the BAR Chief stated there were 18 cases last year, Hayashi interrupted and said, "eighteen hundred you mean". The Chief restated the facts: 18 cases of fraud from over 8000 licensed body shops performing millions of repairs over that period, and at most 24 from any of the past five years.

    At the hurried close of the hearing, even her own committee members stood and asked, "why are we here?".

    If Hayashi had allowed public comment at the hearing, she may have learned other surprising facts and statistics about fraud in collision how the largest case of auto body fraud in California's history was filed by the Attorney General against a chain of shops that not only relied primarily on insurance referrals, but was partially owned by some of the same insurance companies that sponsor AB1200.

    The fact is, Hayashi may be Queen of mis-information. The headline on her website still does not mention that the absurd 42% fraud rate was found at her own hearing to be plain wrong. And it’s been wrong since 2003.

    In her press release about the hearing (also still on her website), she states, "In general, BAR handles 14,800 complaints each year related to auto body repair and smog check inspections.”

    The source of that statement is BAR. On the BAR website, under enforcement, BAR states,
    “Each year BAR handles more than 14,800 complaints relating to auto repair and/or Smog Check inspections.”

    Even her district director didn’t seem to think it was much of an issue. After all, what difference does one word make?

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