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Insurance Firms Push “Access to Repair Parts Act”

Automakers want to keep monopoly selling high profit parts.

by on Mar.31, 2010

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Automakers use patents to stop sales of what they say are inferior parts from independents.

The National Association of Mutual Insurance Companies (NAMIC) is pushing a coalition of consumer groups to support the “Access to Repair Parts Act” – H.R. 3059/S. 1368 – appear to be tied up in the legislative committee process from which they might never emerge for a full and open debate.

The bills (Zoe Lofgren, D-Calif., introduced HR 3059 in the House. The  Senate version, S. 1368, was introduced by Sheldon Whitehouse, D-R.I.) provide an exception to the U.S. design patent law to provide continued access to “affordable, automotive collision replacement parts.”

The latest clash between the insurance industry and automakers was apparently set off by an International Trade Commission ruling that enforced a car company’s design patents on several crash parts, excluding them from the replacement crash parts marketplace.

Automakers use patent law to prevent the sale what they deem to be inferior parts from independent suppliers, many of them based offshore. The resulting lack of a free market – a monopoly according to critics – costs consumers an estimated $2.8 billion per year in increased repair costs, typically when buying bumpers, fenders, and hoods.  

“This legislation is vital to ensuring that consumers have an open and fair marketplace in auto repair parts,” says Kathy Mitchell, NAMIC federal affairs director. The trade group is the largest association representing property/casualty insurance companies.

“By preserving competition and fairness in the marketplace, the Access to Repair Parts Act will help reduce the costs of repairs for consumers through less expensive repair parts and lower insurance rates,” says Mitchell.

The insurance industry estimates that independently produced parts cost 26% to 50% less than car company equivalents. The use of O.E. parts increases the cost of insurance premiums by as much as $3 billion annually.

Some insurance companies such as Nationwide Mutual offer customers the option to purchase, for an additional premium, insurance coverage that reimburses for the cost of original equipment parts in the repair of vehicles. Those who do not choose this option have lower insurance costs.

“NAMIC is committed to supporting the ‘Access to Repair Parts Act’ and the protection it gives to consumers,”says Mitchell. “As the largest association representing property/casualty insurance companies, we encourage Congress to preserve choice and competition by supporting this legislation.”

The battle  over crash parts mirrors a similar one over auto repair information for independent shops.  See Repair Charges Much Higher at New Car Dealerships

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