Report: Rhode Island Drivers Could Pay Highest in Nation Auto Insurance Premiums if Legislation Banning Aftermarket Parts is Allowed to Pass

Auto Body Association of Rhode Island supported bill would benefit auto body shop owners at expense of Rhode Island drivers who could end up paying the highest property damage liability and second highest collision premiums in the nation.

PROVIDENCE, R.I. -- The Property Casualty Insurers Association of America (PCI) today released a detailed research brief on the impact of 20 pieces of legislation promoted by the Auto Body Association of Rhode Island (ABARI) that have become law since 2003, and the negative impacts of new ABARI supported legislation (H-8013, S-2679) that would micromanage the claims process by banning the use of high quality aftermarket parts for collision repairs. Should this legislation pass, PCI estimates that Rhode Island’s already high overall repair costs would rise, resulting in premium increases that could leave Rhode Island drivers paying the highest property damage liability premiums and second highest collision premiums in the United States.

“More than a decade of special interest bills promoted by the Auto Body Association of Rhode Island have resulted in Rhode Island’s 700,000 licensed drivers paying some of the highest auto repair costs and auto insurance premiums in the nation,” said Frank O’Brien, vice president of state government relations for PCI. “Now ABARI is back with their worst bill yet, legislation to effectively ban the use of high quality, reliable aftermarket parts during the repair process. This has absolutely nothing to do with safety, and everything to do with increasing auto body shops’ profits at the expense of Rhode Island drivers who could end up paying THE highest auto insurance premiums in the nation. Rhode Island doesn’t need the dubious distinction of having the highest auto insurance costs in the country. PCI urges the General Assembly to stand with Rhode Island’s consumers by rejecting House Bill 8013 and Senate Bill 2679.”

Decade Plus of ABARI-Supported Legislation Continues to Take Its Toll on Rhode Island Auto Repair Costs and Auto Insurance Premiums

PCI’s research brief finds that the collective impact of 20 auto body shop bills passed since 2003, all of which limit the ability of auto insurers to provide “checks and balances” in the claims process, is Rhode Island consumers paying among the highest auto body repair costs and auto insurance premiums in the nation.

Rising Auto Body Repair Labor Costs

  • From 2006 to 2017, average auto body repair labor rates in Rhode Island have increased an incredible 19.6%, while neighboring states increased 11.2%.
  • Rhode Island’s average auto body repair labor rate is now 7.8% higher than neighboring states.
  • Rhode Island’s auto body shop-owners’ margins have increased 11.2% compared to just 0.9% seen across neighboring New England states.

Rising Insurance Costs

  • Over the past 5 years, the average claim rose from $3,347 to $4,130, a 23.4% increase.
  • The average claim in Rhode Island is 26.0% higher than in neighboring states.
  • Rising claim costs may ultimately impact consumers’ wallets in the form of higher insurance premiums. Rhode Island has the second highest average property damage liability premiums and the fourth highest average collision premiums in the nation.

Estimated Impact of Legislation Banning Aftermarket Parts Use on Rhode Island Personal Auto Insurance Premiums

PCI’s research brief also estimates the impact of House Bill 8013 and Senate Bill 2679, which would effectively ban the use of high quality, reliable aftermarket parts (AMP) and force consumers to use higher priced original equipment manufacturer’ parts (OEM). On average, AMPs are 23.3% to 29.9% cheaper than OEM parts.

Aftermarket parts provide a $1.5 billion benefit to consumers. If insurers are prohibited from using AMPs, repair costs will go up and could lead to higher premiums.

PCI estimates this could drive the cost of repair parts up by 10.8% and overall repair costs by 5.2%. This in turn could drive premium increases, resulting in Rhode Island drivers paying the highest property damage liability premiums in the country, and the second highest collision premiums in the country.

About Us

PCI promotes and protects the viability of a competitive private insurance market for the benefit of consumers and insurers. PCI is composed of nearly 1,000 member companies, representing the broadest cross section of insurers of any national trade association. PCI members write more than $183 billion in annual premium, 35 percent of the nation's property casualty insurance. Member companies write 42 percent of the U.S. automobile insurance market, 27 percent of the homeowners market, 32 percent of the commercial property and liability market and 34 percent of the private workers compensation market.

Subscribe

Media

Media