Industry Critical of Accident Report Veto by Ind. Governor

The Insurance Institute of Indiana and national insurance trade associations are warning consumers that they may suffer because of a gubernatorial veto of House Enrolled Act 1274. The bill would have banned police departments from sending motorists a bill after they investigate an accident, and also would have provided more transparency in setting fees for the public to copy crash reports.

In a veto message that came late on May 9, Governor Mitch Daniels claimed that latter provisions would “limit the Indiana State Police’s flexibility in making available vehicle accident reports in an efficient manner”.

“The insurance industry is dissatisfied with the veto, but the real losers here are consumers,” Insurance Institute President Steve Williams said. “The governor essentially green-lighted a measure that will allow communities to double-tax Hoosiers for police services.”

The bill would have banned accident response fees, which is an increasingly popular way of raising revenue for cash-strapped local governments. Potential vendors tell cities and towns they will bill insurance companies. Most companies in Indiana, however, do not cover these fees, so the bill is passed on to the consumer. These bills can total more than $400.

The second portion, which was first amended into the bill in the House of Representatives, would limit what police departments can charge for a crash report to $8. The Indiana State Police (ISP) currently has a contract with www.buycrash.com that allows the vendor to charge $12. To accommodate this contract, this portion of the bill would not have gone into effect for the ISP until the contract expires in 2010.

After that, the ISP could charge more than $8 by publishing a report proving a higher fee is necessary and adopting an administrative rule. The ISP opposed these provisions and advised the governor to levy the veto. The ISP raised the cost of crash reports from $3 to $12 in 2006, when the contract took effect.

“By opposing a process that provides more transparency, one can assume that the State Police can’t justify what they charge through this private vendor,” Williams said. “Unfortunately, a ground-breaking pro-consumer bill was a casualty.”

The Indiana State Police only receive 10 percent – or $1.20 – of each crash report. Buycrash.com receives the other 90 percent.

HEA 1274 would have been the first bill of its kind in the nation. Kentucky, Missouri, Ohio, Pennsylvania and other states were watching this legislation and considering using it as a model for laws of their own.

The National Association of Mutual Insurance Companies (NAMIC), which is based in Indianapolis, said the veto doesn’t reflect well on Indiana’s desire to be a leader among states.

“Governor’s Daniel’s veto is very disappointing, not only for our members operating in Indiana, but for what his actions say about the state,” NAMIC State Affairs Manager Tami Stanton said. “Indiana had the opportunity to take the lead on an important pro-consumer, insurance issue on the national stage and the governor’s veto turned off the footlights.”

Representative Ron Herrell (D-Kokomo) decided to author this legislation after hearing media reports about the town of Cumberland, Ind., where an ordinance allowing accident response fees is in place. Senator Richard Bray (R-Martinsville) was the Senate sponsor. The bill passed the legislature nearly unanimously. The Senate approved the measure 47-0. The House passed it 93-1.

It’s possible that the General Assembly may override the veto as early as Organization Day this November. If they don’t take action on Organization Day, they could try again in January 2008. In the meantime, however, the insurance industry worries the State Police might attempt to extend their contract. An extended contract could allow the ISP to skirt the new $8 cap for several more years without having to justify it through a public rule-making process, the industry said.

The Property Casualty Insurers Association of America (PCI) says it also leaves the door open for government to charge Hoosiers exorbitant fees for the time being.

“The governor and his advisors did not receive all of the information about the negative impact on consumers,” PCI Assistant Vice President Greg LaCost said. “This law was intended to curb the current abuses being imposed by vendors. Vendors grossly overreached in their deal with the State Police and the average citizen is taking the hit.”

Source: The Insurance Institute of Indiana