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Minnesota Legislature

For insurance sake, no repair shops

Published (3/6/2009)
By Lee Ann Schutz
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The Allstate Corporation owns a vehicle repair shop in New York, and Rep. Leon Lillie (DFL-North St. Paul) doesn’t want them to open one here.

He sponsors HF978 that would prohibit auto insurance companies or their affiliates from owning an auto repair shop in the state.

“By law, consumers are entitled to have their vehicle completely and safely repaired to its pre-accident condition,” Mike Schoonover, told the House Commerce and Labor Committee March 3. The owner of a St. Paul auto repair shop and member of the Alliance of Automotive Service Providers-Minnesota said, “A conflict of interest arises when an insurance company that is paying for the repair is also performing the repair.” He said that if insurance companies can own repair shops, this would lead to fewer consumer choices, and there is the fear companies would “aggressively steer consumers to their own shops.”

“It’s like Byerly’s coming to the Legislature saying Target should not be allowed to sell groceries,” countered Doug Franzen, representing the Property Casualty Insurers Association of America and Allstate.

Although the company does have an interest in a body shop, he said they are not currently pursuing the business strategy. “But we do have a concern about limiting a business model,” he said.

Franzen also thinks the bill could prevent Allstate from doing business in the state. Lillie said that is not the intent of the bill.

The committee approved the bill, and it now awaits action on the House floor.

The companion, SF842, sponsored by Sen. Mary Olson (DFL-Bemidji), awaits action in the Senate Commerce and Consumer Protection Committee.

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