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New York State Seal

STATE OF NEW YORK
INSURANCE DEPARTMENT

160 WEST BROADWAY
NEW YORK, NEW YORK 10013

NOTE: WITHDRAWN EFFECTIVE OCTOBER 11, 2002


Circular Letter No. 4 (1994)
April 7, 1994

                                                                                                  

TO: All Insurers Licensed to Write Motor Vehicle Physical Damage Insurance in New York State and Insurance Producer & Adjuster Organizations
RE: Scope of Referrals to Motor Vehicle Repair Shops

Section 2610 of the New York Insurance Law prohibits insurers who provide collision or comprehensive coverage from requiring any insured to use a particular place or shop to have repairs made to their vehicle. Except for a claim solely involving window glass, under 2610, an insurer cannot even recommend or suggest repairs to be made to such a vehicle in a particular place or shop once a claim has arisen, unless the insured requests a recommendation or suggestion.

The Insurance Department received numerous complaints alleging that insurers have been "steering" insureds to specific repair shops. As a result, the Department performed market conduct investigations into the practices of the three insurers receiving the most complaints. These investigations uncovered certain practices that might be considered questionable under 2610. As a result, the insurers have agreed with the Department to modify their procedures.

The purpose of this Circular Letter is to inform the insurance community of what should be learned from these market conduct investigations on so-called steering. Although the investigations involved only three insurers, other insurers may be following procedures that would be at odds with the Insurance Department's interpretation of 2610.

In order to assure that claims handling procedures do not conflict with the Department's interpretation of 2610, if the following guidelines are used by insurers licensed to write motor vehicle collision or comprehensive physical damage insurance in New York State and by insurance producers and adjusters, they will be deemed in compliance with 2610:

o a subsequent request for a recommendation for a repairer is made;
o documented complaints from claimants about that repair shop have been logged by the insurer;
o complaints about that repair shop have been reported to the Department of Motor Vehicles; or
o a notice of rights letter has been issued pursuant to the requirements of Regulation 64.

The insurer's senior claims officer should, no later than May 1, 1994, acknowledge in writing receipt of this Circular Letter to: Louis Trager, Associate Examiner, Property & Casualty Insurance Bureau, 160 West Broadway, New York, New York 10013. Please direct any questions concerning this Circular Letter to Mr. Trager (212-602-8812).

 

Very truly yours,

SALVATORE R. CURIALE
SUPERINTENDENT OF INSURANCE