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Insurers Challenge ‘Anti-Steering Act’

PROVIDENCE, R.I. (CN) - An insurance trade group has challenged the constitutionality of Rhode Island's Anti-Steering Act, which prohibits auto insurers from recommending repair and body shops to customers and third-party claimants after accidents.

The Property Casualty Insurers Association of America sued the state's Director of Business Regulation Paul McGreevy and Attorney General Peter Kilmartin, in Federal Court.

The state's 1997 Anti-Steering Act states: "The insured or claimant shall be promptly informed by the insurer of his or her free choice in the selection of an auto body repair shop. Once the insured or claimant has advised the insurer that an auto body repair shop has been selected, the insurer may not recommend that a different auto body repair shop be selected to repair the automobile."

The insurers claim, "This ban interferes with the ability of the insurer not only to communicate with claimants generally, but also communicate with their customers, the insureds, regarding repair options and benefits that these insureds have paid for through insurance premiums, thereby unconstitutionally prohibiting truthful commercial speech related to a lawful activity."

In 2005, Rhode Island expanded on the Anti-Steering Act with a "Bulletin," which stated that insurers must "promptly" inform insured parties of their free choice in selecting an auto repair shop, and immediately thereafter ask the claimant whether or not he or she has selected a shop.

"When this occurs, the insurer is precluded from providing valuable information that many claimants would like to know about, including possibly better repair options and benefits available to them, and claimants are denied the opportunity to make an informed repair choice," the complaint states.

The Property Casualty Insurers Association of America claims to represent more than 1,000 insurance companies that conduct business all over the country, of which 256 are licensed in Rhode Island.

It asks the court to enjoin enforcement of the Anti-Steering Act and Bulletin, under the First and 14th Amendments, as interfering "commercial free speech."

The insurers are represented by Patricia Sullivan and Jon Anderson with Edwards Angell Palmer & Dodge.

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