Minutes of Meeting
Claims Advisory Committee
A meeting of the Claims Advisory Committee was held at the office of Commonwealth Automobile Reinsurers on -
Wednesday, March 25, 1998 at 9:30 A.M.
The following members were present -
Ms. Kathleen Devericks Premier Insurance Company
Mr. Douglas Jones Arbella Mutual Insurance Company
Mr. Arthur Remillard, III. Commerce Insurance Company
Mr. Peter Kelleher * Hanover Insurance Company
Ms. Joyce Smith ** Commonwealth Mutual Insurance Company
Mr. Donald Cann Metropolitan Property & Casualty
Mr. Peter Dietz *** Peoples Service Insurance Company
Mr. Dana Marchant Commercial Union Insurance Company
Mr. James Mutschler Liberty Mutual Insurance Company
Mr. Paul Amoruso Trust Insurance Company
Mr. Robert Kerton Safety Insurance Company
Mr. Robert Puopolo Amica Mutual Insurance Company
Mr. Ciro Fei Sentry Insurance Company
Mr. Robert D. Woods, Jr. CNA Insurance Companies
Mr. Thomas Raher National Grange Mutual Insurance Company
* Substitution for Mr. Fran Delage
** Substitution for Mr. Michael Rowe
*** Substitution for Mr. Erik Jepsen
Minutes of Meeting March 25, 1998
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Representative Producers -
Mr. James Doherty Doherty Insurance Agency
Mr. Robert McGowan Mahoney & Wright Insurance Agency
Also present were -
Mr. Paul Brennan The Physician Network
Mr. David Krupa Safety Insurance Company
Mr. Dave Castro Commercial Union Insurance Company
Mr. Michael Doran Premier Insurance Company
Mr. Joseph Haswell Norfolk & Dedham
Mr. William Zukas Quincy Mutual Insurance Company
C.A.R. Staff -
Ms. Valerie Gedziun Vice President - Claims
Mr. Robert W. Bell Claims Manager
Ms. Susie Almonte Winters Claims Analyst
Mr. Joseph Maher Vice President & General Counsel
Mr. Jean Laprime Senior Claims Examiner
Mr. Robert McNamara Claims Examiner
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98.0 Minutes of Meeting
Mr. Doherty made a motion to approve the minutes of the Claims Advisory Committee meeting of January 28, 1998, the minutes of the Automobile Damage Appraisers Licensing Board Subcommittee of January 21, 1998, and the Educational Subcommittee of January 22, 1998, February 12, 1998, and March 5, 1998. Mr. Amoruso seconded and the motion passed unanimously.
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97.35 Reinspections
Mr. Bell stated that the reinspection figures for all of the Servicing Carriers have
been submitted for 1997. Two companies did not meet the required reinspection percentages. These companies will be notified of the results and a determination will be made on issuing a warning for major non-compliance with the Performance Standards once the companies have had an opportunity to review the findings.
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Mr. Bell continued saying that the reinspection results are an improvement
over the 1996 results when five companies were warned for non-compliance. Also, the reinspection rates improved for vehicles with over $4,000 of damage from 65 percent in 1996 to 79 percent in 1997. The reinspection rate for vehicles with less than $4,000 of damage also increased, from 34 percent in 1996 to 38 percent in 1997.
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97.36 Special Investigative Unit
Ms. Gedziun reported that the 1997 Physical Damage SIU savings were $10.9
million, an increase of $160,000 over 1996. She added that in 1997 assignments were 6,881 while in 1996 they were 7,322. The number of cases denied rose from 27 percent in 1996 to 30 percent in 1997 while the number of compromised cases decreased from 10 percent in 1996 to 6 percent in 1997.
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98.51 Performance Standards
Ms. Gedziun stated that at the Governing Committee’s February 11, 1998 meeting, it adopted the proposed changes to the Performance Standards as submitted except for a change to Appendix A of the CAR Standards for Servicing Carrier Special Investigative Units. The following language was substituted: “An SIU must have at least one full time employee whose function is principally dedicated to the recognition and investigation of fraud”.
She continued by saying that the proposed changes were submitted to the Commissioner of Insurance on February 17, 1998. The Independent Property-Casualty Insurers of Mass have requested a hearing regarding this proposed change and CAR is waiting to hear from the Division on this.
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98.55 Educational Subcommittee
Ms. Gedziun reported that the Educational Subcommittee has been meeting frequently and has the 1998 seminars arranged. The seminars will be held on Thursday, May 14, 1998 at the Casa di Fior in Wilmington and on Tuesday, May 19, 1998 at Lantana’s in Randolph. The first mailing of the brochures went out last week.
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Ms. Gedziun said that the speakers will follow a low impact soft tissue injury case through its investigation and settlement and explain how their various disciplines can aid the adjuster in controlling the cost of the claim. These expert testimonies will be debated by plaintiff and defense counsel. The focus this year will be on both the Physical Damage and PIP/BI aspects of the claim.
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98.41 Automobile Damage Appraisers Licensing Board
Mr. Woods reported that the CAR subcommittee on the Automobile Damage Appraisers Licensing Board met on March 17th to update committee members on the activities of the Board. There was also a meeting on March 20th at the Department of Revenue between the Department of Revenue, nine represented insurance companies, and the Massachusetts Auto Body Association to seek clarification of three issues raised in a letter from the attorney representing the nine companies, Henry M. Donlon, Jr.
On the first issue: “No sales tax or mark up percentage is to be charged to a customer for tangible personal property where there is no transfer of title or possession to the customer and/or until such a transfer of property takes place.” The Department of Revenue would not provide a definite answer but did say if formulas are used and are written as paint and material and appear as one sublet item, they would probably be looking for tax on the whole item. Mr. Woods said the Department of Revenue now understands not all of the paint and material goes down the road with the car thus there could be a splitting of tax and companies would be within their rights to do so. Mr. Woods added that the Department of Revenue is looking for the industry and Mass. Auto Body Association to agree on how to interpret this on a prospective basis.
On the second issue: “The repairer must pay a sales tax at the time of purchasing items used in the repair process where there is no transfer of title to or possession of such items to the customer, and the sales tax is based on the price which the repairer pays for such items.” Here a question arose as to how the shops would get reimbursed for the tax they pay when they buy items that will be used in the repairs. The Department of Revenue chose not to cover this issue but indicated there was no intention to charge tax on other than what is paid for materials.
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On the third issue: “Advisory Ruling 97-98-1 which the Massachusetts Auto Damage Appraiser Licensing Board issued does not accurately state the Department of Revenue’s position on sales tax on paint and materials in its Letter Ruling of December 27, 1996 to Attorney James A. Castleman of the Mass. Auto Body Association.” Mr. Woods said the Department of Revenue held that the ruling given to Attorney Castleman is the ruling they will stick with. This is with the understanding that Mr. Castleman told of one method of computing paint and material. In his letter Mr. Castleman only talks about the method which is an hourly charge multiplied by a dollar amount. Mr. Woods said the Letter Ruling could have been expanded to cover the Mitchell issue as well. Also, the Department of Revenue did say that if the companies and the Mass. Auto Body Association came to an agreement, they would listen and be guided as to what percentage of materials went down the road with the car.
Mr. Woods said the Licensing Board was willing to talk with the companies on this issue but the Department of Revenue will not say how to price business. They will, however, ask to show what portion should be taxable. Mr. Woods said the industry is now in position to provide input.
Mr. Amoruso said he believed the subcommittee was acting outside of the scope of its charge. He also believed that the Automobile Damage Appraisers Licensing Board has overstepped the authority given to it by the legislature. Mr. Amoruso contended the subcommittee was legitimizing a form of negotiation through CAR to change the way prices are paid for repairs in Massachusetts. Mr. Amoruso expressed his opposition to the subcommittee negotiating and talking to the Mass. Auto Body Association. Mr. Amoruso did say that the nine carriers individually approaching the Department of Revenue was the proper action. He added that the Licensing Board’s functions are safety and to make sure the proper parts are put on the appraised cars. Mr. Amoruso moved that the Automobile Damage Appraisers Licensing Board Subcommittee disband negotiations and discussion with the Licensing Board.
Committee members opined that the subcommittee had not been negotiating with the ADALB and that at the meeting at the Department of Revenue the insurance companies were meeting individually and not as the subcommittee.
Mr. Marchant asked if the issue is whether the subcommittee will continue to exist or if the subcommittee will negotiate with the Automobile Damage Appraisers Licensing Board? Ms. Devericks said the motion was for the subcommittee to stop negotiation.
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Mr. Mutschler asked if the discussion could return to the motion. Ms. Devericks reminded the committee that at the last meeting of the Claims Advisory Committee a recommendation was made to the Governing Committee that the subcommittee continue and that the Governing Committee was very positive in accepting the recommendation at its February meeting. Ms. Devericks asked if there was a second to Mr. Amoruso’s motion. The motion was not seconded.
Ms. Gedziun read the recommendation that was accepted by the Governing Committee. The recommendation is that representatives of the Auto Damage Appraisers Licensing Board Subcommittee attend Automobile Damage Appraisers Licensing Board meetings in order to have input and report back to the Claims Advisory Committee on items under consideration.
Mr. Amoruso then moved that subcommittee continue to pursue its activities consistent with the recommendation as stated in the minutes of the February Governing Committee Meeting. Mr. Remillard seconded and the motion passed unanimously.
Discussion ensued over the authority of the Automobile Damage Appraisers Licensing Board. Ms. Devericks asked Mr. Maher to address what the statutory authority of the Licensing Board is for the next Claims Advisory Committee meeting. Mr. Maher agreed to look into the matter.
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98.32 Glass Losses
Mr. Bell stated that the Claim Department will include glass claims in the 1998 Claim Reviews. Mr. Bell said some of the items under consideration are discounts, labor rate, presence of photos or reinspections, name and address of shop, name and address of insured, name and address of agent, and correct application of glass prices. He invited suggestions from the committee on other items to include in the study.
There being no further business Mr. Doherty made a motion to adjourn. Mr. Mutschler seconded and the motion passed unanimously.
The next scheduled Claims Advisory meeting will be on Wednesday, June 3, 1998 at 9:30 AM.
Robert W. Bell, CPCU
Claims Manager
Boston, Massachusetts
April 1, 1998