CONGRESSWOMAN ELISE STEFANIK
On Monday, July 23, 2012, the House is scheduled to consider H.R. 5859, a bill to repeal an obsolete provision in title 49, United States Code, requiring motor vehicle insurance cost reporting, under a suspension of the rules requiring a two-thirds majority vote for approval. The bill was introduced on May 30, 2012, by Rep. Gregg Harper (R-MS) and referred to the House Committee on Energy and Commerce. The committee held a markup of the bill on July 10, 2012, and ordered the bill to be reported, as amended by voice vote.
H.R. 5859 would repeal an obsolete provision in Title 49 requiring the National Highway Traffic Safety Administration (NHTSA) to produce, and automobile dealers to provide, a booklet of collision cost information.
This legislation is consistent with the goals of Executive Order 13563, which requires Congress to identify the least burdensome tools to achieve regulatory ends and to consider the costs and benefits of regulations.
According to the Committee, “the 1972 Motor Vehicle Information and Cost Savings Act directed NHTSA to promulgate regulations requiring new-car dealers to give prospective buyers information comparing insurance rates for different makes and models of passenger motor vehicles based on their differences in damage susceptibility and crashworthiness. NHTSA issued a final rule on April 5, 1993. The rule requires new-car dealers to make available to buyers, upon request, a booklet containing the latest information on insurance costs. NHTSA annually updates the information based on data from the Highway Loss Data Institute.”
“The information required by the regulation is rarely sought by consumers and its value to consumers in estimating insurance premiums is questionable. The insurance cost data is general, averaging repair costs from incidents ranging from a low-speed fender collision to a vehicle rollover. Insurance premiums are based on a number of factors that are unrelated to a vehicle's damage susceptibility, including the driver's age, driving record, location, and miles driven.”
“New car dealers face civil penalties if they do not provide the booklet to consumers upon request. The Subcommittee received testimony from two experienced car dealers, Representative Mike Kelly from Pennsylvania and Mr. Jack Fitzgerald of Maryland, recalling no customer requesting a copy of the collision information document in all their years as either salesmen or dealership owners. Mr. Kelly also testified that in the combined 250-plus years of his sales staff, none recalled a single customer, out of the 10,000 car buyers visiting his showroom floor annually, requesting the document. Mr. Fitzgerald further testified that a recent survey of 815 members of the National Automobile Dealers Association reported 96 percent of its dealers had never been asked by a customer to see the insurance cost booklet.”
“The publication of the insurance information obtained under section 32303 consists of data generated by the Highway Loss Data Institute, which ranks new cars by their relative collision loss payments by insurance companies. This information is provided to each new car dealer for customer reference in making purchase decisions. However, the data are rarely used and not useful because the differences in rates due to loss payments are overshadowed by differences in premiums due to driver demographics, geographic location and the relative prices of the vehicles. Though these rankings provide an indication that one model will have a higher collision insurance premium than another, a prospective buyer still must consult an insurance agent to determine how much the premium will differ according to that person's specific personal information (e.g., age, driving record, miles driven, home location). A prospective buyer does not need a brochure from the Federal government to obtain this information, since insurance agents are trained to provide advice on how model selection affects insurance premiums.”
“The Committee finds the continued requirement to provide the collision information booklet to automobile dealers, and the continuing threat of civil penalties to dealers that fail to produce the document upon request, to be outdated, unjustified and a waste of resources. The Committee finds H.R. 5859 reduces unnecessary burdens on both the Federal government and the private sector without harming consumers.”
The Congressional Budget Office (CBO) estimates that implementing H.R. 5859 would have no significant effect on the federal budget. Enacting the bill would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply.
Under current law, the National Highway Traffic Safety Administration (NHTSA) requires dealers of motor vehicles to make available to prospective buyers information it prepares that compares the cost to insure different makes and models, based on a number of characteristics. H.R. 5859 would repeal that requirement. The bill also would require NHTSA to complete a study about the best way to get information to consumers about the likelihood of a vehicle being damaged in an accident. Based on information from the agency, CBO estimates that NHTSA spends less than $100,000 annually to prepare and distribute insurance information to dealers and that the costs to complete the study would also be small.
H.R. 5859 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would not affect the budgets of state, local, or tribal governments.