TIFFANY L. PARKS
Daily Reporter
While Insurance Auto Auctions Inc. has praised the provisions in a bill crafted to modernize the state’s salvage sales laws, the president of the Ohio Auto and Truck Recyclers Association has derided House Bill 468 as having no benefits for Ohioans.
“Ohio is currently one of only a few states that require purchasers of salvage vehicles to pay for and obtain a state-issued bidding license, also known as a BID card, in order to purchase salvage vehicles from salvage pools and salvage auctions,” said Steve Tugend, IAA legislative counsel.
“A BID card can only be issued to salvage dealers licensed in Ohio or to salvage dealers licensed in other states if the dealer has a significant physical presence in Ohio or if the attorney general has examined the laws of the state where the dealer is located and has issued an opinion that the other state’s licensing requirements are equivalent to those in Ohio.”
Under these guidelines, Tugend said many potential bidders such as private citizens, used car dealers, rebuilders and other automotive-related businesses are not allowed to directly purchase salvage vehicles.
“These anti-competitive and unnecessary limitations placed on buyers result in lower overall auction prices for insurance companies seeking to recoup their losses on total loss vehicles,” he said.
HB 468 would repeal the BID card requirement and permit a licensed salvage motor vehicle auction or salvage motor vehicle pool to auction and sell salvage vehicles to authorized purchasers, while requiring the seller to keep an electronic record of all sales, identification of the purchaser and a copy of the purchaser’s license to purchase salvage vehicles.
The bill is jointly sponsored by Reps. Barbara Sears, R-Sylvania, and Ross McGregor, R-Springfield.
McGregor said the information collected and maintained in electronic records by the salvage motor vehicle auction or salvage motor vehicle pool would have to be submitted to state officials for a statewide database of salvage sales and purchases.
“To ensure transparency, this bill requires a salvage motor vehicle auction or pool to give a copy of the certificate of salvage title to the purchaser at the time of sale,” he said. “Similarly, the Bureau of Motor vehicles will be required to include a warning on all certificates of salvage titles.”
HB 468 would ban a salvage motor vehicle auction or pool from knowingly selling a salvage motor vehicle to anyone other than an authorized purchaser.
The bill defines an “authorized purchaser” as someone who is a licensed motor vehicle salvage dealer, junk yard, scrap metal processing facility, used motor vehicle dealer, salvage dismantler or an automotive recycler business authorized to purchase salvage motor vehicles by another state, country or jurisdiction.
An “authorized purchaser” also would be an individual who has purchased no more than five salvage motor vehicles in the current calendar year from any salvage auction or pool.
“This bill has many serious concerns for us and the primary question we should be asking is: what about this bill benefits Ohioans? It’s a question of risk,” said OATRA President Jim McKinney.
“Should we risk hundreds of Ohio jobs so that a few car enthusiasts can purchase rebuilders direct? Should we risk allowing unscrupulous individuals the ability to buy and sell flood cars, such as the ones sold from Hurricane Sandy, to add minimal profit to the already record-breaking profits of the insurance industry? Should we risk the closing of many small businesses in Ohio in order to afford unregulated entities an unfair advantage over those of us who are regulated?”
Tugend noted that Ohio’s current statute regulating the sale of salvage vehicles was enacted in 1986.
“In addition to market conditions, the regulatory environment affecting vehicles changed significantly after Ohio enacted its restrictions,” he said.
“Other states have modernized their salvage sales laws while Ohio has not. In 2007, three states, Oklahoma, Mississippi and Louisiana, amended their out-of-date statutes to embrace the expanding global market and repealed their BID card systems. In addition, Illinois repealed its BID card system for out-of-state buyers in 2008, Utah repealed the BID card requirement for out-of-state buyers in 2009 and Arkansas repealed the BID card requirement in 2011.”
Tugend said the IAA supports “the goal of having only safe vehicles on the road.”
“This goal applies to new and used cars as well as rebuilt salvage vehicles, regardless of who does any needed repairs to such vehicles,” he said.
“We do not believe that there is any evidence that allowing a broader buyer base will jeopardize vehicle safety. By allowing the broader buyer base bid on salvage vehicles, the extra return caused by increased competition comes to the insurance company and helps to hold down automobile premiums for all policyholders.”
McKinney said the state cannot afford to “put money into the pockets of big business at the expense of Ohio jobs, businesses, consumer protection and tax revenues.”
“We need to do what is best for Ohio and Ohioans. There is nothing in this bill that benefits Ohioans,” he said.
“One point in particular that has been touted by the proponents is auto insurance rates. Auto insurance rates are based upon risk, not the return on salvage vehicles. In fact, Ohio ranks as one of the 10 states with the lowest average auto insurance premiums in America already.”
If HB 468 were enacted, McKinney said there would be nothing in place to stop someone in Nebraska from claiming that they have a company based out of the country and they are allowed to purchase salvage vehicles there.
“All they have to do is make a declaration, under penalty of perjury that they are authorized to do so,” he said. “Criminals and those with devious intentions are not concerned with lying, under oath or otherwise. Vehicles have always been a target for individuals with fraudulent intentions and will continue to be so.”
HB 468 was reported out of the House Insurance committee this week.