Auction changes could cost jobs, lower cost of insurance

Recyclers argue proposed bill could hurt industry and safety, insurers say it would lower rates for consumers.

But proponents of Senate Bill 273, including the insurance industry and auto auctioneers, say the bill would reduce insurance rates in Ohio by making the market more competitive.

The Ohio Auto and Truck Recyclers Association and the United Coalition of Auto Recyclers strongly oppose the bill.

“It would open up a big can of worms,” said Gene Wyen, vice president of Walt’s Auto in Springfield, one of nine salvage yards in Clark County.

Currently Ohio requires an identification card to purchase one of the more than 100,000 cars a year that are deemed a total loss by insurance companies. Licensed dealers in Ohio and 21 other states can apply for the ID cards. More than 1,900 valid buyer identification cards have been issued.

The state has more than 600 valid salvage dealers, according to the Bureau of Motor Vehicles.

In other states, insurance companies can sell the vehicles to anyone via online auctions with less regulations.

Dean Fadel, vice president of government affairs at the Ohio Insurance Institute, called Ohio’s salvage vehicle market “the most exclusive” in the U.S. He said insurers are the No. 1 producers of salvage vehicles in the state, but can only sell them to about 1,000 potential buyers.

“From an insurance standpoint, the cost recovery is very low in Ohio compared to other states and ultimately that cost plays into our insurance premiums for auto insurance,” Fadel said.

State Sen. Keith Faber, R-Celina, who represents Champaign County, introduced the bill earlier this year. It passed through the Senate in April and it’s now in the House.

Coalition members protested outside of the Statehouse in Columbus during a House Insurance Committee hearing on the bill on Tuesday. A second hearing is scheduled for Dec. 11.

The bill must make it through during lawmakers’ final session of the year next week, or be reintroduced next year.

Last week, amendments to the bill were made, including language on vehicle titles that would warn consumers that they’re purchasing unsafe vehicles and eliminating a tracking database that can be used by law enforcement.

Recyclers association president Jim McKinney said if the bill passed, it would increase costs for smaller salvage yards by 20 to 30 percent, many of whom were already struggling in the current economy. He estimated it could cost the industry about 2,500 jobs in Ohio.

“They’re dangerous,” McKinney said. “I’ve seen cars completely destroyed sell for $18,000 because they want a title. It’s a dangerous business.”

The groups believe these damaged cars could be sold to unsuspecting consumers, whereas salvage yards typically buy the cars and sell the parts.

Other groups, like the Ohio Environmental Council, oppose the bill because it could increase the risk that hazardous materials, like oil and antifreeze, won’t be disposed properly.

Both state Sen. Chris Widener and State Rep. Ross McGregor are opposed to the bill.

Widener had originally co-sponsored the bill and voted for it when it passed through the Senate in April, but later removed his name it.

“I still think there’s probably a validity to having a licensed group of dealers deal with abandoned and demolished cars because of the processes that need to take place to deal with those,” Widener said.

McGregor said he’s “opposed to the process that’s been used” and is concerned with how the recent amendments changed legislation. It’s a complicated issue, he added.

He believes changes are necessary concerning auto salvage auctions, but doesn’t like the way the current legislation is written. McGregor wants to make sure smaller businesses aren’t overlooked.

“They can’t really afford high-powered lobbyists,” McGregor said. “I just want to make sure their voice is being heard.”

Wyen, who has worked in the family business since 1960, said the bill would hurt his business, allowing essentially anyone to purchase these cars at auction.

“It’s going to drive up the cost of the cars,” Wyen said.

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