San Antonio, Texas-based USAA Casualty Insurance Co. will conduct monthly audits of Safelite Solutions (its third-party automotive glass claims administrator) and has updated its procedures to eliminate any function that could be interpreted as adjusting, according to a report it submitted to the Minnesota Department of Commerce. USAA also says it will do away with the guaranteed average invoice agreement.
The report was issued as a part of a settlement agreement with the Minnesota Department of Commerce. Several issues were raised by the State following a review of USAA’s glass claims process. As a part of the negotiated settlement, the Department of Commerce required payment of a $50,000 civil penalty as well as USAA’s assurances that any independent adjuster engaged to adjust automobile glass claims is properly licensed in the state.
“USAA’s claims adjusters are not required to be licensed. We believe our third-party glass administrators (TPA) do not perform functions that require a license,” says Roger Wildermuth, an USAA spokesperson.
When adjusting functions are required, calls will be transferred to USAA’s in-house adjusters, according to the report.
The settlement agreement also called for USAA to no longer agree to a guaranteed average invoice with its TPA. An average invoice agreement between TPA and insurer generally means the TPA guarantees that the invoice amounts, when averaged together, will not exceed a certain amount over a set time period.
“The contract has been amended to remove the guaranteed average invoice provision,” reads the report.
USAA will also no longer advise insureds they may be billed a balance by non-preferred vendors unless there is information to support this statement for a particular vendor, reads the report.
Moreover, the glass claims process has been changed to remove any recommendation to use USAA’s glass claim agent (Safelite) if the insured has selected a shop.
“If the insured has not selected a shop, the glass claim agent [Safelite Solutions] will ask if the insured would like a recommendation,” reads the report. “If the insured agrees, a recommendation is provided.”
Furthermore, USAA says it will advise the insured of the right to choose a glass vendor.
A copy of USAA’s settlement with Minnesota noted that the Department of Commerce was prepared to commence formal action against USAA’s certificate of authority to engage insurance business in the state.
Two of the allegations based on the Department’s review of glass claim files were that USAA and/or its TPA “engaged in an act or practice of coercion, incentive or inducement toward insureds selecting certain non-preferred glass vendors and USAA failed to effectuate fair settlement of glass claims in which liability had become reasonably clear,” according to the settlement.
The settlement report noted that there has been no hearing, findings of fact or conclusions of law. Minnesota and USAA agreed to a negotiated settlement of the disputed allegations.
Safelite Solutions officials had not responded to a request for comment at press time.
To read a copy of USAA’s report to the Minnesota Department of Commerce, click here.
To read a copy of the settlement agreement, click here.