Arizona Bill Amended; Prohibition Regarding Insurers and TPAs with Financial Interests in Auto Glass Replacement Companies Removed
February 17, 2011

The Arizona Senate’s Banking and Insurance Committee has amended a bill designed to adapt the state’s insurance code to include language about inspections. The recent amendment maintains a clause that would prohibit insurers and third-party administrators (TPAs) from causing "a delay in the inspection of a policyholder's auto glass condition in the handling of a policyholder's claim regardless of which repair facility the policyholder chooses."

However, it removes the third page of the original bill, which would have prohibited insurers and TPAs from having a financial interest in auto glass replacement companies. The removed page of the bill also would have required that, in the case of an auto glass inspection, “the inspector must be a direct employee of the insurer or an independent party who is unrelated and unaffiliated with any glass repair facility.”

Also removed was a provision that would have required insurers to "notify the policyholder whether glass to be used will be original equipment glass or previously used glass, where the glass was manufactured and whether the glass was specifically manufactured for use in the claimant's vehicle" at the time the claim is authorized.

The main section of the new text replacing the removed page would read as follows:

“If a [TPA] recommends or provides information about a glass repair facility to a customer, the [TPA] shall inform the person of the right prescribed … to choose any glass repair facility for the repair of the loss relating to motor vehicle glass at the same time as making the recommendation or providing information. An independent adjuster or a [TPA’s] automotive physical damage appraiser or claims inspector for automotive glass repair or replacement work in connection with an automotive glass repair inspection shall not recommend any particular glass repair facility.”

The addition stipulates that “a person who violates the provisions of this section is guilty of a petty offense for a first violation and is guilty of a Class III misdemeanor for any subsequent violation.”

“After talking with the insurance people as well as Safelite as well as those representing the independent installers, we decided to soften the bill to provide a penalty for those that are steering, as opposed to the original bill, which would alter the business model for someone like Safelite,” Sen. McComish told™/AGRR magazine in an interview this afternoon. “The revised version of the amendment provides penalties for those that do the steering, but doesn’t affect Safelite’s business model.”

The bill originally was scheduled to be heard by the committee last week, but was held until this week’s meeting. “The reason we held the bill was we were working with these various stakeholders in trying to come up with some common language and we did,” adds McComish.

The proposed amendment was filed on Monday morning, February 14, by the bill’s original sponsor, Arizona State Sen. John McComish, and the committee voted unanimously to pass as amended the following day. The bill soon will go to the full Senate for a vote in its amended form.

At press time, Safelite officials had not responded to requests for comment.

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