Arizona Third-Party Administrator Bill Passes Senate; Heads to House for Review
March 10, 2011

An Arizona bill that could adapt the state's insurance code to include language about auto glass inspections passed that state's Senate with a vote of 24-5 yesterday. It will now go the Arizona House of Representatives for review.

The bill, sponsored by Sen. John McComish, contains several auto-glass-related provisions, including one 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."

The legislation also defines a TPA as “any person who collects charges or premiums from or paid on behalf of, or who provides administrative services to or adjusts or settles claims by, residents of this state in connection with motor vehicle insurance coverage,” and adds a section to the law that applies specifically to TPAs.

If passed in its current form, the following language would apply to TPAs—but not to employees of insurance companies, which are excluded from the TPA section:

If a [TPA] recommends or provides information about a glass repair facility to a customer, the [TPA] shall inform the person of the person's right prescribed in section 20-469 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 … ”
Though the original Senate bill contained a provision that would have prohibited insurers and TPAS from having a financial interest in auto glass replacement companies, that provision was removed by the Banking and Insurance Committee prior to passage. The committee also had voted to remove a provision in the bill that 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."

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