Industry Legislation Sparks Opposition from Insurance Association and Safelite
February 15, 2012

by Katie O'Mara, komara@glass.com

Legislation in two states has caused an insurance association and auto glass company Safelite to respond with statements of opposition. The Property Casualty Insurers Association of America (PCI) has released a statement claiming that the South Carolina anti-steering bill, HB 4042, is “inconvenient” and could “raise costs for consumers.” The bill would prohibit TPAs that also have retail divisions, or that have 10 percent ownership or more in an auto glass business, to refer policyholders’ glass claims to itself or to use information obtained through its work as a TPA to solicit business.

“Many years ago, it was common to have to get three estimates to submit to the insurer, a time consuming process that was not exactly customer friendly. Because most people don’t have the need for auto body or glass repair very often, they were very much on their own. Auto glass damage claims, being smaller in severity and more frequent in number lend themselves well to direct repair programs,” reads the statement from the association. “Glass repair networks developed and some of these providers began offering third party administrator services to help insurers handle glass claims. Consumers have been shown to like these programs; a recent JD Power Survey found that people who take their vehicles to network repair facilities are more satisfied than those who use other facilities.”

The language of the South Carolina bill reads as follows: “It is an unlawful trade practice for a motor vehicle glass repair business actively engaged in the repair of motor vehicle glass, or a person or entity with a ten percent or more ownership interest in that business, and acting as a third-party administrator of insurance claims made pursuant to insurance coverage for motor vehicle glass repair to: (1) refer or steer, or cause to be referred or steered, an insured’s motor vehicle glass repair business to itself; or (2) use consumer information obtained in the process of acting in that dual capacity to solicit motor vehicle glass repair business.”

Many in the insurance industry are against the bill.

"This bill would severely limit auto insurers' ability to choose business practices that best serve their customers, limit choices available to consumers for repairing damaged auto glass and potentially increase costs that impact insurance premiums," said Bob Passmore, senior director of personal lines at PCI. "The ability of glass repair facilities to help insurers handle glass claims have shown benefits to consumers. While PCI does not explicitly endorse specific business practices such as using third-party administrators or direct repair programs which help streamline the repair process, we do support the ability of insurers to develop and offer innovative products and programs to their customers."

The bill has been sent to the state’s Senate for review. The South Carolina legislative session runs through June 2, although a vote on the bill is expected sooner. The bill originally was introduced by Reps. James Harrison, Joan Brady, Lewis Pinson, Elizabeth Munnerlyn, Thad Viers, Jenny Horne and Nelson Hardwick.

Safelite has also released a statement of opposition to Arizona bill SB1331, which is currently under review in the Senate’s Banking and Insurance Committee.

The language of this bill, similar in nature to the current South Carolina bill, reads as follows: “It is an unlawful practice for an auto glass repair business that is actively engaged in the repair of auto glass, or a person or entity with at least a ten percent ownership interest in that business, and that acts as a third-party administrator of insurance claims made pursuant to insurance coverage for auto glass repair to either: (1) refer or steer, or cause to be referred or steered, an insured’s auto glass repair business to itself. (2) Use consumer information obtained in the process of acting in that dual capacity to solicit auto glass repair business.

After reviewing the additions to the Arizona auto glass fraud bill, it is amazing to see what we attempted to put into the bill in the very beginning,” says Kerry Soat, CEO for Fas-Break, Inc., in Chandler, Ariz. “This bill should cover third-party administrators as well as auto glass guys, but as I stated in the negotiations, it should also cover body shops, towing companies, auto repair shops and anyone else dealing with your vehicle ... Now they are attempting to do what should have been done in 2010 and that's get to crux of the issues.”

The response from Safelite claims that a bill like this one would leave 700-plus people without jobs in the state of Arizona.

“The effects of SB1331 are plain and simple: it's a job killer. This bill is a direct attack on a single company in a single industry operating successfully in the free marketplace,” says Brian O'Mara, vice president of national contact center operations at Safelite. “We currently employ 581 people at the Chandler contact center, with this number expanding to over 700 during peak seasons. Including our other operations, Safelite employs over 800 people statewide. Further, we are currently holding a $3.5 million expansion project that would increase our contact center's employee base by hundreds. These are all new jobs that Safelite is working to bring to Chandler.”

This bill was introduced by Reps. McComish, Robson and Dial.

This story is an original story by AGRR™ magazine/glassBYTEs.com™. Subscribe to AGRR™ Magazine.
Subscribe to receive the free e-newsletter.