Auto Glass "Inspections" Take Center Stage During Arizona Bill Hearing
March 24, 2011
The auto glass inspections now required by some insurers prior to authorizing auto glass claims were a hot topic during a hearing held this week related to an Arizona bill that addresses inspections and third-party administrators (TPAs).
The Arizona House Banking and Insurance Committee, which hosted the hearing, ultimately voted to pass the bill with an amendment that changes the violations of the bill’s language from a misdemeanor to gradual fine system, starting at $500 and increasing to $1,500 on second offense, and $3,000 on third offense. In addition, the amendment adds language that says “in determining whether a defendant acted knowingly, it may be presumed that the person had knowledge if the person was engaged in a regular and consistent pattern of the prohibited activity.”
The amendment, sponsored by Rep. Nancy McClain, also removes a provision from the bill that would have made it “unlawful for an insurer or an insurer’s third-party administrator or agent to cause a delay in the inspection of a policyholder’s auto glass condition in the handling of a policyholder’s claim regardless of the repair facility the policyholder chooses.”
Safelite corporate counsel Brian DiMasi spoke in favor of the bill as amended and advised the committee the inspection system originally was enacted in Arizona on August 1 of last year and said one particular unidentified insurer has seen a 67 percent decrease in fraud since that date. He also advised the committee how the company determines whether an inspection is needed.
“When the claim gets called in, we always offer customer preference, [and say,] ‘you can use a glass of your choice,” said DiMasi. “The CSR will then, based on past customer data, look at certain glass shops and see spikes in claims and determine we want to inspect the vehicle.”
Sometimes, he said, the inspection might take place over the phone, asking the customer to look at the damage. “We’ll ask the policyholder to go out and look at the windshield … We’ll have the policyholder verify it over the phone. Other times the inspector will go out, look at the glass, and then simply call it in to the insurance company glass program at Safelite Solutions and say ‘yes, there is damage and it’s approved for repair or replacement.’”
When asked by one of the state representatives if a conflict of interest occurs when a a Safelite installer conducts the inspections and whether this opens the door for steering, DiMasi denied such claims. “It’s a lot easier to allege than it is to prove,” said DiMasi. “We don’t go out to any inspection with a piece of glass, ready to snatch it away ... We simply inspect, we look at the vehicle damage to see if the windshield can be repaired or replaced.”
DiMasi also was asked if inspections cause a delay in the time a claim takes to be processed, and how long this typically takes. “There’s no set period of time,” he said. “… Typically what happens is when a claim gets called in, the [insurance company] says [it’s] going to exercise [its] right for an inspection, and usually within a day or two, very very quickly … the inspector goes out to determine if there’s glass damage.”
While Barry Aarons, a lobbyist for the Arizona Glass Association, also spoke in favor of the bill as amended, he offered a different side to the steering allegations. “What we have seen, and we have plenty of recordings if you would like … are circumstances where the customer has chosen a private company, and then the third-party administrator is Safelite, and Safelite comes out to inspect and says, ‘oh my goodness, I just happen to have a piece of glass right here,’ repairs it and as one customer (actually more than one customer) has said, ‘they pulled the old switcheroo on me.’”
He added, “And that’s one of the reasons we wanted to specify in this bill, which it does, is that the customer has the absolute right to select [the shop] and somebody who’s going to do the inspection shall not recommend who should do [the job].”
Aarons also spoke in favor of the newly added gradual fine system. “We believe that having graduated penalties for bad behavior on a regular basis hopefully will deter the Safelites of the world form continuing to do these switcheroos that we have seen occur.”
The bill, S.B. 1238, now will move to the full Arizona House for review. It passed the state’s Senate earlier this month.
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