Connecticut Insurance and Real Estate Committee Holds Public Hearing on TPA Bill
March 4, 2011
The Connecticut Insurance and Real Estate Committee recently held a public hearing to review a bill that would prohibit those who process auto glass claims from having a financial interest in a business that installs auto glass and would enstate liability insurance requirements for auto glass shops in the state if passed in its current form. Safelite and several insurer groups spoke out against the draft legislation, while many independent auto glass shop owners and state associations offered their support for the bill.
“The proposed bill, no. 5283, would drastically turn back the clock on the repair and replacement of vehicle glass in the state of Connecticut,” writes Brian DiMasi, senior corporate counsel for Safelite, in a letter addressed to the state’s House insurance and real estate committee for the public hearing. “The proposed legislation would force Safelite to choose between operating a vehicle glass repair and replacement business in the state … or a vehicle glass claims administration business.”
He also alleges that the bill, if passed, would hurt Connecticut consumers. “The advent of vehicle glass networks and third-party administrators have improved customer service and brought prices down,” says DiMasi. “Critics of third-party administrators and vehicle glass networks have argued that Safelite’s role in administering insurance company vehicle glass programs while also operating a retail vehicle glass business is unfair. Unfair to whom?”
DiMasi goes on to write that if the draft legislation is passed, the state of Connecticut will be the only state in the country “to have legislatively, but unconstitutionally, outlawed a legitimate vehicle glass free enterprise such as Safelite’s.”
The Property Casualty Insurers Association of America (PCIAA) alleges in its letter opposing H.B. 5283 that, if passed, the bill “would limit consumer choice in glass repairs.”
“By prohibiting certain ownership interests in glass shops, this bill may prevent Connecticut consumers from receiving all of the benefits which shops with these prohibited ownership interests may be able to provide,” writes the PCIAA.
PCIAA goes on to allege that if the legislation were to pass, the auto glass claims process “may become more difficult for the consumer—possibly requiring multiple telephone calls and other potential inconveniences.”
The Insurance Association of Connecticut (IAC) issued a similar statement. “H.B. 5283 would eliminate a well-managed method of administering automobile glass repair claims, where the consumer only has to make one phone call in order to get the glass work done,” writes the IAC.
While the bill has faced opposition from some insurers and TPAs that would be regulated by it, several independent glass shop owners and auto glass associations expressed their support for the bill. Darryl Maslak, president of Plymouth Glass and Mirror, is one of these. “[It’s a] conflict of interest for an auto glass repair shop to have [its] hands in the insurance industry, also dictating how competitors process their consumers’ claims,” writes Maslak. “Glass repair shops should have have any direct relationship with networks.”
Connecticut Glass Dealers Association (CGDA) legislative chair Jennifer Vanasse also issued a letter of support for the bill. “Currently independent auto glass companies are unable to replace a windshield without having their customers call a TPA, which is actually the independent auto glass company’s competition first,” writes Vanasse. “The customer believes that they are calling their insurance company to submit a claim but is in reality calling a TPA that handles the claim as well as manufactures and installs windshields. This phone call is actually a mini commercial for their installation company and they politely suggest over and over again that the customer may save money by being serviced at their replacement centers instead.”
Vanasse goes on say that the bill, if passed “will help grow small business in Connecticut and will help create employment in Connecticut’s glass industry.”
The legislation, as currently drafted, also includes a provision that would require auto glass shops in the state to have at least $1 million in general liability insurance. Vanasse writes that this would “ensure the legitimacy of glass companies.”
Connecticut Rep. David Baram of the state’s 15th assembly district also lent his support for the bill.
“It has been reported that when policyholders file a claim, their calls go directly to a designated repairer who then recommends shops in its own network,” writes Baram. “As a result, the favored repairer and its network receive considerably more business while independent repairers struggle to compete. This form of business steering by insurance companies makes it hard for independents to survive because they don’t have the same customer access to policyholders. It also means that consumers may not be getting the best or most economical service.”
Following the hearing, the Committee “voted to draft” the bill; according to information from the state, the bill could now be drafted in legal language, it could be combined with other bills to be drafted as a committee bill, or it could remain in committee indefinitely. A representative in the state’s banking and insurance committee office was unable to comment on specifics, deferring to Rep. Robert Megna, who introduced the bill; Megna was unavailable for comment at press time.
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