Connecticut auto insurers are now prohibited from steering business to their own networks of auto glass repairers after the governor there recently signed legislation into law.
The law, now called Public Act 13-67, expands a current ban for auto damage appraisals that prohibits an auto insurer from directing a policyholder toward specific businesses, a practice called “steering.”
According to the law, an auto damage appraisal from an insurance company cannot require that glass repairs for a car “be performed in or by a specified facility or glass shop.”
Insurers, third-party claims administrators and agents are also prohibited from specifying businesses for work or telling a policyholder that going outside of those specified businesses will mean delayed repairs or “a lack of guarantee for the automotive glass work,” according to the law.
In addition, any initial communication between a policyholder and insurance claims representative will be required to include something “substantially similar” to the following statement: “You have the right to choose a licensed glass shop where the damage to your motor vehicle will be repaired. If you have a preference, please let us know.”
The law was presented to state legislators as HB 5072, which passed the Senate on May 22 with a 34-2 vote and House on May 7 with a 107-38 vote. Gov. Dannel Malloy signed off on the legislation on Tuesday.
The law is effective Jan. 1, 2014.
Insurance companies have generally opposed such pieces of legislation, saying that they rely on specific networks of businesses to control premium costs for repairs and other claims-related work. However, consumer advocates say such referral practices stymie consumer choice and kill business for mom-and-pop repair shops.
The Property Casualty Insurers Association of America protested a similar anti-steering proposal for glass repairs last summer in South Carolina, where lawmakers ultimately passed HB 4042 to stop what they called an “unfair trade practice.”