S.C. Legislature Passes Glass-Repair Referral Restrictions

[This story was updated on June 7 at 8:46 a.m. to reflect the results of the latest vote on the bill]

Legislation in South Carolina restricting insurance companies’ referrals to auto glass repair shops was passed by senators there last week and brought back to the state House, where representatives voted Wednesday unanimously for Senate amendments that finalize the bill’s journey through the Legislature.

The legislation gives policyholders more power in choosing the vendor they want when they file insurance claims for glass damage to their vehicle and bars both insurers providing glass-related coverage and third-party administrators that connect policyholders with shops from requiring customers to use specific service providers.

HB 4042 closes up a loophole that previously gave corporate affiliates the role of third-party claims administrators, effectively allowing them to steer policyholders towards providers within their networks.

The bill described those referrals as an “unfair trade practice” that hurt independent auto glass businesses.

Policyholders Picking Own Repairer Can Pay Cost Difference

Under the legislation, insurance companies and administrators can refer policyholders to “preferred network of providers” only if those policyholders don’t have their own specific pick for a glass repairer.

Insurance carriers are required to present a “fair and reasonable rate of reimbursement” to repairers chosen by policyholders that are outside of those preferred networks, and policyholders can pay the cost difference themselves if the provider refuses the rate, according to the bill.

Bill Passed as Legislative Session Nears End

The state House passed the bill by a 104-1 vote in May 2011, more than year before senators passed an amended version of the bill in a 37-0 vote on May 31 this year. Representatives passed those amendments in a 96-0 concurrence vote Wednesday. The state’s legislative session ends on June 7.

The bill now heads to Gov. Nikki Haley for her consideration.

Trade Groups Protested Bill’s Previous Version

One Senate amendment eliminated a provision that stripped companies with a 10 percent stake or more in auto glass repair shops of the role of third-party administrator.

Insurance industry trade groups, including the Property Casualty Insurers Association of America (PCI), heavily protested that version of the bill, saying it would complicate the repair process that utilizes preferred networks to save money for policyholders.

In South Carolina, providers within preferred networks cost less by an average of 14 percent, according to PCI.

Without the power to control costs within those networks, even an insurer included on listings of the best insurance companies would feel the impact of HB 4042 and could “possibly raise costs for consumers,” according to PCI.

“Consumers benefit when insurers are able to offer them information on repair options,” said Bob Passmore, PCI senior director of personal lines, in a statement on HB 4042 given in February, when it was being considered in a state Senate committee. “They have more options and better information with which to choose a repair shop, but they also benefit when insurers can control costs.”

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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