South Carolina Governor Finalizes Glass-Repair Legislation

South Carolina Gov. Nikki Haley signed a bill into law Monday that limits the power of insurance companies and administrators in the referral process for auto glass repairs.

The legislation, HB 4042, ensures policyholders retain their choice of vendor for claims-related work on vehicle glass damage, changing legal provisions that allowed insurers and third-party administrators to require policyholders to go to affiliated glass-repairer networks.

Such referrals established a systemic “unfair trade practice” that favored in-network businesses, according to the bill.

Under the legislation, policyholders can request a specific glass repairer in or outside of the “preferred network of providers” offered by insurance companies or third-party administrators, who are allowed to refer policyholders to networked providers only if a choice is not indicated.

Insurers are required to offer a “fair and reasonable” rate to non-network glass repairers that are picked by policyholders, but the policyholder pays the difference if the provider and insurer disagree over the amount, according to the bill.

The bill also excises any corporate-linked entities from claims-administrating roles that previously allowed them to refer policyholders to affiliated businesses.

Bill Got Strong Support from Legislators

The bill was introduced last year and was passed by the state House in a 104-1 vote last May.

Its latest version passed the state Senate on May 31 this year, with changes in that version getting approval from House representatives the day before the end of the legislative session on June 6.

Steering Bills Draw Complaints from Trade Group

The Property Casualty Insurers Association of America (PCI) issued a public statement against HB 4042 as Senate committee members began debating it in February, saying insurers choose providers within their networks to keep costs down.

Restricting referrals, according to the PCI, would raise the prices consumers see when they generate auto insurance quotes from providers in the state.

“Some companies have chosen to use these kinds of programs because they feel that using them will deliver a better claims experience for their customer and enable them to compete for business in the extremely competitive auto insurance marketplace,” said Bob Passmore, PCI senior director of personal lines, in a statement.

PCI officials also stood against steering provisions in a Rhode Island bill that prohibits insurers from requiring policyholders to go to specific body shops for repair work. That bill is awaiting a final decision from Gov. Lincoln Chafee.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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