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South Carolina’s Small Glass Shops Seek to Crack Giant Safelite’s Clout

Post Time:Feb 24,2012Classify:Company NewsView:432

How automotive glass repair companies are allowed to access glass claims has become a contentious issue in South Carolina where independent shops are trying to break a national company’s hold on the market.

 

South Carolina lawmakers are considering an amended bill that seeks to dismantle preferred provider networks hired by auto insurers to repair glass in favor of a provider list that would be offered to consumers needing windshields or windows replaced or patched.

 

Sponsored by Rep. James Harrison (R-Richland), HB 4042 specifically targets Safelite AutoGlass Co., which serves as a third-party administrator for many major auto insurers’ glass claims and then steers those claims to its own repair facilities.

 

Ken Kinard, who represents a number glass repair shops throughout South Carolina, says the bill is designed to create a level playing field so that Safelite and independent shops have equal access to business.

 

“The independent owners feel like Safelite has too many advantages over them when dealing with potential customers,” said Kinard.

 

Initially, lawmakers set out to prohibit third-party administrators that have their own repair facilities like Safelite from being able to refer policyholders to themselves or use the information gathered in the claims handling process to solicit business.

 

That version of the bill had strong support in the South Carolina House of Representatives where it passed by a vote of 104 to 1.

 

However, the bill ran into opposition in the South Carolina Senate, where it was strongly opposed by not only Safelite, but also by trade groups including the Property Casualty Insurers Association of America. The insurer groups argued that the use of third-party administrators that operate their own retail divisions helps expedite claims, reducing the costs to consumers, and ensuring quality controls.

 

PCI offered data showing that on average, glass repairs cost 15 percent less when insurers use a third-party administrator and a network provider. It also said that while network repairs on average have increased by 2 percent, non-network repair costs in South Carolina have risen by 5.6 percent.

 

“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 for personal lines.

 

Faced with that opposition, the bill’s proponents pulled back and amended their proposal to allow companies like Safelite to continue acting as third-party administrators, while prohibiting them from “requiring that repairs be made to the insured’s vehicle in a particular place or shop.”

 

In place of such repair networks, consumers would be given a list of repair shops on a rotating basis. The amendment is backed by DNS Auto Glass, one of Safelite’s major competitors in the state.

 

The state Senate Banking and Insurance Committee approved the bill by a 12 to 4 vote, causing Sen. John Ford (D-Charleston) to issue a minority report in opposition. Under state law, any senator can issue a minority report on a bill to effectively stop it from moving forward unless the senator agrees with the changes.

 

Kinard acknowledged that some changes still need to be made to the amendment including spelling out the qualifications a repair shop needs to meet to be placed on the provider list. However, he said talks are continuing with insurers over the fate of the bill.

 

“There seems to be willingness by companies to sit down and talk,” said Kinard.

 

For its part, Safelite shows no sign of changing its position.

 

“Dismantling direct repair programs that offer high quality and low prices hurts consumers,” said Brian DiMasi, senior corporate counsel for Safelite. “Claims costs will rise, warranty claims will rise, and customer complaints will rise. All of this affects insurance premiums, and issue South Carolina has worked hard to address.”

 

Source: www.insurancejournal.comAuthor: shangyi

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