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Auto-glass regulation bill debated

Post Time:Mar 09,2012Classify:Industry NewsView:277

A bill under consideration in the Arizona Legislature could affect choices for consumers who need auto glass repaired or replaced.

 

The bill's backers, including the Arizona Auto Glass Association, say it would preserve consumer choice, level the playing field and increase competition in the state's industry. Opponents, including large insurers and Safelite AutoGlass, say the proposal amounts to legislative meddling in the marketplace, would reduce consumer choices and could subject customers to shoddy work.

 

After testimony Wednesday, the Senate Government Reform Committee passed House Bill 2197 on a 5-1 vote. The dissenter was Sen. David Lujan, D-Phoenix.

 

The bill was introduced after complaints by competitors of Ohio-based Safelite, which employs nearly 900 people in Arizona, including 600 at a Chandler call center.

 

Safelite has several aspects to its business: third-party administrators, inspectors and repair shops. It's a business model that has been challenged and upheld in courts. However, some competitors claim that Safelite snags customers for its own repair shops.

 

"There is steering going on," said Rex Altree of New Image Auto Glass in Tempe and president of the Arizona Auto Glass Association.

 

He said that repair shops, including his, have asked to be on Safelite's network, but that he and others have been spurned.

 

Barbara Meaney, a lobbyist for Safelite, disputed that assessment.

 

"This bill is not for consumer choice; this is an industry turf battle," she said. "It is the Legislature picking winners and losers regardless of quality of service."

 

Meaney said Safelite holds 26 percent of the auto-glass aftermarket. There are more than 1,500 glass-repair shops in Arizona and more than 300 in the Safelite network, including 22 owned by Safelite, she said, adding, "There's plenty of competition."

 

Motorists who need auto-glass repair now will call their insurance company and, depending on the insurer, may be referred to Safelite, where a so-called third-party administrator will send out an inspector. The vehicle owner then has his choice of shops to do the repair.

 

Under the proposed law, the third-party administrators, or TPAs, would have a rotating list of repair shops and would give the consumer the names of the next three repair shops on the list. Shops on the list would need to be bonded, insured and accredited by a reputable national association, although there was discussion as to whether such an association existed and what accreditation would involve and cost.

 

Also supporting the bill is John Blackwell of Penske Auto Glass, which, he said, has 1,500 employees in metro Phoenix.

 

"We're looking to grow into the future," he said. "We'd be hiring people if we felt it was a level playing field."

 

Lining up against the bill are large insurers.

 

Lobbyist Wendy Briggs testified for the American Insurance Association, representing more than 300 property and casualty insurers. She said that the practice of steering is illegal and that if it does happen, consumers can complain to the state Department of Insurance.

 

"Consumers often rely on their insurance company's recommendation (for a repair shop). I relied on USAA on where to go, and they picked a location close to my home. (This bill) would place severe limitations on recommendations."

 

Michael Low, a lawyer who spoke for Allstate and American Family Insurance, said the bill would create a problem for insurance companies who want to ensure the quality of workmanship.

 

Insurance companies get feedback from policyholders about whether work was shoddy or high quality."To take away (choice) from insurance companies is to impair insurance companies' ability to provide good service to policyholders," Low said. "This proposal puts up in the untenable position of accepting anyone."

 

Farmers Insurance Group was represented by S. David Childers of the Kutak Rock law firm. "This really is a direct frontal attack on insurance companies' and TPAs' ability to develop a program that benefits consumers," he said. "The glass-repair industry has the highest satisfaction rate. ... This bill works to oppose that direction."

 

Meaney, of Safelite, said that the company records every call and that its industry partners can listen to calls. "If we were steering, they would not be doing business with us."

 

If the bill passes, Arizona will be the only state with a rotating repair-shop list, she said.

 

Chandler's Safelite call center is in the district represented by two of the bill's co-sponsors, Reps. Jeff Dial and Bob Robson, Republicans in District 20. The third co-sponsor is David Burnell Smith, R-District 7.

Source: www.azcentral.comAuthor: shangyi

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