Bill Addressing Auto Glass Inspections, TPAs and More Introduced in Arizona

An Arizona legislator has introduced a bill that would amend the state's insurance code to add language addressing auto glass inspections required by insurers, would define several prohibitions for third-party glass claims administrators (TPAs) and would prohibit insurers and TPAs from having a financial interest in auto glass replacement companies.

Regarding auto glass inspections, which some insurers now require prior to authorizing work, the bill would prohibit insurers and TPAs from causing "a delay in the inspection of a policyholder's auto glass condition in the handling of a policyholder's claim regardless of which repair facility the policyholder chooses."

Along the same lines, when an inspection is required, the bill would require "that the inspector must be a direct employee of the insurer or an independent party who is unrelated and unaffiliated with any glass repair facility."

S.B. 1238 defines an inspector as "a party who is engaged in the physical inspection of a claimant's vehicle for the purposes of adjusting a claim."

In addition, it would expand the state's current anti-steering law, which requires insurers to advise consumers of their right to choose an auto glass repair facility when providing information about a glass repair facility, to make the same requirement of TPAs.

The following language, "The insurer or [TPA] shall not in any manner coerce or induce an insured to use a glass repair facility other than the insured's chosen facility, if the insured has chosen a facility," also would be added to the law, under the current text of the bill, if passed.

S.B. 1238 further proposes that an "insurer that uses the services of a [TPA] is responsible for the [TPA's] acts that are within the scope of the motor vehicle insurance policy or under this article."

The bill also would require insurers to "notify the policyholder whether glass to be used will be original equipment glass or previously used glass, where the glass was manufactured and whether the glass was specifically manufactured for use in the claimant's vehicle" at the time the claim is authorized for repair.

Likewise, the bill would prohibit insurance adjusters, auto damage appraisers and TPAs that process auto glass claims from "hav[ing] a financial interest in or be[ing] an affiliate of a business that installs or repairs automotive glass."

Lastly, the bill, introduced this week by Arizona state Sen. John McComish, would define a third-party administrator as "any person who collects charges or premiums from or paid on behalf of, or who provides administrative services to or adjusts or settles claims by, residents of this state in connection with motor vehicle insurance coverage."

If passed, the changes would fall into the same section of the law developed last year, which included several provisions related to auto glass fraud.