The Auto Glass Safety Council (AGSC) strongly supports important consumer safety provisions of the Motor Vehicle Glass Model Act, model legislation developed by the National Council of Insurance Legislators (NCOIL) – particularly those related to ADAS calibration, consumer disclosure, repair documentation, and anti-fraud.

It just as strongly opposes other provisions that will introduce and condone anti-competitive practices likely to severely disadvantage small, independent auto glass shops. The NCOIL model bill would expand insurer and third-party administrator (TPA) control over the auto glass claims process in ways that restrict consumer choice and introduce anti-competitive workflow requirements unrelated to vehicle or consumer safety.

AGSC advocates a balanced approach that addresses both concerns: opposing the bill’s anti-competitive provisions while supporting its safety measures. Rather than rejecting the bill outright, we will urge state legislators, when it is introduced, to amend it as follows:

• delete the provision that allows insurers and their TPAs to steer consumers to a particular auto glass service provider through “recommendation,” thus strengthening consumer choice;
• remove provisions restricting glass shops’ ability to contract with consumers before obtaining a claim or referral number; and
• insert a provision requiring insurers to disclose relationships with TPAs and TPAs with glass shops, creating greater transparency.
  
  

Specifically, the model bill expressly prohibits an auto glass shop from contracting with a customer for the repair or replacement of damaged auto glass until that shop receives a claim or referral number for insurance-covered damage. This may seem like a minor procedural technicality on the surface, but it is not. This precondition to performing work creates a considerable obstacle for independent and small glass shops for market-dominance-driven reasons.

AGSC member shops report that claim numbers are often not available in a timely manner from the claim administrator that controls securing those numbers and disseminating them to shops. The largest glass claims administrator in the U.S. is owned by the largest auto glass company. The customers’ insurance policies require them to file their claims through this claims administrator. This dynamic creates an inherent conflict of interest, giving that conflicted administrator the ability and the incentive to manipulate the timing of providing claims numbers, leaving small, independent shops unable to provide timely and competitive service. The potential customer ends up going to that large auto glass company shop the administrator “recommends” rather than waiting.

The model bill expressly allows TPAs to recommend specific repair facilities while simultaneously controlling the claim administration, thus compounding the anti-competitive effect of the bill. This provision, as a practical matter, effectively negates the immediately preceding provision in the bill, guaranteeing the insured’s right to choose its repair shop. The forcefulness of the TPA recommendation has that impact.

Collectively, these two work-flow provisions create procedural and market-place burdens disproportionately affecting independent repair facilities and small businesses. The result is not enhanced vehicle safety or consumer protection, but increased consolidation pressure within the industry and reduced competition among qualified repair providers.

The model bill contains laudable provisions addressing auto glass repair-and-insurance fraud and promoting transparency. One such provision prohibits glass shops, with respect to insureds’ claims, from misrepresenting – presumably to their insurers and TPAs – the shops’ relationship to the insureds or the insureds’ agents or from performing any act constituting fraud or misrepresentation. These may be reasonable as far as they go; however, the bill fails to ensure equality of treatment. It applies only to glass shops; it does not require large nationwide auto glass replacement chains, insurers, or their related claims administrators to disclose their relationships with each other or to divulge what consideration, in the form of compensation, rebates, marketing fees, etc., they provide insurers or each other in exchange for directly working with them.