I have been following with great interest the legislative initiative that has been taking place over the last two years in South Carolina. HB 4042 is attempting to lay out the rules of engagement for all stakeholders (consumers, auto glass repair and replacement (AGRR) companies, third-party administrators (TPA) and insurers) of the AGRR industry in the state. Since HB 4042 was first introduced on April 6, 2011 in the South Carolina House and in the South Carolina Senate on May 24, 2011 the bill has gone through several versions. Now that the bill was passed in its final form by the General Assembly on June 6, 2012, it awaits Governor Nikki Haley’s signature to become law. If the governor signs the bill it will take effect on January 1, 2013. ***UPDATE*** On June 20, 2012 Governor Nikki Haley signed the bill into law.
The bill as passed is meant to:
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 39-5-31 SO AS TO MAKE IT AN UNFAIR TRADE PRACTICE FOR A MOTOR VEHICLE GLASS REPAIR BUSINESS THAT ADMINISTERS INSURANCE CLAIMS FOR MOTOR VEHICLE GLASS REPAIRS TO HAVE AN INSURED’S GLASS REPAIR BUSINESS REFERRED TO ITSELF OR TO USE INFORMATION TO SOLICIT BUSINESS.
Legislation typically requires compromise to reach agreement for passage and to be signed into law. The final version of the bill that was passed by the House and Senate chambers of South Carolina last week does just that. When stakeholders attempt to “improve” and influence legislation to provide their constituents their desired goals that they hope the legislation will achieve, legislation is generally weakened from the original version that was presented. That too happened. Is this bill a win win for everyone?
When you read through the bill and try to determine the sum of the parts, it appears that everyone got a little something. If you were a consumer you probably didn’t take any notice of the fight over this bill, but consumers did receive rights and protections to choose the provider they want to use if they file an auto glass loss with their insurance company. When a loss occurs many insured’s are looking for a recommendation as to what AGRR company they should use when they need a glass repair or replacement. If you’re a consumer insured by a direct writer (an insurance company that solicits and services business directly with the public through its own employees rather than through local agents) and you have a glass loss you’re probably going to be directed to the AGRR company recommended by the TPA, even if it results in the TPA’s related AGRR company doing the work. Another positive section of HB 4042 is that when an insured makes a call to their insurance company claims department 1-800 number to report an auto glass loss; and the phone is answered by a TPA, the TPA that answers that call on behalf of the insurer must immediately tell the insured that the TPA is acting on behalf of the insurance company.
If you’re an AGRR company operating in South Carolina you certainly did receive some relief in the bill as there are restrictions on a TPA’s ability to attempt to steer your customer on a 3-way conference call. The bill does come with some reasonable restrictions as to the business practices that AGRR companies must follow when a consumer files a glass damage claim when insured in South Carolina. The bill has a number of important sections that restrict how an AGRR company markets to consumers who have insurance coverage for an AGRR loss. Some of the restrictions will place limits on the sales and marketing methods used by some AGRR companies who compete in South Carolina.
In the bill insurers received new mechanisms to protect its insured’s from those who attempt to improperly influence claims and the bill imposes penalties for those that are found using improper methods as defined by the bill. There is also language in the bill giving insurers the ability to pay only what is “fair and reasonable” for an AGRR claim and insurance companies may inform its insured that the insured could be responsible for paying any cost of an AGRR loss over what the insurer feels is a “fair and reasonable” price. There are additional provisions in the bill that would appear to benefit insurers regarding how auto glass losses are billed in South Carolina. I’ve detailed all of the provisions at the bottom of this blog post. Time will tell whether the insurers are happy with the final version of the bill.
TPA’s may refer an insured with a glass loss to any company that is a member of the TPA’s approved shops (including its own AGRR company) if the insured does not have a provider of choice at the time they file the claim. The TPA can require an inspection of damaged glass prior to replacement, but the inspector cannot refer or attempt to influence who the insured chooses to use for the repair or replacement during the inspection. If the insurer or TPA does not own a ten percent or greater ownership interest in an AGRR company the provisions of the bill do not apply. As with the insurers, TPA’s have a number of new rules that they must follow in the handling of auto glass claims for insured’s in South Carolina. Some TPA’s will have issues with this bill while others may not. A June 4, 2012 article in glassBYTE’s quotes a senior corporate counsel for Safelite as saying,
“We are very pleased with the compromise reached in the South Carolina Senate on HB 4042. We are hopeful that the House will concur and that it will be signed by Governor Haley,” says Brian DiMasi, senior corporate counsel for the company. “In the end, all parties came to the table and worked very hard to address their respective concerns. Safelite has always honored customer choice, and this compromise not only preserves that choice, but protects consumers by addressing the rampant fraud in the vehicle glass industry in South Carolina.”
While many may have an opposing view to Mr. DiMasi’s comment regarding Safelite having “always honored customer choice”, I was surprised by what he said at the end of his comment where he stated that the bill “protects consumers by addressing the rampant fraud in the vehicle glass industry in South Carolina.” Rampant? Really? The bill certainly offers fraud protection for South Carolinians, but when you look up rampant in the dictionary you’ll find definitions such as “profusely widespread”, an “absence of restraint” and “growing wildly: growing strongly and to a very large size, or spreading uncontrollably”.
Does fraud exist in the AGRR industry? Does fraud exist in South Carolina? Certainly instances of fraud are committed by some in the AGRR industry, but rampant? I think that Mr. DiMasi’s statement is a grossly unfair characterization of the vast majority of AGRR companies that attempt to fairly compete in South Carolina by providing consumers who need auto glass repairs or replacements with excellent AGRR services at “fair and reasonable” prices.
I’m sure that one or more stakeholders see something in South Carolina HB 4042 that turns the advantage their way. With the passing of this bill in South Carolina the battle lines are drawn and there is a panoply of those interested in what’s next. Next year could bring another attempt in South Carolina to gain further advantage for one or more of the stakeholders, but the success that some see with the passing of this bill will help embolden legislative efforts to curb the activities of one or another stakeholder in other states.
Depending upon which side of this debate you support, all should give thoughtful consideration what it is you want. As the saying goes, “Be careful what you ask for,..” as to be sure there are always winners and losers in legislation passed into law and it’s possible that “…you might just get it”, but then again you might not get the outcome you were looking for.
Additional information on HB 4042:
In its final version the legislation provides little wins for all stakeholders.
1. Consumers get in the bill (or law if and/or when its signed):
a. When filing an AGRR claim through their insurance policy the opportunity to choose who they want to do their AGRR claim and they can’t be required to use a particular provider. Both the insurance company and the TPA are covered under this provision.
b. Insured’s must be informed by the TPA that it is acting on behalf of the insurer and that the insured is not taking directly to their insurance company.
c. Once the insurer or TPA verifies coverage, both must find out if the insured has a preferred provider of choice for their AGRR claim.
d. If the insured’s provider of choice IS an approved vendor for the insurance company or TPA, the insurer or TPA must assign the claim and provide a claim number or reference number to the insured’s provider of choice.
e. If the insured’s provider of choice IS NOT an approved vendor for the insurance company or TPA, the insurer or TPA must confirm that the insured’s provider of choice will perform the required work at the insured’s rate of reimbursement for the work which is “fair and reasonable”. If the provider refuses the “fair and reasonable” reimbursement the insured may be told by the insurer or TPA that the insured is responsible for any amount over the reimbursement rate. The insured must be informed that they can use the provider of choice. The insured must not make statements about the warranty of provider of choice and refer any questions the insured may have regarding any warranty to the insured’s provider of choice.
2. AGRR companies get in the bill (or law if and/or when its signed):
The right to have an insured use them without interference if the customer chooses them as the provider of choice and they follow the rules laid out in the bill. The rules are:
a. The AGRR company or anyone remotely associated with them must not:
i. Threaten, coerce or intimidate the insured into filing a claim;
ii. Engage in unfair or deceptive practices;
iii. Induce an insured to file a claim if the damage is insufficient to warrant a repair or replacement;
iv. Perform a repair or replacement for an insured without the approval of the insurance company;
v. Suggest or represent that the windshield replacement could be free under the insured’s insurance policy or
vi. Market or advertise to consumers that could be insured’s who have an AGRR loss in virtually any way that their replacement could possibly be free under their insurance policy. 
b. File a claim on behalf of an insured for a repair or replacement.
c. The insurer or TPA can require an inspection of the loss if they want by the representative of the TPA the representative cannot offer to repair or make suggestions as to who could do repairs during the inspection.
d. “Violations of this section are subject to the provisions of the South Carolina Insurance Unfair Claim Practices Act.”
e. “Notwithstanding the provisions of this chapter, the insurer has the right to inform the insured that the insurer will not guarantee the work performed by a provider that is not in the network of the insurer or third party administrator.”
3. Insurers and TPA’s get in the bill (or law if and/or when its signed):
a. “When an insured does not request to have covered glass repair work performed by a specific provider of choice, the insurer or third party administrator may refer the repair to a vehicle glass repairer who is a member of the insurer’s or third party administrator’s preferred network of providers.”
b. Strictly limits who can file an insurance claim for an AGRR loss.
c. The insurer or TPA can require an inspection of the loss if they want by the representative of the TPA the representative cannot offer to repair or make suggestions as to who could do repairs during the inspection.
d. “The provisions of this section do not apply to insurers or third party administrators who do not have a ten percent or greater ownership interest in a vehicle glass repair business.”
e. “Violations of this section are subject to the provisions of the South Carolina Insurance Unfair Claim Practices Act.”
f. “Notwithstanding the provisions of this chapter, the insurer has the right to inform the insured that the insurer will not guarantee the work performed by a provider that is not in the network of the insurer or third party administrator.”
g. It is an unlawful practice for anyone that sells, repairs or replaces vehicle glass to:
i. submit a claim to either an insurer or a TPA if the glass was not damaged prior to the claim being submitted;
ii. if the services were not provide;
iii. use a location to bill for the repair or replacement other than the one that the repair or replacement was actually performed in an attempt to charge a higher price,
iv. have authorization from the insured to do the repair or replacement;
v. show any date other than the actual date of the repair or replacement or
vi. make any material misrepresentations related to the repair or replacement.
h. An AGRR company cannot advise a policyholder to falsely the date of the damage done to a vehicle that needs a repair or replacement.
i. An AGRR company cannot falsely sign on behalf of the policyholder any document regarding the repair or replacement.
j. An AGRR company cannot intentionally misrepresent the cost to the policyholder for a repair or replacement or tell the policyholder that the insurance company or TPA has authorized a repair or replacement.
k. An AGRR company cannot represent to an insured that the repair or replacement will be paid entirely by the insured’s insurance company.
l. An AGRR company cannot do further damage to the glass that is to be repaired or replaced in order to increase the scope of the repair or replacement or encourage others to do further damage.
m. An AGRR company must repair or replace the damaged glass back to the pre-loss damage and use approved and customary AGRR techniques.
n. An AGRR company cannot offer rebates or something of value to the insured who files a glass claim.
o. An AGRR company cannot misrepresent their relationship with the insured’s insurance company.
 SECTION 3. Section 1Chapter 5, Title 39 of the 1976 Code is amended by adding: “Section 39‑5‑170. (E)”
#1 by Auto Glass Dallas on June 12, 2012 - 8:24 pm
First off, thanks for finding and adding the bill, I’ve been wanting to take a look at. Second, what is with this portion of the statement? “Safelite has always honored customer choice”. That’s a load of good stuff! As long as I’ve been around steering has been a big issue, and in Dallas, Texas I lose auto glass customers on a weekly basis even after my staff and I inform the customer of what may be told to them by the glass claims only department at most insurance companies. I’ve heard some calls, and boy they are smooth. I think “customer choice” should mean, a variable list of approved shops in what ever area the customer is in. That’s just my opinion. Does anyone else have suggestions of ways to stop auto glass steering?
#2 by "Just Sayin'..." on June 12, 2012 - 11:59 pm
You’re welcome. We’ve heard a number of people from Safelite make that claim over the years haven’t we? You make a great point.
#3 by r browning on June 13, 2012 - 11:26 am
we tried to get a list or rotation system but failed.somehow saflite convinced the insurance industry this bill was going to hurt them even state farm told thier agents to get involved and ask senator’s to vote no. they did everything possilbe to take attention away from the real issue steering but they did alot of money and power, we were not going to get an all or nothing deal now we just have to try and get this law interpreted in our favor.
#4 by Fix-A-Chip Auto Glass on August 29, 2012 - 9:18 pm
This is very well done, thank you for the windshield repair info. I’m hoping this starts a chain reaction throughout the country. The main advantage I see in this bill is the customers rights not to be hard sold or pushed in to an auto glass claim. This is such a big problem in Las Vegas as well as many other cities and to have a law that protects innocent and sometimes ignorant (no fault of there own) consumers from being lied to is something every AGRR company should support. And this bill will get rid of the AGRR companies that support these pressure tactics. Thanks again for the well done blog!
#5 by AutoWorx Automotive Glass Replacement on November 26, 2012 - 5:29 am
The bill is a joke and is obviously in favor of TPAs and Insurance Companies. There are a great deal of problems with this bill and a great deal missing.
# 1 this society is based in free legal capitalism.
# 2 To have true capitalism would mean that the CONSUMER (END USER) must make a choice freely by way of influence (advertising)of the PROVIDER(AUTO GLASS SHOP) and nothing else. If an CONSUMER does not have a known preference they should then be required to research and choose a PROVIDER for auto glass work.
# 3 Insurance companies are not the customer, they are only third party payers and should act accordingly. They should have no say on billing (for bills within Posted List Prices and Hours). They should have to pay right away since they do not have an established account and have not submitted a credit application. They should not have any affiliations with any businesses whatsoever (owning networks, body shops, glass shops, etc) nor should they recommend any business at all.
# 4 Networks should be required to have all incoming and outgoing calls monitored by a third party source that will be contracted on a yearly basis and another third party source not for profit group choosing that record monitoring company yearly and any calls with a particular PROVIDER should be able to be requested and delivered within 24 hrs to the requester.
# 5 All glass work must be done by an auto glass company and not subcontracted to one. If a invoice for auto glass is presented to a CONSUMER or a n INSURANCE COMPANY then it must be from a shop that has performed the actual auto glass work and is registered as an auto glass shop by some sort of local government agency.(if you take your car to the new car dealer they will just call a auto glass shop to come put in the glass they have but they wont install)
There is much more I can say but I have run out of time….Sam awautoglass.com
#6 by "Just Sayin'..." on November 26, 2012 - 2:58 pm
Thank you for your comments AutoWorx. You raise some interesting points.
#7 by AutoWorx Automotive Glass Replacement on November 26, 2012 - 4:19 pm
one of the more important aspects is why is it that PROVIDERS have to accept the “fair & reasonable” rates that each insurance company offers while there are listed prices and hours. if it is fair and reasonable then why are all the insurance companies paying different rates but they all call it a fair and reasonable rate. How do they figure that what they give is fair when each insurance company pays a different rate for the SAME WORK? And as seen in these bills they even address how they price these rates different according to geographic area. How wrong is this that they do whatever they want and we just have to take it?
#8 by AutoWorx Auto Glass facebook automotiveglass on August 24, 2013 - 4:10 am
i take it back this is the real deal after a little more education …….. line the mccarran-f e rguson act is the problem insurance companies are taking advantage of the wording ” for insurance purposes only” the the Act makes it so they have no monopoly or competition laws federally ..insurance companiesre a third party payer there should be no promotion whatsoever of any shop .every consumer should have to choose a shop with outsuggestion or promotion from an insurance company or agent or its networks. The networks should not exist the whole concept goes against healthy competition to have a list of providers put on a rotation is even absurd every customershould have to choose through advertising if you advertise u get customers but not currently..currently it gets funneled to safelite and anything left over goes to others..so safelite is not a successful enterprise at all it is only because of taking away consumer choice and shops advertising power have they done anything at all…if the scenario was correct then all shops that advertise would have a exact fair share of possible work and the pricing would come down for insurance companies and the quality would be high with a federally mandated requirement that all windshield shops and thier techs fully understand substrate systems…on another note the car manufactures are not utilizing good substrate systems when they attach glue to paint instead of primer ..paint is always drying and deteriorating so over time the bond is not sufficient for protection. ..Insurance companies pay more losses to bodily damage and deaths when car manufacturers don’t do it right and how can we ever expect the techs to do it right if the beginning source is not.
#9 by Houston Auto Glass Repair on July 5, 2013 - 3:16 pm
“The provisions of this section do not apply to insurers or third party administrators who do not have a ten percent or greater ownership interest in a vehicle glass repair business”. That just caught my eyes…Interesting, heh? Just saying.
#10 by Sam Henderson on August 23, 2013 - 2:31 pm
This is such a wonderful article. Thanks a lot of sharing this bill. This is a really big help to entrepreneurs like me.
#11 by AutoWorx Auto Glass facebook automotiveglass on August 24, 2013 - 4:03 am
bottom line the mccarran-f e rguson act is the problem insurance companies are taking advantage of the wording ” for insurance purposes only” the the Act makes it so they have no monopoly or competition laws federally ..insurance companiesre a third party payer there should be no promotion whatsoever of any shop .every consumer should have to choose a shop with outsuggestion or promotion from an insurance company or agent or its networks. The networks should not exist the whole concept goes against healthy competition to have a list of providers put on a rotation is even absurd every customershould have to choose through advertising if you advertise u get customers but not currently..currently it gets funneled to safelite and anything left over goes to others..so safelite is not a successful enterprise at all it is only because of taking away consumer choice and shops advertising power have they done anything at all…if the scenario was correct then all shops that advertise would have a exact fair share of possible work and the pricing would come down for insurance companies and the quality would be high with a federally mandated requirement that all windshield shops and thier techs fully understand substrate systems…on another note the car manufactures are not utilizing good substrate systems when they attach glue to paint instead of primer ..paint is always drying and deteriorating so over time the bond is not sufficient for protection. ..Insurance companies pay more losses to bodily damage and deaths when car manufacturers don’t do it right and how can we ever expect the techs to do it right if the beginning source is not.
#12 by AutoWorx Auto Glass facebook automotiveglass on August 24, 2013 - 6:30 am
having the mccarren-ferguson act around and having networks at all makes a cartel
#13 by Glass Machinery on December 4, 2013 - 1:51 pm
Thanks for sharing the information. Very helpful for me..
#14 by "Just Sayin'..." on December 4, 2013 - 7:00 pm
I’m glad you found the information was helpful. Have a great day!