This is not to say “some” changes to the law should have been made but what it was attempting to accomplish from the insurance company’s perspective was to give them a hammer in which to keep shops in line on billing and pricing. Dealing with Marketing, Billing and Pricing should never be the intent of a fraud law. In this case, the original purpose of the law got lost in the details.
Representative David Livingston, the bill’s main original sponsor, made a valiant attempt at putting a bill in place to pass. He compromised on sections of the bill most glass shops were upset with, including me, but the final bill in committee still fell short for what I call “real world” impacts.
I asked the MAPS committee to vote no on the bill because the “penalty does not fit the crime”. Simple enough but if passed this law would have put someone in jail for merely operating their auto glass business.
Paragraph 17, as written, stated it would have been illegal to “perform auto glass repair or replacement without the insured’s and insurance company’s approval”. The key words in this paragraph being perform not approval. When someone is in your shop with a broken door glass at 115 degrees; they really don’t care if the insurance company approves of the replacement or not. They want it replaced and they want it “now”. “Snowbirds” or out of state winter visitors are traveling in and through Arizona all the time and their insurance company is “back east” with a 3 hour time difference. When you are stuck in Arizona and need work done on your Motorhome waiting for approval from your insurance company isn’t always an option. Even if the client “paid cash for the job” the glass shop could still face a Class 6 felony for “performing” the work without the approval of the insurance company. Facing “Possible Jail time for taking care of your client” is just wrong.
The Auto Body Industry wasn’t involved in this battle on this bill but they should have been for nothing more than my example of the above paragraph. Auto Body Shops replace door glass all the time and sometimes deal with it exactly as I have stated. They take care of their clients but in doing so they might have risked jail time.
Insurance companies should not be allowed to have this much power over a shop conducting business with their clients. Because when you get right down to it, the insurance company may assume “the client” is their customer but “the client” is our “glass client” and for good service we will always “take care of our clients”. Clients have been known to change insurance companies but our clients always use us for glass needs, which should be the true mark of a great glass company.
And of course, the infamous Paragraph 16, which if the shop didn’t accept the “insurance company’s price” then they had to follow the next 5 steps “to the letter of the law” or face a Class 6 felony charge. The opposition would not budge on this clause. I believe the purpose of this clause was to effectively allow the insurance company to tell a shop “if you don’t accept our price you could be facing jail time”. I might be taking this to a higher level than the insurance companies want to admit but it would have gone something like that.
If a shop doesn’t want to accept the insurance company’s price then the APPRAISAL and ARBITRATION clauses in all polices takes over. In my opinion, there was no need whatsoever to put this clause in the law except to accomplish my above statement.
If a shop doesn’t want to accept the insurance price then the shop should be risking “not getting paid” not “going to jail” because you missed one of the 5 steps. “The penalty does not fit the crime”.
Representative Farnsworth of the MAPS committee saw this bill for what it was, over reaching, when he himself stated the current fraud law covers all the fraud instances the insurance companies stated this law was needed to cover. Through-out all of the discussion of this bill it was stated there is “massive amounts of fraud” being perpetuated in the auto glass industry. When Representative Farnsworth asked what the number of fraudulent claims was, not one insurance company representative had an answer. When they were asked how about a percentage, not one insurance company representative had an answer, not even the Safelite representative. No one could identify this “massive amount of fraud”. Chuck Gregory of the Arizona Department of Insurance testified there were “66 possible claims last year with 3 convictions”. Arizona had somewhere over 300,000 auto glass claims last year and 66 possible fraud claims with 3 convictions.
Quite often the insurance company reps would state shops are talking clients into replacing their windshields for a repairable chip. Replacing someone’s windshield for a repairable chip is not fraud. Nowhere in law or in the policies does it state it is but the insurance company reps’ continued to state it is fraud to replace a “repairable” windshield. At best, it would be a questionable claim. Sometimes “overstating” your position can come around to bite you in the rear.
The other issue here is throughout this discussion the other side kept referring to how when you crash your car you are required to get a “written estimate” and the Insurance Company’s approval before any work is performed.
I, as a licensed insurance agent in the state of Arizona, would like to state; “read your policy”. The policy spells out clearly, under the Collision portion, what you are “required” to do in the event of an accident. Auto Glass damages are covered under the “Comprehensive” portion of the policy and it does not spell out everything like the Collision portion does. In most cases it merely states if you have Glass damage we will pay. It doesn’t refer to if it is repairable, we will repair or if it is replaceable, we will replace. It states if it is damaged, we will pay. A lot of times the client wants a new windshield even when it could be repaired. The shop is not committing fraud by taking care of “their” client’s wishes.
They would be committing fraud if there wasn’t “any damage” and the current law states that.
The Insurance Companies need to change the language of the Comprehensive portion of the policy to something closer to the Collision portion. I can assure you it should be easier to make changes in a policy instead of attempting to create a new law to threaten an Auto Glass Company with.
If the insurance companies would have stayed focused on the lack of Safety Standards in the law or merely “rewrite” their policies to deal with these issues then all this talk of changing the law would not have been needed. As it turns out all of the “great things” we wrote into this bill are now out the window also.
The inclusion of the Auto Glass Replacement Safety Standard and the Repair of Laminated Automotive Glass Standard, which are ANSI accepted safety standards, would have strengthened our law but not at the expense of the two paragraphs I mentioned above.
As I had testified before in the House Committee, the current Auto Glass Fraud law is adequate to cover all of the auto glass fraud being committed in the state of Arizona but “enforcement” is the key lacking for this “massive amount of fraud”.
I was told the other side had put up over $500,000 to get this bill passed. I would recommend they should have “donated” the money to the Arizona Department of Insurance to create an “Auto Glass Fraud Division” to focus on the fraud. The law already exists but needs greater enforcement. This is not to throw the Department of Insurance under the bus but when an insurance investigator is faced with finding a felon who has perpetuated a $100,000 fraudulent insurance claim or a $400 auto glass claim I believe they are focusing on where their time is best utilized given the resources they have.
With all the bills our Representatives and Senators have to deal with each year, I find it hard to pass laws to create good behavior. Laws do not guarantee stopping crime, Enforcement does. The Insurance Companies should put their money where their mouths are, especially if they want to stop glass fraud.