Michigan TPA Code of Conduct Bill Moves Forward
November 3, 2011
A Michigan bill that would place several requirements on third-party
administrators, including the addition of a code of conduct by which
those that also provide auto glass services would have to abide
in order to maintain both services, was passed out the state's insurance
committee this week, and now moves to the full Senate for review.
The bill, introduced earlier this year by Sen. Joseph Hune, would
amend the state's insurance code to require third-party glass claims
administrators (TPAs) that also offer auto glass retail services
"to adopt and follow a code of conduct when processing, paying,
administering or monitoring such a service." In addition, TPAs
would be required to file annual reports with the Commissioner of
the Office of Financial and Insurance Regulation (OFIR) pertaining
to their handling of auto glass claims, and quarterly reports with
auto glass businesses that participate on their networks. The legislation,
if passed, also would prohibit an auto glass business from offering
"a rebate, gift, cash or anything of value to an insurer in
exchange for referring a claim to the facility."
The code of conduct that TPAs with retail divisions would need
to follow contains several specific provisions as well, as follows:
- If an insured had a preference of an auto glass retail facility,
and that facility is on the TPA's network, no other repair facility
could be recommended;
- The TPA could not close its network to new applicants if the
network contains facilities that it owns or are related to; and
- If the insured did not have a preference of a glass shop, or
if the preferred facility wasn't on the TPA's network, the TPA
would have to suggest three network facilities "on an objective
basis that was designed not to give a preference to facilities
related to or affiliated with the third-party biller.
Several Michigan auto glass business owners have worked with legislators
on the bill, including Ron Overbeck, co-owner of Auto One in Brighton,
"We expect to get the bill passed before the end of the year,"
Overbeck told glassBYTEs.com/AGRR magazine this
afternoon. "It's about bringing transparency and objectivity
to the referral process, and about protecting small businesses."
The Michigan chapter of the National Federation of Independent
Businesses (NFIB) also has backed the bill.
"The issue for small business is unfair competition by exclusive
contracting," says NFIB state director Charlie Owens. "The
vast majority of auto glass replacement and repair is paid for by
auto insurance companies. When a single entity or group of entities
has significant control over a market and uses that position to
skew the market, the result is unfair competition."
"Whenever we have an entity that basically controls the market,
it is the duty of the legislature to be sure that fair play, consumer
choice and competition are preserved," adds Owens. "In
this case the insurance industry controls the market for auto glass
repair by virtue of the fact that almost all claims for damage flow
through them and are paid by them. They have the power to determine
who stays in business and who doesn't and this must be held in check
to prevent unfair competition that ultimately will narrow consumer
choice and drive smaller companies out of business."
S.B. 0306 originally was
introduced in March, but the session had a lengthy recess in
the summer. Hune's office had
advised glassBYTEs.com/AGRR magazine in June
that he planned to revive discussions this fall.
Stay tuned to www.glassBYTEs.com for more on this legislation
as it becomes available.
This story is an original story by AGRR™
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