Volume 11, Issue 3 - May/June 2009

legal updates

House Bill Would Remove Anti-Trust Exemption From Insurers

U.S. Congressman Gene Taylor (D-Miss.) and Peter DeFazio (D-Ore.) have introduced a bill that would remove the federal anti-trust exemption from the insurance industry. The act, called the Insurance Industry Competition Act of 2009, would amend the McCarran-Ferguson Act. 

It would change the following language in the current law, to add the following phrase: “the Federal Trade Commission Act, as it relates to areas other than unfair methods of competition, shall be applicable to the business of insurance to the extent that such business is not regulated by State law.”

The Insurance Industry Competition Act also would give the Department of Justice and the Federal Trade Commission the authority to apply the antitrust laws to anticompetitive behavior by insurance companies, while leaving state laws regulating insurance intact.

Taylor says the legislation is particularly important in light of the bailout of AIG Insurance. 

“The fact that the insurance industry is exempt from federal anti-trust laws is outrageous,” Taylor says. 

Alabama House Committee Favors Auto Glass Deductible Bill

The Alabama’s house committee on banking and insurance has made a favorable recommendation on a bill that would make it so that deductibles do not apply to windshield damage in the state. The bill was read in the House committee for the second time since the session opened in mid-March.

If passed, the bill would provide that “the deductible provisions in any motor vehicle insurance policy issued in this state by an authorized insurer providing comprehensive coverage or combined additional coverage shall not be applicable to damage to the windshield of any motor vehicle covered under such a policy.”

The bill was pre-filed by Rep. Thomas Jackson on January 28. 

One auto glass shop owner in Fultondale, Ala., points out that the bill likely won’t affect business much either way, as waiving deductibles tends to be a common practice in his area.

“I think it will still be the same problem, but maybe not as bad,” says Rick Bradberry of Bradberry Auto Glass. “Business has gotten so slow, though, people are doing what they have to do.”

Massachusetts House Bill Designed to Limit Glass Company Ownership of Third-Party Administrators

The Massachusetts House of Representatives currently is considering a bill that would prohibit third-party billers for insurance companies from providing auto glass repair and/or replacement services for the same insurance company. 
The bill defines a third-party biller as “as any company who processes pays and monitors the payment of auto glass claims on behalf of an insurance carrier or insurance producer.”

“Such third-party biller shall not be related to any glass replacement repair services in any way,” reads H.B. 3680, which would be an amendment to Section 100A of the Massachusetts General Laws. “This includes stock ownership or such ownership by any direct family relative.”

If passed, violators (including both insurance companies and third-party administrators) would be fined $1,000 per incident.The bill, sponsored by Rep. Joyce Spiliotis, also would require that third-party administrators file statements of ownership every year with the Office of the Insurance Commissioner. If enacted, failure to file the statement of ownership would result in a fine of $5,000 per incident.

In addition, the bill includes a provision that would amend the state’s current anti-steering law (which prohibits third-party administrators and insurance companies from restricting auto glass company choice), by adding the following clause: “provided that this shall not prevent an insured from specifically requesting information about a particular glass shop and its location.”

A spokesperson in Rep. Spiliotis’ office advised that the bill came about as a result of the work of a lobbyist named Pat Scanlan of J. McGlynn Law, who is working with an auto glass client. At press time, Scanlan had not responded to calls or e-mails regarding the bill, and the House spokesperson was unable to identify the auto glass company involved. 

This is one of two bills dealing with insurer involvement in auto glass claims being reviewed by the Massachusetts House during this session. Rep. Ron Mariano introduced a similarly worded bill, H.B. 952, earlier this year, which would add a section 100B to the commonwealth’s General Laws, which also would deal with consumer choice of auto glass shops.

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