Bill Defining TPA Code of Conduct Passes Michigan Senate
The Michigan State Senate has passed legislation that could place several
requirements on third-party administrators (TPA), including the addition
of a code of conduct by which those that also provide auto glass services
would have to abide in order to do business. The bill passed the Senate
January 26 with a vote of 38-0.
This was the third reading of the bill, S.B. 306, introduced by Sen. Joseph
Hune, though the final Senate version had several changes from the original
The Senate-passed version states: “A [TPA] shall not provide automobile
glass repair or replacement services for an insurer unless the [TPA] adopts
and follows, when processing, paying, administering or monitoring an automobile
glass repair or replacement service for the automobile insurer, a code
Several changes also have been made to the code of conduct. The language
in the bill that passed the Senate states in cases where the insured has
no preference or prefers a non-network facility, the legislation would
require the TPA “to advise the insured that the insured has the right
to choose any repair or replacement facility and the TPA shall not threaten,
coerce or intimidate the insured into selecting a particular repair or
The final version of the bill also requires TPAs to submit annual reports
to the state’s insurance commissioner. It includes a provision that TPAs
provide a list of “the names of the auto glass repair and replacement
facilities for whom a preference was stated.”
Industry reaction so far has been mixed with some independent shop owners
have said the code of conduct suggested by the bill needs to be strengthened.
“Work needs to be done in the House of Representatives to strengthen the
code of conduct to ensure the referral process for non-preference work
is equally distributed throughout to network members,” says Shari Montgomery,
owner and president of Pollack Glass in Lansing, Mich., and a member of
the Independent Glass Association's Michigan Chapter, which has been closely
involved with the legislation’s development. Still, she is pleased with
the results so far.
She adds, “The Michigan Senate unanimously stood up in opposition to the
unregulated opportunity of the TPA self-referral and ignoring consumer
Ron Overbeck Sr., co-owner of Auto One in Brighton, Mich., who also has
devoted much time to working with other glass shops in the state on the
bill, echoes Montgomery. “We’re optimistic that we’ll still get the end
result that we need,” says Overbeck.
Brian DiMasi, senior corporate counsel for Safelite, whose third-party
administration arm could be affected by the bill, has a different concern
about the bill.
“Consumers demand high-quality work from network shops. While any shop
is free to apply to the SGC Network, network shops must have adequate
liability insurance, warranty their work, provide high-quality and agree
to fair and reasonable pricing,” DiMasi says.
At press time, the bill was still under the review of the House.
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