Progressive expects that usage-based insurance — which judges drivers based upon their actual driving habits — will become the primary means of automotive underwriting, its…
Safelite Auto Glass last week withdrew its request for the U.S. District Court to halt a AAA-state of Minnesota deal in which the insurer agrees to quit using the company to handle glass claims.
Interestingly, it cited in its Aug. 10 filing a “partial settlement agreement” with Minnesota, though no other details were provided. Safelite in its withdrawal reserved the right to resume seeking an injunction in case the settlement had been violated.
The state in an April 22 motion to dismiss the injunction request had accused the glass company of “unlicensed and improper adjusting of insurance claims” in Minnesota for the Auto Group, the second-largest AAA club in the nation.
It’s unclear what concessions were made in the settlement.
The Insurance Department didn’t return a phone messages for comment Monday afternoon; the Attorney General’s Office said a person with more knowledge of the case wouldn’t be available until early next week. Both agencies are involved in Safelite’s U.S. District Court litigation.
“I first need to get approval from legal and then from AAA so if we do provide information, it will take some time,” a Safelite spokeswoman wrote in an email Monday when asked about the terms of the deal.
Safelite wouldn’t discuss the AAA-Minnesota consent order earlier this year, citing the fact that an insurer business partner was involved.
The consent order, approved in January by the insurer and state, still allows AAA policyholders to use Safelite for repairs, and AAA can still keep Safelite in their glass direct repair program. Safelite just can’t administer claims.
Safelite in its April request for an injunction had accused Minnesota of denying it its free speech, due process and interstate commerce rights. It argued that it was unfair for Minnesota to block it from working for AAA without a hearing.
But Minnesota pointed out that the decision to drop Safelite as a claims administrator was AAA’s. The insurer proposed the idea to avoid a larger payment than the $150,000 involved in the consent order, the state wrote, and the AAA-Safelite contract could be terminated at any time.
Minnesota also said that misleading speech wasn’t protected by the First Amendment.
“Moreover, it is clear that Safelite Solutions goes far further than simply asserting that if a non-preferred vendor is used then balance billing might occur,” the Attorney General’s Office wrote in the motion to dismiss the District Court case, referring to instances where a policyholder must pay any portion of the estimate neither the insurer nor the shop will cover. “In many cases, Safelite Solutions affirmatively represents that if a non-preferred vendor is used then the insured will be balance billed.”
Safelite did this even in one example where “the glass shop clearly and unambiguously instructed the insured and Safelite Solutions on the call that the insured would not be balance billed,” the state wrote. Its misleading warnings that balance-billing could occur also disregard that neither insurers and glass shops knew of a glass repairer who balance-billed, according to the motion to dismiss.
Still, there was nothing factually incorrect about those statements, Safelite argued in response, and it shouldn’t be expected to know what all 1,400 glass shops in the state do or don’t do regarding balance billing.
Minnesota also argued that there was no getting around the fact that Safelite had been acting as an unlicensed claims administrator, giving the example of a transcript in which Safelite is “clearly negotiating … to settle the claim at a specific price.”
It also accused the glass chain of steering.
“The Department’s investigation revealed an effort by Safelite Solutions to get the auto glass shop to agree to a particular price for the service, and if the glass shop refused, to use that refusal in a scripted effort to make insureds believe that they will be balance billed by their chosen shop and should instead choose a Safelite affiliated provider,” the Attorney General’s Office wrote.
As for determining fair service prices, the state found “Safelite Solutions used flawed survey information that did not reflect fair and reasonable rates in the relevant area when adjusting claims.”
Safelite argued that it was merely passing on the information of what AAA would pay, not trying to determine the rates itself or negotiate them.
Safelite had first attempted to appeal the decision to the Minnesota Court of Appeals but lost. Chief Judge Edward Cleary, who wrote the decision, found that as the discussion between AAA and Commerce wasn’t a judicial or even “quasi-judicial” proceeding, it wasn’t something that should come before the Court of Appeals. The Minnesota Supreme Court declined to hear the case in late April.
Minnesota isn’t the only state scrutinizing Safelite’s behavior. In May, the state of Montana told Safelite and Lynx to stop serving as unlicensed glass claims administrators for several large insurers.
Featured image: The Safelite logo is shown. (Provided by Safelite AutoGlass via PRNewsFoto)