Legislative and Vendor inquiries prompt letter from Insurance Commissioner's Office to answer several questions.

Ms. Vanessa Mosley
American Family Mutual Insurance Co.
6000 American Pky
Madison WI 53783-0001

Re: Complaint File 121987, Auto-Glass Claims

Dear Ms. Mosley:

      We have received several inquiries from legislative offices and vendors about American Family's new process to handle auto-glass claims. Since this situation does not lend itself to our standard complaint process, I am writing this letter to obtain information about the implementation of the American Family and Safelite program. I have also reviewed material already presented to us by American Family and Safelite representatives. It is the implementation of the new process that has raised the questions. Please respond to the following questions or requests:

1. The company has contracted with Safelite to administer its auto-glass claims, and has informed a number of glass repair facilities about the process in a letter dated May 27, 1999. The letter states that "all invoices received by American Family will be returned to the vendor." Why will American Family not forward these misdirected invoices to its administrator, since American Family is the insurer? How can American Family reject claim information without committing an unfair claim practice, ins. 6.11. Wis. Admin. Code?
   
   
2. There is a point at which an insurer could indirectly be requiring the use of specific vendors, as prohibited by e. 632.37, Wis. State. Agents were told in a memorandum that is apparently from a district manager in Senator Farrow's Legislative District that "the company is expecting every agent to use Safelite." How were the agents informed that claimants can use any vendor and that Safelite would process those claims as it would claims from its own affiliates? How will the agents be assured that they will not be criticized or penalized if one or all of their customers use non-Safelite affiliates? What were district sales managers told they can do to encourage or direct the use of certain glass vendors?
   
   
3. Agents were told in the same communication that "under NO circumstances should an agency be directing a glass claim to a local vendor." How does this statement comply with e. 632.37. Wis. State?
   
   
4. Safelite, under this arrangement, is an administrator for American Family. What has American Family done to assure itself that Safelite is assisting independent glass vendors in filing and receiving payment for glass claims?
   
   
5. What are the prices at which the American Family's administrator caps the price to repair or replace auto-glass?
   
   
6. How is the use of a Safelite price to cap payments for glass repairs/replacement appropriate in areas where Safelite affiliates who offer the price are at unreasonable distances from the claimant (an unreasonable distance could be 20 to 30 miles)? What is the distribution of Safelite affiliates around the state?

Please mail your response within 10 days of receiving this request.

Sincerely,

Philip B. Kress
Property and Casualty Section Chief