When Insurance Covers Routine Expenses….
When insurance covers routine expenses, perverse incentives often follow. Here is an example I found today shopping for a company to replace my car’s windshield — This sure looks to be an absolutely blatant kickback (image from a glass company website here).
All the pitches on my Google search are like this. Here is another one:
But here is the winner, at least as far as I got through the google search:
Don’t you have to wonder about a $1,000 rebate on a procedure that retails for perhaps $250?
I am not a lawyer, nor do I play one on the Internet, but it certainly appears that the glass companies are charging the insurance companies for more than the glass replacement would normally go for in a competitive marketplace, and then splitting the extra money defrauded from the insurance company with the consumer. Another way of putting it is that in selecting a glass company for an insurance-covered repair, the consumer is acting as an agent for the insurance company, and as such an agent the consumer is taking a monetary inducement from a particular vendor to throw business to that vendor.
Arizona has explicit no-fault legislation banning insurance companies from raising insurance rates due to broken windshields. I wonder what there is to stop someone, then, from heaving a rock at his/her windshield every other week? Further, I wonder what stops such offers, which look like blatant kickbacks to me, from being either illegal or prosecuted? I can only guess that in the weird interest-group-politics that substitute nowadays for ethics that its OK to commit fraud if the little guy is the beneficiary and unloved insurance companies are the victim.
