** PART I **
RE: REQUEST FOR ATTORNEY GENERAL'S OPIN ON: CAN AN INSURANCE COMPANY MANDATE THAT AN INSURED UTILIZE ONLY A DESIGNATED VENDOR OR REPAIR SHOP WHEN EFFECTUATING THE REPAIR OR REPLACEMENT OF DAMAGED AUTOMOBILE GLASS PURSUANT TO A VALID CLAIM UNDER A VEHICLE INSURANCE POLICY
THE ATTORNEY GENERAL HAS ASKED ME TO RESPOND TO YOUR QUESTION IN THE ABOVE-REFERENCED MATTER. AFTER REVIEWING THE QUESTION AND THE APPLICABLE LAW, IT APPEARS THAT THE ISSUANCE OF A FORMAL OPINION IS UNNECESSARY. HOPEFULLY, THIS INFORMAL OPINION WILL BE OF SOME ASSISTANCE TO YOU.
INTRODUCTION
A REVIEW OF THE BACKGROUND INFORMATION YOU PROVIDED ME CLEARLY INDICATES THAT YOUR QUESTION REVOLVES AROUND VEHICLE INSURANCE POLICIES ISSUED IN OKLAHOMA AND THE PROPER RESOLUTION OF CLAIMS ARISING THEREUNDER WHICH ARE RELATED TO THE REPLACEMENT OR REPAIR OF DAMAGED AUTOMOBILE GLASS. THE CONCERNS WHICH UNDERLIE YOUR QUESTION WERE BROUGHT FORWARD, AS I UNDERSTAND IT, BY LOCAL GLASS VENDORS WHO PERCEIVE THAT NATIONAL INSURANCE COMPANIES ARE ENTERING INTO EXCLUSIVE CONTRACTS WITH NATIONAL GLASS COMPANIES FOR THE REPAIR OR REPLACEMENT OF GLASS WINDOWS IN THEIR AUTOMOBILES. IT IS ALLEGED THAT CERTAIN NATIONAL INSURANCE COMPANIES HAVE DIRECTED THEIR AGENTS IN OKLAHOMA TO ARRANGE ALL GLASS REPLACEMENTS THROUGH JUST SUCH A NATIONAL GLASS COMPANY AND TO NOT CALL ANY LOCAL VENDORS TO PERFORM SUCH SERVICES.
ANY ANALYSIS OF THIS ALLEGED PRACTICE FOR THE PURPOSE OF DETERMINING ITS PROPRIETY MUST BEGIN WITH THE PRINCIPLE THAT THE RELATIONSHIP BETWEEN THE INSURER AND THE INSURED IS CONTRACTUAL. HOWEVER, THE INSURANCE BUSINESS AND INSURANCE CONTRACTS ARE UNIQUE FOR A VARIETY OF REASONS AND HAVE BEEN DETERMINED BY THE OKLAHOMA SUPREME COURT TO BE FAIR SUBJECTS OF REGULATION BY THE STATE. SEE, E.G., OKLAHOMA BENEFIT LIFE ASS'N. V. BIRD, 135 P.2D 994 (OKLA. 1943); METROPOLITAN LIFE INS. CO. V. LILLARD, 248 P. 841 (OKLA. 1926); INSURANCE CO. OF NORTH AMERICA V. WELCH,154 P. 48 (OKLA. 1916).
STATE REGULATION OF THE INSURANCE INDUSTRY IN OKLAHOMA IS EMBODIED IN THE OKLAHOMA INSURANCE CODE ("CODE"), 36 O.S. 101 (1991) ET SEQ. THE CODE'S COVERAGE INCLUDES ALL TYPES OF INSURANCE COMPANIES AND THEIR PRODUCTS. THE CODE DEFINES INSURANCE AS "A CONTRACT WHEREBY ONE UNDERTAKES TO INDEMNIFY ANOTHER OR TO PAY A SPECIFIED AMOUNT UPON DETERMINABLE CONTINGENCIES." 36 O.S. 102 (1991). PERTINENT TO YOUR QUESTION IS THE CODE'S DEFINITION OF VEHICLE INSURANCE WHICH IS, IN PART, INSURANCE "AGAINST LOSS OF OR DAMAGE TO ANY LAND VEHICLE . . ." 36 O.S. 706 (1991). THE CODE REQUIRES CERTAIN BASIC CONDITIONS TO BE INCLUDED IN INSURANCE CONTRACTS BUT LEAVES OTHER CONDITIONS TO BE AGREED UPON BY THE PARTIES SO LONG AS SUCH CONDITIONS ARE NEITHER INCONSISTENT WITH THE CODE, PROHIBITED BY LAW OR IN CONFLICT WITH ANY OF THE REQUIRED BASIC CONDITIONS. 36 O.S. 3612/36 O.S. 3614 (1991). SIMILARLY, THE CODE EXPRESSLY WARNS THAT "NO PERSON SHALL TRANSACT A BUSINESS OF INSURANCE IN OKLAHOMA WITHOUT COMPLYING WITH THE APPLICABLE PROVISIONS OF THE CODE." 36 O.S. 109 (1991).
THEREFORE, WHETHER THE PRACTICE YOU ARE CONCERNED WITH IS PROVIDED FOR IN A WRITTEN PROVISION