Anti-Steering Legislation: Who Does It Benefit?

We have all heard about anti-steering legislation, but have you really ever considered who it is meant to benefit? The First Amendment rights establishment on the one side of the argument, insurers and their ilk, profess that anti-steering legislation denies insurance companies their rights to free speech under the First Amendment.

But what does this mean to the policyholder who reports a first notice of loss with the determination to use a shop of their choice, a legal right in most states, and must be subjected to a process that goes beyond free speech? (And let me add that after experiencing this insurance company “free speech” process firsthand, that right under the first amendment does not include coercive tactics and exaggerations.) And if you think that this is not reality, I know of one trade association that is gathering the evidence. The mere fact is that it must be a problem, because it is the subject of legislation across the United States.

Speaking from the other side of the issue, if this were about free speech and the right for insurance companies to educate, then this would be a “no” issue. And, if those same insurers who believed that their rights were infringed upon, would simply respect a consumer’s choice after having their say, this would likewise be a “no” issue. As former Speaker of the House Newt Gingrich might interject, the debate would wither on the vine. But this isn’t about an insurer’s right to free speech. It is about much more than that. In the auto glass repair and replacement (AGRR) industry, it includes insurers having the ability to twist arms to contain costs and inflate a bottom line.

To clarify, I would not want to deny an insurer the right to present options to its policyholders. But, at the same time, if the policyholder researched the various service providers in their area and came to a decision as to who to use, that choice should be respected. Those of us dealing with this on a daily basis know that this process is about much more than free speech. We know that an individual cannot yell “fire” in a crowded movie theater or “bomb” at the airport because that could place innocent people in harms’ way. But isn’t it also true that the current process of enticing policyholders to use insurer recommended shops can compromise consumer safety (placing them in harm’s way) since they, the insurers, do not contract for services and therefore assume no liability? The insurers and their TPA partners cross the free speech line and that is why anti-steering legislation is necessary. It is necessary to protect the policyholders from poor repairs, shoddy installations and inferior parts. Yes, it is the abuse of free speech that brought us where we are today.

Recently, in my ongoing research, I came across an article written by two attorneys on behalf of Washington Legal Foundation proclaiming in their writing that anti-steering insurance laws are a form of state censorship. In fairness, it was written from a perspective about the auto body industry, but anti-steering legislation includes the auto glass industry as well. So I will address this matter from the perspective of the auto glass repair and replacement industry.

In this particular article, the authors write that there are actually benefits to insurer referrals. If one wants to view convenience as a benefit, I concede that they are right on the mark. A couple of weeks ago I wrote about the concierge service offered by one of the larger insurers. And I asked a very logical question: who in their right mind would turn their vehicle, the second largest purchase that an individual makes after their home, over to an insurer to have it repaired without being involved in the process?

The authors of this article wrote that automotive insurance companies have “unsurpassed knowledge” given their constant exposure to the auto body industry. While I cannot speak from experience on behalf of the auto body industry, I am qualified to speak on behalf of the AGRR industry. We know that the knowledge used in this referral process (a.k.a. education) is based on one qualifier, and that qualifier is price.

To insurers’ logic, every windshield replacement is the same and there is no quality difference in the glass being installed. We in the auto glass repair and replacement industry experience on a daily basis that “unsurpassed” knowledge and how it hurts policyholders, not helps them. Let me ask you this: was it this “unsurpassed” knowledge that caused a policyholder to drop off his vehicle at the shop of my former employer for a windshield replacement and then to return in an hour to advise that his insurance company would not allow him to have his work done there? Was that within the realm of the insurer’s First Amendment rights? Did the insurer actually use that “unsurpassed” knowledge to enlighten the policyholder or could it have been coercion?

In addition, the presence of this “unsurpassed” knowledge in what it has done to the industry has affected the cash segment of the industry as well. I would welcome the opportunity to see a comparable program whereby insurance companies could apply this “unsurpassed” knowledge to the legal profession—where every divorce is the same, every product liability case is the same, and every malpractice suit is the same. I would welcome the opportunity to hear these attorneys’ perspective then. Do you think the First Amendment rights test would apply here as well? Of course not.
The next time either of these either attorneys have their own windshields replaced or collision work performed on their personal automobiles, I would be very curious as to where they took them for service. I would like to see if they trusted this “unsurpassed knowledge” from their insurers when it affected them personally. Not once in the “free speech” process will you hear an insurer/TPA boast that their affiliated shops use OEM parts or the technicians doing the work are certified, or inform customers about safe drive-away times, etc. If they did, maybe I would concede to the claims about unsurpassed knowledge.

Unfortunately for the policyholder/consumer, at least in the auto glass industry, the process is all about securing a low-cost service provider. While consumer safety should be at the very heart of this process, those of us in the AGRR industry know that “unsurpassed” knowledge does not include this variable in the equation. The consumer safety issue is far beyond whether or not a windshield leaks after it leaves the shop. And that, my friends, is why we need anti-steering legislation to protect those consumers who are informed and know why they chose a particular shop. And we need to properly educate the uninformed as well. Why? To protect them.

Borrowing a phrase from the legal profession, I rest my case.

In the Name of Customer Service or Profits?

The television ads continue to flow for one large insurer promoting its “customer-friendly” concierge service. The ad urges the insurer’s policyholders, in the event of an accident, to drop their vehicles off at this concierge service and let the insurer do the rest. Maybe I am naïve, but who would ever consider putting their damaged vehicle, the second most expensive purchase that a person makes after their home, into the hands of the insurer and believe that the repair will be done safely and restore the vehicle to pre-loss condition? Unfortunately, this is probably a very successful venture for this particular insurance company. However, those of us participating in the auto glass repair and replacement industry witness everyday the real objectives of insurers and we know that the end result is not pretty.

What advantage does a car owner have in utilizing such a service? Convenience? Are these ads produced in such a way to instill confidence in the viewing audience that the insurance company has decided to put their safety ahead of cost minimization and therefore profit? That the insurance company is a valued friend? Using this service, what is the likelihood that the owner’s vehicle will be restored to pre-loss condition and not suffer from diminished value? What are the odds that the service provider will install replacement parts that meet or exceed the crash safety standards recommended by the automobile manufacturer? Recently, Ford Motor Co. showed us that there are pronounced quality differences between aftermarket and original equipment manufactured parts. As a lifelong Buffalo Bills fan, I would say that the odds would be much better for the Bills to take home the Vince Lombardi Trophy in February 2011 than for the service provider in this scenario to use even one OEM bolt. How’s that for confidence?

This promotion of a concierge service undermines the role that the professional shop owner/operator fulfills in both the collision industry and the auto glass repair and replacement industry. Specifically, in the auto glass repair and replacement industry, the independent shop owner/operator assesses the damage to the customer’s windshield to determine if it can be repaired or requires replacement. Once the determination is made, the recommended service is presented to the customer and the customer makes a decision. If the situation is handled properly, the shop’s customer will have the necessary information to make an informed decision; information that should include the benefits of windshield repair, differences in OEM versus aftermarket glass and safe drive away times. These are the attributes that separate the professionals from the non-professionals. If you recall, one major gasoline company used to advertise, “You can trust your car to the man who wears the star.” Does the same really hold true for this concierge service?

It is an outright shame that the entire commercial is focused on making the repair convenient for the customer, rather than safe for the customer, especially given the underlying motives of the insurer. Apparently, this insurer, by making the collision repair convenient for the customer will have enough influence to keep its policyholders from taking their vehicles to an independent third-party to assess and repair the damage. In addition, I see no message throughout the ad that the insurer is implying to the customer that the insurer will see that the repair is done safely and properly. Unfortunately, for the customer, unless some paint peels prematurely off of the vehicle, or some other cosmetic flaw stems from the repair, he/she will never know how safely the repair was done or the reliability of the parts installed until another accident is encountered. And, at that point, it may be too late.