On Friday, September 17, 2010, glassBYTEs.com™ linked to a story about the Irish Automotive Glass Repairers Association (IAGRA) and their protest against insurance companies in Ireland, claiming that they are putting their members out of business. The article reports that insurance companies in Ireland are making it difficult for policyholders to use the services of IAGRA member shops, referring them to preferred providers. While the group draws comparison to the United States, I believe that they are under the wrong impression about steering being subject to heavy regulation in the United States. Yes, most states have anti-steering laws to protect consumer choice. No, these laws are not adequately enforced and therefore, the situation in the United States is no different than in Ireland.
I believe that independent shops operating in the United States have the same gripe. As noted in the article, shops in the United States spend significant capital on advertising their shops and investing in the employment of talented technicians, only to have that investment negated by the tactics of insurers and their third-party administrators.
While the plight of those businesses operating in the windscreen repair industry in Ireland is comparable to those shops operating in the United States, I would advise them to evaluate the industry from the consumer’s perspective. Let me elaborate on that point. Since beginning my career in the auto glass repair and replacement (AGRR) industry, I lobbied extensively on both the state and federal level, both legislators and agencies, and the reaction from the officials was consistent. If there truly are problems in your industry, the AGRR industry, why are we not hearing from the public? One New York State official told me in no uncertain terms that if his agency was hearing from the public on a level that he was hearing from the glass and auto body shops, change would be immediate.
When I would meet with a legislator or bureaucrat, the first issue that I would raise would be the steering issue and to the extent that it was harming shops. Quite frankly, while they understood our challenges, they did not want to hear it. But during the past 12 to 24 months, my presentation was revised to include issues affecting consumer safety, from shoddy workmanship to inferior glass and the possibility of consumer fraud in the sale of an automobile insurance policy. The reaction, to say the least, has been quite different. But while this perspective has drawn their interest, they want to see the documented proof.
The difficulty before the industry now is to get show owners and operators to understand that we have to come together, collect and compile the data, and rouse the public’s support that will be necessary to bring about the change.
The bottom line is that the current atmosphere in any industry involving insurance claims and insurance companies is dictated by politics. We all know that the insurance lobby is very powerful. But we can also agree that it can be thwarted. The recent debacle that took place in Washington regarding “Obama care” is proof. The insurance companies could not over-power what was labeled as the will of the people, even though the jury is still out. In the AGRR industry, I have heard it all. I have heard testimony that third-party administrators know what’s best for consumers and they promote competition. This is silly, but unfortunately I also heard first-hand that people are buying it.
It is my ever-so-humble opinion that the AGRR industry also can change. Insurance companies are having their way because they have argued that they are doing what is in the best interests of the public and many legislators have and continue to buy into it. Fortunately, we know better and we know what needs to be done. If we involve the public and present the data to legislators and the appropriate state and federal agencies that can prove the contrary, in that consumers are being harmed, then the winds of change will begin to blow. Like the gentlemen on the Men’s Warehouse commercial boasts, I guarantee it. This is and should be all about the consumer. After all, aren’t you all in business to serve and satisfy consumers?
Wednesday, September 22, 2010
Monday, September 13, 2010
“At No Cost to You:” Direct Marketing or Insurance Claims Harvesting
Last Spring the hotbed of controversy swirling around direct-marketing techniques in the auto glass repair and replacement (AGRR) industry was the State of Arizona. Recently, out of the State of Florida, we are reading about direct marketing tactics to consumers pressuring them to have their windshields replaced “at no cost to you.” Specifically, the articles refer to the growing number of sales people showing up on the doorsteps of homes of Floridians and offering to replace damaged windshields “at no cost to you.” Where else have we all heard that phrase before?
In one article, aggressive windshield replacement marketing sales tactics were referred to as claims harvesting. In response, haven’t we been bombarded by repeated sales pitches on our radios and televisions using the same theme, using the same pitch, “at no cost to you?” While I would argue that although the media approach may be a little more subtle, isn’t this still a form of insurance claims harvesting? And not isolated to Arizona and Florida, isn’t this happening across the country? So why isn’t anybody up in arms about that? Where are our friends at the National Insurance Crime Bureau (NICB) who just love to sensationalize statistics in the news media, only to qualify them in later paragraphs? Is there really any difference? But I don’t see or hear one word from insurers about that. Are the ads okay because the company using this phrase in its commercials is actually the preferred provider, where insurers would prefer the windshield to be replaced?
Whether on the doorstep of a residence, the radio in the car or a television in one’s home, isn’t one party encouraging another person to use the proceeds of an insurance policy to have a service provided considered claims harvesting? Isn’t “at no cost to you” a phrase whose intention is none other than to meet that end, to have the consumer file a claim? So I assume that all of the people assaulting these direct marketers are okay with the same concept being used by another company, but only repeatedly on radio and television?
In my ever so humble opinion, there is nothing wrong with a company using these direct marketing techniques, as long as they are legitimate and in full compliance with any and all local ordinances. As a side, this is all that the State of Arizona needed to do in dealing with this issue; enforce local peddling ordinances and prosecute any insurance fraud under existing laws. However, we know the intent there was to tighten the first notice of loss requirements, shoring up the third-party administrators, because they cannot counter this kind of marketing. I believe that companies undertaking these marketing initiatives are doing so because insurance companies have created barriers that hinder a shop’s ability to secure and properly service its rightful customers.
Right or wrong, this insane atmosphere exists and therefore, companies are trying to find creative ways to survive in the AGRR industry. And while margins and profits continue to shrink, there is never an excuse to commit fraud. So find the fraud and prosecute it and leave the sensationalism to the tabloids. I have seen so many statistics thrown around from insurers and their associates. In Arizona, a lobbyist proclaimed that it was 10,000 cases of fraud, and lately, the NICB is throwing around their stats. Based on these statistics, as reported, there must be a lot of glass shop operators sitting in jail. So, just how many of these perpetrators have been prosecuted?
On a closing note, the quality issue was raised as a possible symptom of these direct marketing efforts. Any illegitimate company selling their services door to door may be doing substandard work. However, I can assure you that there are many operators (in numbers that far outweigh these) in this industry that are not engaging in these marketing practices and doing shoddy work, and installing inferior glass. There are many, many problems in this industry; this just so happens to be the hot topic in 2010.
In one article, aggressive windshield replacement marketing sales tactics were referred to as claims harvesting. In response, haven’t we been bombarded by repeated sales pitches on our radios and televisions using the same theme, using the same pitch, “at no cost to you?” While I would argue that although the media approach may be a little more subtle, isn’t this still a form of insurance claims harvesting? And not isolated to Arizona and Florida, isn’t this happening across the country? So why isn’t anybody up in arms about that? Where are our friends at the National Insurance Crime Bureau (NICB) who just love to sensationalize statistics in the news media, only to qualify them in later paragraphs? Is there really any difference? But I don’t see or hear one word from insurers about that. Are the ads okay because the company using this phrase in its commercials is actually the preferred provider, where insurers would prefer the windshield to be replaced?
Whether on the doorstep of a residence, the radio in the car or a television in one’s home, isn’t one party encouraging another person to use the proceeds of an insurance policy to have a service provided considered claims harvesting? Isn’t “at no cost to you” a phrase whose intention is none other than to meet that end, to have the consumer file a claim? So I assume that all of the people assaulting these direct marketers are okay with the same concept being used by another company, but only repeatedly on radio and television?
In my ever so humble opinion, there is nothing wrong with a company using these direct marketing techniques, as long as they are legitimate and in full compliance with any and all local ordinances. As a side, this is all that the State of Arizona needed to do in dealing with this issue; enforce local peddling ordinances and prosecute any insurance fraud under existing laws. However, we know the intent there was to tighten the first notice of loss requirements, shoring up the third-party administrators, because they cannot counter this kind of marketing. I believe that companies undertaking these marketing initiatives are doing so because insurance companies have created barriers that hinder a shop’s ability to secure and properly service its rightful customers.
Right or wrong, this insane atmosphere exists and therefore, companies are trying to find creative ways to survive in the AGRR industry. And while margins and profits continue to shrink, there is never an excuse to commit fraud. So find the fraud and prosecute it and leave the sensationalism to the tabloids. I have seen so many statistics thrown around from insurers and their associates. In Arizona, a lobbyist proclaimed that it was 10,000 cases of fraud, and lately, the NICB is throwing around their stats. Based on these statistics, as reported, there must be a lot of glass shop operators sitting in jail. So, just how many of these perpetrators have been prosecuted?
On a closing note, the quality issue was raised as a possible symptom of these direct marketing efforts. Any illegitimate company selling their services door to door may be doing substandard work. However, I can assure you that there are many operators (in numbers that far outweigh these) in this industry that are not engaging in these marketing practices and doing shoddy work, and installing inferior glass. There are many, many problems in this industry; this just so happens to be the hot topic in 2010.
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