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.
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