I have been a part of the auto glass repair and replacement industry since 2000. Over the course of that span, I have witnessed the influence of the insurers and their partners, the third-party administrators (TPAs), get stronger while the resistance of the independent shops gets weaker. Quite frankly, the independents are getting steam-rolled like freshly laid blacktop. There is virtually no resistance as shop after shop closes its doors, while others standby hoping that they can survive.
Personally, I believe in the free market system; markets operating freely, work best. But I remain steadfast in my opinion that within the auto glass repair and replacement industry there’s no free market, as barriers to entry are dominant, anti-competitive practices prevail, fixed prices exist and insurers have been allowed to make the rules, including directing shops as to what materials to use. TPAs are known to use the manipulation of NAGS part numbers to make the costing of parts favorable to their insurer clients, commonly with interchange part numbers. Even standardized part numbers and pricing isn’t black and white. It is gray and grayer. And their TPA partners continue to usurp power as they remain unchallenged delegating their implied authority. And, to my amazement, independents continue to tolerate it.
The extent of any resistance that I see coming from independents is the exchange of complaints and criticisms, including personal attacks on a glass industry forum. On that same forum, I have read posts from independents boasting how they are in control of their own businesses. My question to them: Are you really? Are you actually servicing every customer that wants to use your shop regardless of how he/she is paying?
Why should the presence of third-party payers be allowed to wreak havoc on an industry whose impact extends into the cash market? Why should the presence of third-party payers be allowed to compromise the safety of the motoring public? Yet it happens every hour of everyday. We are all affected—consumers, shops and industry suppliers, and yet I see no real resistance. In addition, as deductibles increase, any TPA will have the ability to direct jobs, impacting the cash market as well. Why? This will happen because they are privy to the information on an individual’s policy, aware of the amount of any deductible.
Will it matter which TPA? Of course not. Obviously, having this information will allow TPAs the opportunity to steer work to their own shops or shops that are members of their network. Yet, I continue to see no real resistance.
On a side note, and off-topic, have any of you ever been stuck because a TPA told you that the policyholder had no deductible only to find the reverse was true? Or that your customer had insurance coverage, to later discover that he/she did not? And, when you called a TPA, what were you told? The TPA probably advised you that it wasn’t its problem, didn’t it? How about warranty work? How many of you performed a windshield repair or replacement, never aware of any problem, until you were charged back by the TPA? Yet, I see no resistance.
We now have full body scanners at the airports. In the AGRR industry, we have had full business scanners for years, not to protect human life but to protect bottom lines. Yet, I see no resistance.
Recently, we witnessed the influence that a political movement, the Tea Party, had on the mid-term elections. So when individuals come together for a common cause, they have the real ability to affect change. The Tea Party movement was the determination of individuals coming together to literally affect political change across this great nation of ours. So is change within the auto glass repair and replacement market beyond the reach of independents? I personally don’t think so. But apparently many of you do, because I see tolerance and no real resistance.
Wednesday, November 17, 2010
Thursday, November 4, 2010
“Windshield Bullies:” The Jails Must Be Full of Them—Is That a Fact?
A recent blog, “‘Windshield Bullies a Growing Fraud Problem,’ posted by MSNBC blogger Bob Sullivan, discusses the issue of direct marketing tactics used by auto glass repair and replacement (AGRR) companies. Once again, we have an article that attempts to label most, not all, of the companies using these techniques as “bullies.” The fact of the matter is that there are reputable companies using direct marketing to sell their services. And, in my ever-so-humble opinion, let me add that legitimate companies employing direct marketing are justified in doing so.
In this blog, there is a lot of chatter about direct marketing fraud. However, the blogger does not identify any specific cases where an individual or company was arrested, convicted and fined or jailed for fraud. When the blog refers to fraud, it refers to cases that were not related to direct marketing. The first two paragraphs describe an industry rampant with illegal activity. And then the third paragraph begins by pointing out that the “salesmen aren’t necessarily criminal.”
Ladies and gentlemen, unfortunately the insurance industry breeds fraud. It should not be news to any of you that there are dishonest people serving in the AGRR industry. But let me add that there are no excuses to commit fraud, and the perpetrators should be prosecuted and punished. By the way, what happened to the Florida woman referenced in the article who was accused of damaging windshields and told police that she received $45for every referral? Is she in jail?
But let’s not talk about it. If these people are guilty, let’s roll up our sleeves, put down the pens and the sensationalism, and get to work. How many more articles will we need to read about this so called problem? If local ordinances require licensing, are these sales reps licensed? If not, I would encourage local municipalities to license these kinds of activities. There are ways to deal with this problem, but it appears that we would prefer to write about it rather than deal with it.
The blogger does a good job of identifying the problem, discussing it, and painting the problem with a broad brush. But his perspective is one-sided. He does not discuss the real cause for the increase in this kind of marketing. And it does not help the situation when the push for windshield repair is all over the television and radio—especially with emphasis on how it may be no cost to the consumer. Mr. Sullivan, the author of the recent “Windshield Bullies” blog, is a journalist and sensationalism drives readership. But I continue to be amazed at the silence of the insurance industry. Prior to the barrage of these commercials focusing on windshield repair, how many consumers paid any attention to a chip in their windshields? People are coming out of the woodwork wanting to do chip repairs.
Companies have turned to direct marketing to take control of their businesses from a system that is designed to thwart real competition and refer business to those shops that are price-friendly to insurers. That is correct. The TPA models thwarts competition and does a major disservice to consumers. It would do the legitimate operators in the AGRR industry a service if Mr. Sullivan would pursue this matter by writing a blog on the real cause. I have sent Mr. Sullivan an e-mail suggesting he do just that. Guess what? No response.
Erin Klug, a spokesperson for the Arizona Department of Insurance, was cited as having a personal experience with direct marketers. Unfortunately, we remember the debacle in the State of Arizona and how they dealt with this issue. She says that there is a real problem with auto glass fraud in Arizona and elsewhere. Please give me the facts. There are thousands of shops operating within the industry. And how would an article built around sensationalism be complete without input from a representative of the National Insurance Crime Bureau? Does anyone recall the article on “questionable” claims on the rise, only to find out later in the article that they may not be of a fraudulent nature?
I can assure you that the legitimate players in this industry do not want to coexist with the bad apples in this industry. But let’s delve into the underlying reasons why this kind of activity is taking place and let’s fix it. Let’s work to fix it together.
In this blog, there is a lot of chatter about direct marketing fraud. However, the blogger does not identify any specific cases where an individual or company was arrested, convicted and fined or jailed for fraud. When the blog refers to fraud, it refers to cases that were not related to direct marketing. The first two paragraphs describe an industry rampant with illegal activity. And then the third paragraph begins by pointing out that the “salesmen aren’t necessarily criminal.”
Ladies and gentlemen, unfortunately the insurance industry breeds fraud. It should not be news to any of you that there are dishonest people serving in the AGRR industry. But let me add that there are no excuses to commit fraud, and the perpetrators should be prosecuted and punished. By the way, what happened to the Florida woman referenced in the article who was accused of damaging windshields and told police that she received $45for every referral? Is she in jail?
But let’s not talk about it. If these people are guilty, let’s roll up our sleeves, put down the pens and the sensationalism, and get to work. How many more articles will we need to read about this so called problem? If local ordinances require licensing, are these sales reps licensed? If not, I would encourage local municipalities to license these kinds of activities. There are ways to deal with this problem, but it appears that we would prefer to write about it rather than deal with it.
The blogger does a good job of identifying the problem, discussing it, and painting the problem with a broad brush. But his perspective is one-sided. He does not discuss the real cause for the increase in this kind of marketing. And it does not help the situation when the push for windshield repair is all over the television and radio—especially with emphasis on how it may be no cost to the consumer. Mr. Sullivan, the author of the recent “Windshield Bullies” blog, is a journalist and sensationalism drives readership. But I continue to be amazed at the silence of the insurance industry. Prior to the barrage of these commercials focusing on windshield repair, how many consumers paid any attention to a chip in their windshields? People are coming out of the woodwork wanting to do chip repairs.
Companies have turned to direct marketing to take control of their businesses from a system that is designed to thwart real competition and refer business to those shops that are price-friendly to insurers. That is correct. The TPA models thwarts competition and does a major disservice to consumers. It would do the legitimate operators in the AGRR industry a service if Mr. Sullivan would pursue this matter by writing a blog on the real cause. I have sent Mr. Sullivan an e-mail suggesting he do just that. Guess what? No response.
Erin Klug, a spokesperson for the Arizona Department of Insurance, was cited as having a personal experience with direct marketers. Unfortunately, we remember the debacle in the State of Arizona and how they dealt with this issue. She says that there is a real problem with auto glass fraud in Arizona and elsewhere. Please give me the facts. There are thousands of shops operating within the industry. And how would an article built around sensationalism be complete without input from a representative of the National Insurance Crime Bureau? Does anyone recall the article on “questionable” claims on the rise, only to find out later in the article that they may not be of a fraudulent nature?
I can assure you that the legitimate players in this industry do not want to coexist with the bad apples in this industry. But let’s delve into the underlying reasons why this kind of activity is taking place and let’s fix it. Let’s work to fix it together.
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