Steering continues to be a major topic of interest and source of frustration to independent auto glass shop operators. When it comes right down to it, steering related matters consume a considerable amount of a shop’s resources. Bills addressing steering at the state level continue to be introduced by legislators that agree that steering exists. Recently, the National Conference of Insurance Legislators (NCOIL) shelved model legislation that was intended to address steering.
I have always contended that state legislation, although well intended, will not address the issue of steering. Even well written legislation, accompanied by stiff penalties for violators, will not be effective in eradicating steering.
First and foremost, this legislation only deals with the issue after the shop becomes aware of a customer that wants to use its services. Therefore, this legislation addresses the “known” incidences of steering; the point at which the shop’s representatives become outraged that they lost a customer. But how many of those customers are diverted to other shops in which the “shop of choice” has no clue that the customer ever requested its services? It is at the point of contact with which the issue of steering must be dealt.
Let me explain. I put forth the argument that the majority of steering takes place at the initial contact point between policyholder and insurer. I believe that many vehicle owners, after incurring damage to their windshields, make the first call to their insurance companies or their agents to report the damage. It is at that point, even though the customer may have a “shop of choice,” that many potential customers are steered or diverted to a shop that is “preferred” by the third-party administrator and its insurance partner. We have heard it all before, the national warranty, they are not on “the list,” or “you may incur out of pocket expenses.” Therefore, the real culprit is the process of the claim reporting. It is the telephone number on the insurance identification card that takes the shop’s rightful customer directly into the call center of the third-party administrator. Until this process is changed, the issue of steering will never be addressed adequately.
The second problem that we have at the state level is that those wanting to protect the status quo have immense influence (particularly from a financial standpoint). In my opinion, the only opportunity for shops to counter that influence is through the organization of a strong grassroots effort. But again, the real issue is that legislation addressing steering will have minimal impact. As I pointed out, steering has to be stopped at the initial point of contact between the shop’s customer and the insurance company or its partner.
Does this mean that shops should not try to advance legislation to protect their business interests? Of course not, as shops must pursue every opportunity to safeguard the business that rightfully belongs to them. A major step would be to advance legislation that cleanses the entire industry. Third-party administrators must be pure, with no financial conflicts of interest. They should not be allowed to have any conflict, especially a conflict where the parent company can financially benefit from the ownership. But corrective measures must not stop there. All gifting, which in my opinion is nothing less than a bribe, has no place in the industry and should be outlawed across the entire industry. And only legitimate business operators should have the opportunity to offer auto glass replacement services. After all, auto glass repair and replacement is a service dealing with consumer safety. I think we can all agree that this critical service has transitioned to be treated like a commodity, a topic for another day.
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