An Independent View

Insurance Companies: Listen to Your Policyholders

2011-03-16T14:04:00.000-07:00

The auto glass repair and replacement industry has evolved into an industry based on suspicions and ulterior motives. This is evident from the recent statistics offered to the industry on a dramatic rise in questionable claims by the National Insurance Crime Bureau (NICB) and the latest “Windshield Bullies” campaign. Just imagine what perspective you would have if you heard such a phrase like that from some other service industry. Is there any one of you among us that would be willing to label that professionalism?

Unfortunately, we should not behave as though we are players in a chess game trying to out-strategize one and other. But in reality, we are. We are serving the public and, due to the fact that we are service providers in a service industry, we must all do better. Naturally, every single one of us is in business to profit financially. But, professionalism on all fronts should be the guiding beacon. Can any one of us boast that we are satisfied about the situation to which we have transitioned to as an industry? To me, it is a professional embarrassment.

The other night, there was an article on glassBYTEs.com™ that reported that one insurer was evaluating its decision to continue its windshield inspection program performed by technicians of a major auto glass service provider. The article included that service provider’s reaction to accusations that it is using the inspection process to steer claims. Would any one of us expect that the response would be anything other than “we are the best?” Would any one of us expect that the spokesperson would admit to steering or that technicians show up to inspect a windshield with the proper replacement part already in the van?

I read the comments regarding the steering concerns and I question why the insurance company would not prefer to hear directly from their policyholders. It does not make any sense to me that the insurer would publicly acknowledge the response from the company performing the inspections. It does not occur to me that any party would take the word of an intermediary between themselves and their customers as gospel. From the calls that I take from the field, I know that the situation is not what these representatives say. However, as mentioned, we would expect no different. I don’t hear that all is rosy in the inspection process. To the contrary, I hear of delays and stolen claims. So whatever outcome the insurer expects the inspection program to achieve may not be consistent with providing their policyholders with the best customer service.

I have said it before and I will say it again. I cannot imagine any insurance company, if knowing how their customers are being treated at the hands of some third-party administrators who serve two masters would allow it to continue. Folks, common sense says that it cannot be done. Insurers, listen to your customers.

The challenge before each and every one of us, including insurers, third-party administrators, suppliers and service providers, is to clean up this mess and make customer service the priority while ensuring the proper and safe replacement of windshields in the process. After all, isn’t that what a service industry should be all about?

IGA Sets Sights on a Stevie Award for Promoting Customer Service

2011-03-02T14:39:00.001-08:00

For the past few weeks, I have been writing on the woeful customer service in the auto glass repair and replacement industry—an industry that should be all about customer service. As an industry, we know that customer service is not anywhere near the level that it should be. Special interests with close ties to the insurance companies have an agenda to entice policyholders to use service providers that are “insurer-friendly.” However, we can all agree that not every service provider that is “insurer-friendly” is necessarily concerned with the interests of the consumer, especially their safety. Not only is the customer used as a rope in this tug of war, but some third-party administrator CSRs have no reservations about being confrontational with a shop while the customer is on the line.

To any of you that may know me or follow my rants, I have always said that it is the consumers who are being short-changed in this industry. I have always believed in the “customer-first” philosophy and that the rest will fall into place. The consumers are used as pawns in a process in which insurance companies are more concerned about trying to glorify their income statements than honoring the contract they executed with their policyholders. Insurance products sold as indemnification policies are treated more like HMO policies. I think the ongoing battle between shops and insurers is simply a by-product of shop operators fighting for their right to service customers without the presence of external interference. I remind you of the phrase that has become very popular in the auto glass industry: who is the customer?

The question of the century is: where will this all end? The Independent Glass Association’s (IGA) recent announcement pertaining to the development of technology standards is an initiative that should be embraced by the industry. The industry now has before it the best opportunity to unite and endorse the use of state-of-the-art technology in the insurance claims process, which has become fossilized and no longer promotes anyone’s objectives.

Recently, a major industry company won a Stevie Award for the best use of technology in customer service and was cited for the capability of its mobile technician technology. From what I have witnessed in the early stages of the IGA’s initiative, the technological capabilities available will reach far beyond e-mailing the customer an appointment confirmation and a technician’s picture and biography.

We have tremendous opportunity before us. The industry has the opportunity to place the Stevie Award in the hands of those who will truly restore customer service to the priority that it deserves. The question remains as to whether or not the industry will embrace it. The question remains as to whether or not the industry will embrace the technology that will put the Stevie Award for customer service where it rightfully belongs; in the possession of those who truly are concerned with servicing their customers.

Customer Service is the Priority—Maybe in Other Industries

2011-02-17T05:29:00.000-08:00

Has anyone given much thought to how the CEOs of insurance companies would react if they knew how their policyholders were being treated at the hands of some third-party administrators (TPA)? As a former employee of a glass shop, I witnessed some extremely poor treatment of customers at the hands of the customer service representatives. In a service industry, I would expect such treatment would be unacceptable at any link in the customer service chain. I would find it hard to believe that insurers would tolerate such treatment of their policyholders to save $20 on a glass claim. However, in the auto glass repair and replacement industry, the poor treatment of consumers at the hands of some third-party administrators is the rule and not the exception.

For starters, I remember being placed on hold, sometimes in excess of twenty minutes, while the customer service representative “educated” the customer on why they should not bring their car to our shop. The treatment was especially harsh when the customer was reporting the first notice of loss in our shop’s lobby. These calls always ended with a bewildered look and, in many cases, just plain anger. Fortunately, with the in-shop calls, we always retained the customer.

So we shall return to the question at hand. Why would CEOs of insurance companies allow their customers to be subjected to such abuse? Is it truly that they do not care? I doubt it. But I have not had the opportunity to ask them. It has always been my understanding that securing a new policyholder is costly. It has always been my understanding that an insurer must also retain that insured for a period of years to make that policy profitable. So again, assuming that this is true, why would insurance companies place the retention of a policyholder at risk for a few dollars?

In this industry, customer service should be priority number one. But it is not. The point of contact between the shop’s customer and the TPA is not the only point of contention. With the introduction of the “windshield bullies” nonsense (which I maintain that in and of itself a fraud) and the call by some insurers for inspections of windshields, the opportunity for consumers to get their automobiles properly and timely serviced has become even more problematic. More and more, I am taking calls that tell me that the inspections are taking an inordinate amount of time. The service that all of us provide to the consumer should be made as convenient as possible from the reporting of the claim to, at a minimum, the point where the consumer has been serviced and on their way.

Will there be any improvements in this industry in the area of customer service, especially as it appears that more and more, the insurers are dancing to the tunes of the TPAs and not vice versa? Recently, the Independent Glass Association announced the initiative to develop technology standards in the industry to improve customer service. It is believed that through the integration of state-of-the-art technology into the insurance claims process, customer service will be restored to the priority that it well deserves. After all, this is a service industry. Hopefully this should alleviate any concerns by consumers that the shop of choice is the culprit in the process. From experience, I know that many times the shop at which I was employed was viewed by the consumer as the weak link in the chain because, after all, our customers believed that all of the time, they were communicating directly with their insurance companies.

Will Customer Service Ever Become a Priority in this Service Industry?

2011-02-02T09:57:00.000-08:00

With each passing day, I become more and more amazed how insurance companies embrace the status quo (at least publicly), as their customers get abused and disrespected at the hands of some third-party administrators (TPAs). If insurers have not learned by now, let me remind them that any TPA with a conflict cannot serve two masters. Only one master can be served and based on the calls that I field every day, it is not the insurance client that is the master being served.

One day last week, I received a call from a shop manager telling me that his customer had been waiting more than a week for a windshield inspection. The delay had the customer on edge. The customer was confused and extremely upset, and the shop manager could not appease him. I offered him several suggestions. The first was to make sure that he had the signed assignment of proceeds, which he did. The second was to have his customer contact the agent and advise him/her of the situation. The customer’s insurer was clearly not on his side, it seemed. Another suggestion that I had made was to have his customer contact the Department of Insurance and file a formal complaint.

Once again, I find myself challenging the real purpose of the inspection process. From the moment that these “inspections” were introduced, I proposed that inspections had nothing to do with fraud. Rather, I believe the inspection process is a fraud. Inspections are another attempt to steer claims. Why do I argue that the inspection process has nothing to do with fraud? Because all the while the customer is delayed in getting the inspection, he is pursued, in some cases with gimmicks, to have his vehicle serviced at another shop. If this was all about fraud prevention, the policyholder would simply have to wait for the inspection. And how do you justify a lengthy delay for a process that would take five minutes? This is all about making the process inconvenient for the customer, hoping he/she will turn to the insurer/TPA for advice. The bottom line is, if insurance companies were concerned with fraud prevention they would not employ the services of a TPA (aka the competition) to perform the inspection process. Can anyone say “credibility?”

When will insurance companies get it? (I think that they already do). Do they actually think that an arrangement to have a third-party service their customers will serve their best interests? They are so consumed with containing costs that they have allowed customer service to take a back seat. But then again, behind the scenes, are insurers truly happy with how this industry has evolved? Can they possibly be happy with the increase in claims that resulted from a media campaign that boasted “at no cost to you?” (By the way, what happened to those ads? I haven’t seen or heard one in a long time.)

Are insurers satisfied with the fact that everywhere you look, you can read about disgruntled claims or some other controversy? I cannot imagine that they are, but after thinking about it, they cannot go public with their displeasure either. After all, they are the ones that have cultivated this debacle.

On a closing note, I have always argued that the emphasis in this industry needs to focus on the customer. Does anyone remember the customer, the person that we are all in business to serve? It is the customer that is getting short-changed in this process. The customer is confronted with a claims reporting process that takes way too long, in some cases receiving a service from someone who is not qualified, having poor quality glass installed and not receiving the benefit promised in the insurance policy purchased.

Next week, members of the auto glass industry will be coming together in Scottsdale, Ariz., to draft a blueprint for the development of an ANSI technical standard. In my opinion, this will be a major step forward in restoring customer service to a service industry that has neglected the very party that we are all here to serve. Stay tuned; good things are on the horizon.

Technology and TPAs: The Best Defense is a Good Offense

2011-01-19T13:52:00.000-08:00

Recently, it was announced that there is an effort in place to introduce the concept of the development and implementation of technical standards to address the insurance claims process, thereby leveling the playing field. As noted in those same announcements, technical standards would support independently owned glass shops in their ability to launch an offensive against the blatant, anti-competitive tactics used by insurers and their third-party administrator (TPA) partners. TPAs are getting bolder and bolder in their determination to capture market share, steer work to preferred providers and contain costs. The recent announcement by USAA Insurance that it may require inspections using technicians, employed by the competition, and following the lead of GEICO Insurance, was the catalyst for this development. Thank you, USAA. Using the latest in technology, the industry will unite to stop this brazenness. Enough is definitely enough.

When I began my career in the auto glass repair and replacement industry, I could not believe that any third party, insurer or otherwise, could dictate the terms of what a business should charge for its services. To me, it should never matter who is paying the bill. I viewed this as no different than if a credit card company would have any control over what a business charged, because a customer was using credit as a means of payment. As the years passed, I watched in amazement as insurers, through their TPAs, assumed expanded dictatorial powers regarding the terms of doing business, including the parts that shops were to install (that is, if you were fortunate enough to retain your customer in the process). And, as evidenced by the introduction of inspections, performed by the competition, and under the mask of fraud prevention, they continue to attempt to expand those powers. It is time for independents to take a stand—and we will!

I maintain that any business should be able to charge as it sees fit, because market forces will eventually determine its fate. Any significant variance on pricing in a free market, whether higher or lower, will be the determining factor in whether a business is successful or not. Am I suggesting that shops should charge insurance companies significantly more than the price they charge customers paying cash? Absolutely not. But the desire of insurers to contain costs does not justify the antics that are being experienced in the AGRR industry today.

I believe that independents have been remiss in their failure to address the ongoing interference in their ability to conduct their businesses. But, as they say, it is never too late and the introduction of technical standards will present an opportunity to address the interference that insurers and their partners instill on independent businesses as they attempt to further control the market. The technology is available and independents will be far better off if they embrace these efforts. In my opinion, the expanded use of technology in the claims process can eliminate the need for TPAs altogether, making them a page in the history books. And I believe that by presenting insurance companies with the option, TPAs may just sail off into the sunset.

“The Windshield Bullies”

2011-01-05T13:58:00.000-08:00

Somebody, please stop those windshield bullies that are preying on the unsuspecting elderly, and, at all costs, stop them from using the glass shop of their choosing.

Recently, I learned that the National Insurance Crime Bureau (NICB) was escalating its sensationalism regarding “windshield bullies” by airing 30- and 60-second commercials on auto glass fraud. The ads feature what appears to be the voice of an elderly woman who states that a company changed her windshield before she could call her insurance company. Can you imagine that she did not have the chance to call her insurance company? What third-party administrator would like that? Why they would not have the opportunity to “steal” that claim out from under that glass shop?

The woman featured in the ad did not think that she needed a new windshield. I would be curious to determine how the woman in the commercial arrived at that conclusion. It sounds like the woman sat at the gas station the entire time while the company went and retrieved the windshield and did an actual replacement. Was this in actuality a repair? Certainly she must have some evidence that there was wrongdoing to get these people arrested for fraud. Were they arrested and were they convicted? This entire ad appears to be suspicious and fabricated.

With bullying running rampant and these claims circumventing the third-party administrators (TPA), one would think that TPAs would want to do whatever they could to put an end to these tactics that apparently are the cause of a dramatic increase in “questionable” claims. However, since when has the duty of claims processing been expanded to include claims policing? Third-party administrators are not regulatory agencies. The Arizona legislation passed in the spring of 2010 was about tightening the claims reporting process, and not fraud. I contend that this ongoing reporting and windshield bullies campaign is about the claims reporting process, not fraud.

For at least the past two quarters, the NICB reported this dramatic increase in “questionable” claims. Just who is the source of the “questionable” claims that are being reported to the NICB? Is it the third party-administrators? I have addressed the sensationalism of the NICB press releases in the past. NICB president and CEO Joe Wehrle is quoted as saying that auto glass fraud is happening across the nation, but has produced no hard statistics or convictions. In addition, can a parallel be drawn to the fact that this “dramatic” increase in so-called “questionable” claims may be the result of a “claims harvesting” media blitz? The same media blitz that not one major insurance company has publicly denounced. The same media blitz that urged automobile owners to inspect their windshields for any defect that they may never have paid attention to in the past.

I believe the time is right for glass shops to run a counter-campaign by producing and airing commercials that are based on the following theme: Have you ever been on the end of a telephone line when a third-party administrator CSR will not accept the fact that you already have chosen a glass company to replace or repair your windshield?

The script read by the actor/actress could read: “I called the toll-free number on my insurance identification card to report my glass claim and, when I told the young lady that I wanted to use Joe’s Auto Glass, she was relentless and insisted that I would incur out-of-pocket expenses and that my windshield would not be guaranteed. After approximately 30 minutes on the line, I was able to make an appointment with Joe. The next day, a van was in my driveway that did not say Joe’s Auto Glass and, before I was aware of it, my windshield was replaced before I could stop it.” Here is a real customer who was bullied into using a shop that he/she did not choose in the first place. Since the inception of third-party administrators, there has been a “dramatic” increase in automobile owners being steered to shops they did not intend to use. We must put an end to this CSR bullying.

Insurers and the industry must accept that there are direct marketers that are selling windshield repair and replacement services to consumers that are legitimate and do not subscribe to fraudulent practices. The NICB should cease painting the industry with such a broad brush because one affiliated company, in particular, does not appreciate direct marketing. In the name of credibility, NICB CEO Wehrle should produce the number of convictions in his organization’s next quarterly report and insurers must end their silence on the “no cost to you” media blitz. Rather than dividing the industry, let’s work together to clean it up. No one condones fraud and many in the industry would want to work together to clean it up if it actually is as bad as portrayed. Mr. Wehrle, sensationalism must be left to the tabloids. I contend this issue is not about fraud at all. Rather, it is about exerting control over the claims reporting process.

The State vs. Independents: You be the Judge

2010-12-15T14:06:00.000-08:00

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.

Extraterrestrial Minds Want to Know …

2010-12-01T14:15:00.000-08:00

Just the other day, I was reflecting on the auto glass repair and replacement (AGRR) industry, especially focusing on several issues that I believe to be unfair trade practices. I began my career in this industry in the year 2000 and it did not take me too long to realize that something was amiss. Actually, it was the first NAGS calculator in May 2000 and the stream of faxes that followed with insurance pricing revisions that encouraged me to get involved. I remember taking the faxes into the shop owner’s office and asking him what the deal was. Within days I was in our local state legislators’ offices educating them about the practices within the industry and I haven’t rested since.

That was ten years ago and things have gotten progressively worse. I continue to ask myself, “why?” But instead of offering my perspective, I would like you to contemplate the following. Imagine that the earth was recently visited by aliens and, one day, an alien reporter from the Saturn Sun Times, who also happened to be green, entered your shop looking for a story on your business and industry. He had heard that the practices in the industry were out of this world but had to hear straight from the earthling’s mouth. So he began the interview and asked the following questions.

Why do glass shop owners run their businesses according to the demands of insurers and their third-party administrators? Why do shop owners price the products and services that they provide in accordance with a standardized parts and pricing schemes? Do they do this purely to accommodate insurance billing? Is there something unique about your industry that makes it much different than any other? And why do shops have to accommodate third-party billing? Does serving a customer who happens to be paying for those services with an insurance claim require that shop owners must relinquish their rights to a third party? Who has liability in the event that a tragedy occurs because of your negligence?

What are networks? What are the advantages of being a network shop? Why are non-network shops expected to follow network rules? Why do non-network shops succumb to the likes of signature audits or allow unlicensed claims adjusters onto their property to do the inspection of a damaged windshield? Why do third-party administrators fight anti-steering legislation if they are not using coercive tactics and operating within the law?

I can continue, but I think you will agree that our alien friend is a pretty inquisitive fellow. I, for one, would be very interested in reading the alien’s article after publication to learn his perspective. But I think we can conclude that after learning about the AGRR industry in the United States, the entrepreneurs on his planet will not be green with envy.

Peaceful Coexistence: Political Correctness in the AGRR Industry

2010-11-17T10:11:00.001-08:00

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.

“Windshield Bullies:” The Jails Must Be Full of Them—Is That a Fact?

2010-11-04T13:42:00.000-07:00

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.

Will That Be Cash or Credit? Will That Be Cash or Insurance?

2010-10-06T12:38:00.000-07:00

This past Monday, the U.S. Department of Justice sued MasterCard, Visa and American Express for anti-competitive practices, reaching a proposed settlement with two of the defendants, MasterCard and Visa. As of this writing, American Express vowed to fight on, arguing that the proposed settlement will promote steering and do nothing to promote competition.

I personally find this very interesting to say the least. But more importantly, can a parallel be drawn to the practices that are commonly used within the auto glass repair and replacement (AGRR) industry? Louise Parent, the attorney for American Express, was quoted as saying the contracts are “intended to shield consumer from pressure by merchants not to use the cards of their choice.” Just what are the objectives of the contracts between insurance companies and their third-party administrator (TPA) partners?

Do the contracts in existence in the AGRR industry between insurers and TPAs promote competition and facilitate a shop’s equal access to the consumer? I would have to argue that they do not. I will not address the particulars that support my argument as I have many times before. To proclaim that TPAs promote competition and facilitate equal access to the marketplace in the AGRR industry is ludicrous and only a fool would buy into it. To argue that the TPA model benefits the consumer is just as empty. The only ones that can argue in favor of the TPA practices are the ones who are directly benefitting.

What really has piqued my interest is that the U.S. Department of Justice is on the march and serious about enforcing the rules of free and fair competition. The credit card industry is huge. But I will argue that based on what I am reading about the anti-competitive practices that brought the Department of Justice to investigate the industry pales in comparison to the practices in existence within the AGRR industry. I highly doubt that if consumers choose to pay for purchases with a MasterCard that a representative of Visa calls them on their cell phones and pressures them to do otherwise.

And to those of you who have read my blogs, I do not believe that the participants in this industry are looking for any favors to tip the scales of justice. I believe that all we desire is to have them return to a state of equilibrium. I have always said that the proof that things are amiss in the AGRR industry is the ongoing introduction of anti-steering legislation across the 50 states. Simply and without fanfare, we want the rules of engagement enforced. And in that regard, I have a project for Ms. Christine Varney, who serves as assistant attorney general for the antitrust division at the U.S Department of Justice. One call to a TPA and I am confident that she will be anxious to get started.

Through the Eyes of the Irish

2010-09-22T05:44:00.000-07:00

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?

“At No Cost to You:” Direct Marketing or Insurance Claims Harvesting

2010-09-13T12:15:00.000-07:00

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.

Anti-Steering Legislation: Who Does It Benefit?

2010-08-25T12:42:00.000-07:00

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?

2010-08-11T11:52:00.001-07:00

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.

Cost vs. Safety

2010-07-28T12:58:00.000-07:00

For several months, the Independent Glass Association has been promoting the theme that the focus in this industry is on the low-cost provider, compromising consumer safety. Just recently, I was reminded that Mr. Gary Lubner of Belron in his presentation at the NGA Conference in Tucson in May 2006 said the following: “There is too much focus by insurance companies on cost and not on services.”

He continued, “As an industry, we deliver fantastic service and it’s just not fair that we are asked to do that without being fairly compensated.” On behalf of the shops that do deliver the fantastic service (many of which are IGA members) I say, thanks for the compliment. Yes, the majority of glass shops do provide a fantastic service and, yes, they are not being fairly compensated.

Mr. Lubner, I am in total agreement with your position. You were exactly right on and I will argue that this focus on cost is endangering the lives of consumers with inferior glass and shoddy workmanship. Your comments were delivered in 2006, and, in 2010, and your company, through its third-party administrator (TPA) and the other TPAs operating in this industry continue to be major contributors to this problem. The cost issue is getting much worse.

And regarding your comment about cash pricing, shops should not be concerned with who is ultimately paying the bill. Although I will argue that shops are justified in billing more for insurance claims (extensive overhead), the difference should be reasonable. Mr. Lubner, since your company owns the largest third-party administrator in the business, you have considerable influence over the insurance pricing in the marketplace. Yet the rates offered through your TPA are among the lowest. One example would be that when MetLife changed to the SGC Network from LYNX, the discount rate off NAGS list doubled—a total contradiction to your words in Tucson. What sudden change in the market place could justify that? I have argued for years that there is a huge disparity in what insurers pay across the country and they all have access to the same market pricing data. Is it because some want to be more generous?

Contrary to the scenario portrayed by a Belron senior corporate counsel member at the National Conference of Insurance Legislators a couple of weeks ago, third-party administrators are not good for the industry and especially the consumer. And their one-price-fits-all philosophy most certainly does not promote competition. Third-party administrators are pro-insurer and the defense of the TPA model is built on a mountain of sand. The third-party administrator model benefits the owner of the TPA and the client insurance company, period. Isn’t it ironic that a customer can walk into a glass shop off the street, contract to do business with the shop, and the TPA, who is not privy to the contract, receives an economic windfall because the shop’s customer uses their insurance policy to pay for the shop’s services? This is wrong, especially when the shop is a non-network shop. Thankfully, the courts are ruling against these shenanigans and ruling in favor of the shops and awarding short pays. TPAs should be independent and should not be allowed to own glass shops or have any other conflict of interest. Shops need to do more to wrestle control of their own businesses.

The arguments fixated on keeping insurance premiums low are nonsense; we all know that. The average consumer has his/her windshield replaced every five to seven years. If this statistic is accurate, and such an occurrence will cause a policyholder’s premium to increase, then the entire insurance industry is in need of intense scrutiny. I do not know about any of you, but my premium goes up every year. And while I have had one repair, I do not believe that I have had a windshield replaced in any vehicle that I have ever owned.

If we are to fix the auto glass repair and replacement industry, we must be rational in our approach and allow it to operate on the principles of a free market system, no matter who is ultimately paying the bill. The first step to achieve that end would be to eliminate the baseless arguments that support the status quo. The TPA model does not promote competition, it does not contain premiums and it certainly does not promote consumer safety. Unfortunately, our industry is being held hostage by deep pockets, healthier bottom lines for some, and arguments that cannot be supported by facts.

Attending NCOIL

2010-07-14T13:39:00.001-07:00

This past Saturday, July 10, 2010, I had the opportunity to attend the Summer Conference of the National Conference of Insurance Legislators in Boston. Prior to May of this year, I did not know too much about NCOIL and their objectives. On the agenda was the “Model Act Regarding Insurer Auto-Body Steering,” which was subsequently amended to include auto glass, thanks to Rep. Barbara Byrum of Michigan.

The conference was well attended and I had the opportunity to discuss the auto glass industry with legislators from across the country. In those discussions, I explained that for years the contentions have been between independent auto glass shop owners and insurers and their third-party administrator partners. But I further pointed out that the consumers, the party in the middle of all of this contention, are nowhere to be heard. To that, some legislators replied that they are not hearing from constituents so they can only assume that all is well. To this, I replied that the Independent Glass Association (IGA) is in the process of changing that.

Over the past several months, IGA members and non-members alike have been recording phone calls and collecting steering reports, all authorized by their customers to release to the interested parties. So the IGA is doing something about this and, in doing so, there is no risk that a tape is lost or edited. I am of the opinion that when the state insurance departments across the land hear these tapes, they will have no choice but to act. In addition, I propose that we make these tapes/documents available to the insurers who must be able to make an informed decision as to whether the trade-off is worth it. We also must weigh heavily the fact that most consumers still believe that they are corresponding with employees of their insurance company and are intimidated, a very important consideration supporting adoption of the model act.

As I sat in the committee hearing, it was very difficult for me to hear two legislators from my own state defend the status quo, but I am accustomed to that line of thinking. Originally, when I began calling on legislators in New York State, some shared the same philosophy. But with a little education, they saw the light. We must always keep in mind that the insurance lobby is very powerful, but a well organized grass roots campaign sometimes can succeed.

We must keep in mind that our opposition keeps stressing the constitutional right for the insurers to “educate” their policyholders. So I must present this question to you: have you ever heard them tell their insureds, “I can refer you to a shop that emphasizes the safety of you and your family and employs certified technicians, uses only the best parts and has been in business for fifty years?” Now that would be education in the truest sense of the word. The call between the TPA and the consumer is predicated purely on securing a lower-cost provider. How many phone calls has your shop taken in which the CSR hangs up the phone after you tell him/her that you won’t accept the price and they say they will advise your customer on the other end of the line?

We are all well aware of the arguments provided by third-party administrators in defense of their operations. In my words to the committee, I emphasized that the entire industry needs to be “cleansed.” Not only do the tactics of the TPAs need eradicated, but gifting to agents, rebates to consumers and the waiving of deductibles should be illegal across the board. However, none of these should be eliminated until the TPAs are neutralized and the only way to neutralize the TPAs is to rid them of their conflicts—the serving of two masters.

Let’s set the facts straight. Third-party administrators do not benefit consumers and they most certainly do not promote competition. To even imply that they do is ludicrous. Let’s evaluate the concept of guaranteed average invoice. Should not the consumer be the sole beneficiary in any settlement paid by an insurer? So, therefore, a gimmick like guaranteed average invoice actually allows a third party to benefit from the insurance policy. And since when does fixed pricing, one size fits all, take it or leave it, promote competition? Perhaps in the economy of the old Soviet Union, but definitely not in the United States.

And then we have the implication that cannot help but raise eyebrows. As is the case in any industry, there are a few bad apples, but the majority of glass shop service providers are hard working men and women. To proclaim that a third-party administrator protects consumers from those “trying to take advantage of consumers” is nonsense and quite frankly an insult. That argument is up there with the famous quote, “it depends on what the meaning of the word ‘is’ is.” With the words I used to close my presentation this past Saturday to the NCOIL Committee, “anti-steering legislation is pro-consumer and pro-constituent.”

A View of the IGA

2010-06-30T11:18:00.000-07:00

In my new position as executive director of the Independent Glass Association (IGA), I have had the tremendous opportunity to take the pulse of the membership, both past and present, and industry suppliers. I can say that it has been interesting, to say the least.

In my discussions with the membership, most of the current members say they support the IGA and welcome the new direction. One said to me, “You know that over the years, the shops were focused on doing battle with the insurance companies and their TPA partners, but we never really looked at what it was doing to our customers.” I could not agree more. When an insurer sends out a directive to shops instructing that they will only pay for the least expensive glass, what message is that sending about their concern for the safety of their policyholders? Or when an insurer pays a low rate per NAGS hour? What message is that sending about their concern for the safety of their policyholders? I have said it before and I will say it again, consumer safety is being compromised under the current scenario. And believe me when I say that legislators and attorneys general are asking a very specific question: how are consumers being harmed? To that I reply that information is being collected.
I also have spoken with former members, who remember the lawsuit and thought that the IGA was too radical. In hindsight, the lawsuit was divisive, but hindsight is 20/20. And how would those same people feel if the IGA had been victorious? However, those days are behind us and, for the past few years, the IGA has taken on a new direction. The IGA is a kinder and gentler association whose primary focus is to build bridges on the path to success. Our mission remains clear. And we would like everyone who has a stake in the industry to join us.

In my discussions with industry suppliers, I have told them that I would like them to partner with us and do more to support the independents. I am of the opinion that if the independent shops continue to close at the rate that they are, suppliers will continue to lose market share. I believe that it is in the best interests of the suppliers to support the IGA.

On another subject, during my calls, the association has been accused of having a fixation on attacking Safelite. To that, my reply has been that the association would be derelict in its duty to its membership to allow any blatant move by Safelite, LYNX or anyone to take business intended for our members and to direct it to some other shop to go unchallenged. Believe me, I have heard some tape recordings and seen some reports that will open anyone’s eyes. To the insurance companies that allow customer service representatives (CSRs) from any third-party administrator to make the claims reporting process much longer than it should be and confrontational, I say, shame on you. The association will challenge any party that applies any practice that will take business away from our members, regardless of who the perpetrator might be.

When I was working in the business, I had the opportunity to talk to the managers of the national glass program of three or four of the top insurers and every one of them conceded that the rates billed by my employer were not “out of line.” So I ask insurers, why place the relationship with your policyholders in jeopardy for a few dollars? It does not make the least bit of sense to me. As an example, a member of the New York State Legislature was in the shop of my former employer calling in the claim for his windshield replacement. He must have been on the phone 15 to 20 minutes on the three-way call with the TPA. After he hung up the phone, he asked, “Is this what every customer must go through when trying to get their car serviced?” To this I replied, “You do not know the half of it.”

Insurers sourcing out the claims reporting process to third-party administrators does not have to cease. However, it would be in the best interests of your companies and your policyholders to cleanse the process of third-party administrators who are trying to serve two masters. And, based on my experience with the process, you are not the primary beneficiary of this relationship. If you were, I would find it hard to believe that you would allow your policyholders to be subjected to such abuse when the cost of retaining that customer must far outweigh any additional cost of repairing or replacing a windshield. So just what value do you get from a relationship that may be placing your relationship with your customers in jeopardy? Is it not your goal to retain your policyholders?

To the members, past and present and prospective, and to our trading partners, the IGA wants to hear from you. What is it specifically that you would like to get out of your membership in the IGA? Your membership should not be passive. Rather it should be interactive. I can assure you, I will listen and I will react. If there is something specific that the IGA can do for you or you feel should not be doing, I want to hear from you. It is together that we can accomplish much. United, we can make a difference—and we will make a difference!

CSRs and Scripts: All in the Name of Education?

2010-06-16T13:18:00.000-07:00

For quite some time now, the industry has been told that insurers approve the scripts used by the customer service representatives employed by third-party administrators (TPAs). Those same people who justify these scripts also advise that the purpose of the scripts is to educate the consumers about “choice.” I have heard comments like, “yes, in the end, we honor the customer’s right to choose, but our clients want us to educate the customers about all of their options.”

However, at what point does education cross the line to become harassment or infringement on a consumer’s right to choose a repair shop? The Independent Glass Association has been collecting data on these exchanges between CSRs, glass shops and the customers, and I have had the opportunity to read and even listen to them. If what I have been seeing and hearing to this point can be labeled education, then I am the best auto glass technician on the planet and I have never installed a windshield.

Let me give you one example. Recently, I had the opportunity to listen to an audio tape in which I actually could not believe what I was hearing. In the conversation, after the CSR advised all of the parties on the line what the insurer would be willing to pay for the service, after a quick calculation, the shop owner advised the CSR that his invoice would be less than what the insurer was offering to pay. With the pricing issue no longer a factor, the CSR proceeded to continue with the reading of the script, including the threat to the customer that she might incur out-of-pocket expenses. At that point, the shop owner interjected with a comeback to the effect of, “Excuse me, but did you hear what I just said? I told you that I would be billing less than what the insurance company is willing to pay.” The CSR proceeded to say that she must continue to read her script. The immediate question that comes to mind is this: how often does this go on?

I believe that insurance companies should have the right to educate their policyholders, but that right should be an exclusive right between the insurance company and its policyholder, not passed on to a third-party who has everything to gain by stealing that business for personal gain. Any one of us on the other end of the TPA call knows that the scripts and the tactics contained therein go far beyond anything required to educate the consumer. The example above is proof of that. And if you truly want to educate the consumer, educate them about safe drive-away times, the brand/quality of the glass being installed and emphasize that most state laws give them the right to choose the repair shop of their choice. That’s right, educate them about the importance of proper and safe windshield installation. Now that’s a brilliant idea.

What has always amazed me was the line, “We have a customer on the line who has requested your shop, but before I bring him on, we need to discuss pricing.” Let me make sure that I have this down. The customer called the TPA wanting to use my shop as long as the price is acceptable to the insurance company. In our example above, without a doubt the price was acceptable to the client’s insurance company, but the scripting procedures are written in such a way that the CSR should continue until the outcome of the conversation is acceptable to the TPA, using every opportunity to secure that business. After all, every consumer we talk to is naive. In our example, the insurance company had what it wanted, but the TPA was not getting what it wanted. I think that any rational person would conclude that steering (I personally prefer the word stealing) does indeed exist.

The Ballad of the Forgotten Consumer

2010-06-02T10:45:00.000-07:00

Here it is my one of my favorite seasons of the year, spring. With the arrival of spring, we draw closer to summer and warmer weather, outdoor activities and another NAGS price adjustment. Ah yes, the May calculator and another average decrease in the list prices contained therein. Does this finally convince us that NAGS list pricing is about as useful to the auto glass repair and replacement (AGRR) industry as an abacus is in the present-day math classroom?

Many of you may have seen my rants before about NAGS pricing. I have written many times about how discounts off the NAGS list price at 65 percent off justified the 2005 NAGS rebalancing farce. Yes, I label it a farce as we presently witness discounts approaching those same levels. Is it time for another rebalancing act? Is the NAGS standardized pricing still relevant?

NAGS list prices impact the entire industry. To some, like the insurance industry, NAGS list prices have a positive impact. Like they say how some foods go right to the behind, to insurers, NAGS price adjustments go right to the bottom line (but in this case positive). To others, like the independent glass shops, OEM manufacturers and OEM distributors, they have a negative impact. And there isn’t a one of us who should passively accept this and move on.

But most importantly, in an industry that tries to focus on consumer safety, is such a standardized pricing system counter to these goals? When insurers offer ridiculously low rates per “NAGS Hour,” this is a good indication that insurers lack confidence in the published rates and, therefore, encourage shops to cut corners. And when the profit margin on glass continues to slide, there is no question that the quality of the glass being installed in vehicles is going to slide. Therefore, I cannot help but feel that the NAGS factor in the AGRR industry puts consumers in harms way.

Let’s face it. The time for NAGS to come clean has passed. It no longer matters how they arrive at their list prices. Who audits these prices? Is it comparable to boasting that you have the best installation standards in the industry and not be willing to prove that claim with an independent third-party?

To publish information that has such a dramatic impact on an industry, especially an industry dealing directly with consumer safety, credibility must be the watch word. Independents, you must act as independents. Educate your customers and take care of them using quality glass and the best installation standards. Then price accordingly on a basis of honesty and integrity. Take care of the customer and the rest will all fall into place.

AGRR According to NAGS

2010-05-10T10:45:00.000-07:00

Fraud

2010-03-30T10:44:00.000-07:00

With each passing day, the AGRR industry seems to shifting its’ focus on fraud. Whether it is the central theme of newly-introduced legislation or the culmination of an investigation, fraud is making the headlines. Before I proceed, fraud should not be condoned in any manner. And I would bet that every state in the union already has laws on the books dealing with insurance fraud. Is what we are seeing labeled as a "fraudulent practice" truly fraud? Or is it fraud because it does not meet the guidelines established under the TPA system, thereby giving the insurance companies and their TPA partners further control over the industry, especially pricing?

For purposes of our discussion here, I will focus on one issue. For example, where did this nonsense come from about billing different amounts in different zip codes? While it may apply to a network shop, it should not make any difference to the shop that is not. There would be no justifiable reason for a non-network shop to fabricate where the work was done. None, that is unless you want to commit an act of fraud. Perform the service and bill accordingly. You are a non-network shop so do not attend to those rules for network shops. Bill your customer for the work that you performed and the products you used wherever you do the work, it’s that simple. I can draw the comparison to the “good” witch in the Wizard of Oz, where she tells the bad witch to “be gone” because she has no power in Munchkin Land.

As I see it, a non-network shop has no contractual obligation to an insurance company under any circumstances. So why pay any attention to network rules? Again using a phrase from the Wizard of Oz, pay no attention to the man behind the curtain. Run your business and pay no attention who is paying the bill. You have every right to bill your price, whether cash or otherwise. The independent shop owner does the work requested by its customer, an implied contract. The customer is then obligated to pay for your services. In some cases, the customer uses an insurance policy to pay and does so under the assignment of proceeds. So obviously, you want to ensure that your customer has coverage. In other transactions, the shop’s customer may pay the shop directly and submit it to his/her insurer. There is nothing unique about any of this at all. It should not matter who ultimately pays the bill. Maintain your integrity and you should have nothing to worry about.

The only shops that should be guilty of this zip code nonsense are those that are network participants. And if they fabricate the zip code, then they are committing fraud. THERE IS NO REASON WHY A NON NETWORK SHOP SHOULD FOLLOW THIS RULE. THAT IS, UNLESS YOU ARE CONCEDING TO NETWORK RULES AND PRICING, TRYING TO MAKE MORE MONEY. IF YOU DO THIS, YOU ARE COMMITTING A FRAUDULENT ACT, AND DOING SO FOR NO VALID REASON.

So why does an insurance company believe that it has the power to intervene when it has no contract for repair or replacement with the shop owner? Perhaps this is the million dollar question of two decades or perhaps even the century.

As long as an independent shop is non-network, it should bill according to its own guidelines. Take care of your customers, apply integrity when billing for the service and product that you provide, and you should have nothing to worry about. If you as a non-network shop, try to adapt your billing to network guidelines to gain enrichment, then you do have something to worry about.

Pennsylvania Takes on Consumer Rights

2010-03-10T10:44:00.000-08:00

A resolution has been introduced in the State of Pennsylvania requesting the commissioner of insurance to investigate steering. I cannot understand why, when we all know that steering does not exist (ha!). Pennsylvania is the latest state to have the initiative to take action in the name of protecting consumers’ rights. To my knowledge, many states have “right to choose” laws. But actions taken by third-party administrators have proven time and again that they are loosely enforced or not at all. You do not have to look very far to see that many states across the nation are making the effort in this regard, consumer protection. This resolution proposed in Pennsylvania is just the latest.

Before I proceed, let me ask each and every one of you. Is the Pennsylvania Senator who introduced the resolution a whiner? According to the glassBYTEs.com article, the resolution includes words like coerce and the phrase “otherwise attempting to aggressively direct their insureds.” That’s pretty powerful stuff. Therefore, do you think it is the senator’s intention to protect the consumer and their right to choose or is his motive to protect the service providers? “Whiners.” That is the label that many of you have given to many of your fellow glass shop owners that are sounding off against the third-party administrators. This Senator is taking action because he knows, like all of us, that motor vehicle owners are being “coerced.”

The glassBYTEs article does not indicate whether this is true, but I would be willing to bet that this Senator either is acting out of personal frustration, or he knows someone who has encountered an experience with either a TPA or an insurer directly. I can tell you from personal experience that I watched as a member of the New York State Assembly called in a glass claim with one of the dominant TPAs in the industry. After he hung up the phone, he asked, “is this what a person must go through to get their windshield replaced?”

And now for the consumer. Ah yes, the consumer. It is the consumer that is the forgotten orphan in the entire process. It is the consumer, our customer, who has chosen our glass shop to have his or her car serviced, only to be harassed when he or she calls in the claim. It is the consumer who has purchased a product, insurance, only to learn when he or she goes to use it, discovers that they are not getting what they paid for. It is the consumer who chooses his or her service provider, only to be “coerced” to think that he or she has an obligation to use someone else. I don’t know about you, but I for one believe that involving the consumer, whom this is really all about, may be the catalyst in turning this industry around.

Food for Thought

2010-03-03T10:43:00.000-08:00

I continue to read comments on various forums pertaining to the state of the AGRR industry and how independents are advised to quit their whining and “coexist” with the third-party administrators. Yes, it is proclaimed that independents should work around the TPAs. To that, I say “nonsense.” Independents are being forced out of business through no fault of their own, while doing most things right. Businesses should be allowed to compete fairly and thereby succeed or fail on their merits, nothing more and nothing less.

Yes, independents should focus on branding their businesses and providing a service that is second to none, but I fail to see where they should not be allowed to voice their opinions. I would not call that whining. We are talking about blatant unfair trade practices, consumers being denied their “right to choose,” and perhaps consumers being defrauded because they are purchasing a product, an indemnification policy, in which the seller is not delivering what the consumer has paid for. Just the other day, I heard that an insurance company is withholding payments, because the shop owner would not have his customer call the TPA, who happens to be in direct competition. I applaud him.

In an effort to brand, I expect that each and every “legitimate” shop owner is advertising his/her business through a variety of outlets, and spending a considerable amount of their operating budgets in doing so. Having said that, let me pose a fair question to you. How many customers are you losing to TPAs, who are directing your potential business elsewhere? Is it one, five, ten, or twenty? Not a single one of us has a clue—do we? And we should accept that?

And one other point—the customer service rep says that they have one of your customers on the other end of the line and they won’t send over the referral until you accept the price. Huh? They aren’t referring a thing. A referral would be if the customer on the other end of the line didn’t have a shop in mind, and they were referring them to that shop.

So we should stop voicing our frustrations because a handful of people have labeled it whining? I don’t think so.

And another important point for consideration is this. Those who label this process whining do so behind a screen name, so we really do not know what side of the industry they are coming from or their real intent. When I challenge them to come forward and tell the audience their stake in the industry, they fade away. Therefore, I can only conclude that they are not on the side of the independents at all. I stand by my principle that if a shop loses one, just one customer, to these practices, they should not be tolerated. To that, I say keep up the whining. Turn up the volume and bring down the house.

Safelite vs. Starbucks?

2010-02-25T10:42:00.000-08:00

Mr. Feeney, is that the right comparison?

In a recent press release, it was announced that Belron US was changing its corporate name to the Safelite Group. In that release, Belron US CEO Tom Feeney said that he wants consumers with glass damage to think of Safelite like they think of Starbucks when they want a latte. That makes me wonder if Safelite is headquartered in Columbus or Fantasyland. Mr. Feeney, you might be able to sell that concept in an interview on NPR, but not in a press release on glassBYTEs.com, whose readers are fully aware of your company’s branding strategy.

And yes, you are still owned by Belron, a foreign corporation and your profits still flow overseas. Thank you for accentuating that fact. This change makes very good business sense. You want the American consumer to identify you as an American-owned corporation. But a wolf is still a wolf, no matter how you dress it up—a very important point to be made in a country losing its identity and in the midst of a deep recession.

I have a couple of points of contention to him making this comparison. If a customer chooses to get a latte from Dunkin’ Donuts, Starbucks does not interfere in that decision, telling the customer that Dunkin’ Donuts is not priced right. And Starbucks would not make an attempt to defend that interference in the name of education. Starbucks does not position itself in front of every Dunkin’ Donuts, handing them a flier which interrogates them as to their Dunkin’ Donuts experience with the Starbucks name plastered all over it. When you are at the drive-through, you actually talk to a Dunkin’ Donuts employee, not a third-party trying to talk you into going to Starbucks while the customer is wasting a tank of gas.

Starbucks certainly does not send a coffee wagon to Dunkin’ Donuts trying to persuade customers to purchase a latte from them before they can walk into the store. And I am confident that Dunkin’ Donuts does not have to provide Starbucks with the cost of its coffee beans. Therefore, comparing the branding campaign used by a company like Starbucks versus the efforts by your company, Mr. Feeney—well, there is no comparison. Starbucks became successful on the pure merits of the product it sells.

So my purpose here is to demonstrate that there are huge differences in building a brand name on the merits of what the company has to offer versus using tactics that currently are being used by Belron US or Safelite (or whatever you choose to call your company). Thus far, your branding campaign has been a big success, as independents are experiencing an explosion in windshield repairs (thanks to the Safelite commercials, I might add). Now that is an espresso that is smooth and easy to swallow.

The State of the Industry

2010-01-14T10:42:00.000-08:00

The auto glass repair and replacement industry begins the New Year, 2010, just as it ended 2009. But I believe that we begin 2010 with a renewed hope and expectation that change is coming. As many have done so many times before, let’s dissect our industry and identify just what the problems are and what suppresses independents in their ability to service their customers and compete freely.

Independent auto glass shops provide a service of replacing or repairing automobile/truck glass to the general public. Like other entrepreneurs, they promote their services through a variety of marketing channels such as the Internet, radio and TV ads, yellow pages and direct marketing. How a consumer chooses a particular shop may depend on reputation, advertising or referral. Regardless of how the consumer reaches the decision as to with whom to do business, the selection process and their ability to make a choice should be no different than in any other decision to purchase a product or service.

We can all agree that this is not the case in the auto glass repair and replacement industry. But why is our industry so unique? Why does the fact that many of our customers use an insurance claim to pay for our services inhibit our ability to service our customers and charge a fair price for those services? (That is, a fair price as decided by the seller of the service and not as dictated by an external source that has no vested interest other than to enhance their profits.) If a shop installs quality glass, employs certified technicians and adheres to safety standards, should they be paid the same amount as the guy operating out of the back of a pickup truck and not doing these things? So why does a third-party payer have the ability to change the economics of a contractual transaction between a buyer (the consumer) and the seller (independent glass shops). This is even more perplexing, when you consider the importance of replacing a windshield in a safe and proper manner. Obviously, the federal government, under the realm of standards, agrees.

Understand that I hold (and never have held) any animosity against the insurance industry or the TPAs. Simply, I view them as entrepreneurs taking advantage of the absence of enforcement of federal laws protecting fair competition within our industry. But in reality, independents should be allowed to survive or fail on the basis of true market forces at work within our industry, not because of artificial pricing or the influence of third-party administrators with blatant conflicts. Our industry should be no different than any other industry, simply because our customer is using a non-traditional method of paying for our services.

In actuality, if you just took five minutes to reflect on our industry and contemplate how it actually works versus how it should work, you would find it to be bizarre—just as Mr. Ralph Nader labeled it. On the eleventh of this month, we just implemented another standardized pricing update. Once again, we witnessed a weighted average decrease of .81 percent on all parts. Whether or not this holds true for your shop, should this be a factor in how we conduct our business in a free market economy? Of course it should not be.

The fact that “fair and reasonable” pricing, as determined and dictated by the insurance companies, varies should be a “red flag” to regulators. Why does one insurer view a “fair and reasonable” price to be more than another? And in some instances that price determined and dictated by one insurance company is significantly higher than that price determined and dictated by another. Do not all insurers have accessibility to prices being charged within a particular market? And why should this matter in a “free market” economy?

The fact of the matter is that the contract to consume the service and to provide the service is, and should be, an exclusive right between the consumer and the shop. No third party should be privy to this inherent right, no matter who is ultimately paying the bill. Most of the 50 states in the union have laws that protect a consumer’s right to choose a glass shop. A law to protect a consumer’s right to choose is indicative that something is amiss. But yet, in my opinion, insurance companies, many under the guise of a third-party administrator, have the ability to circumvent these laws. And they have been getting away with it. All independents should be allowed to survive or fail on their own merits.

In the end, the role of the insurance industry, the TPAs, concepts like the Guaranteed Average Invoice, the fact that insurance companies do not contract the services of the glass shops, unilateral contracts, artificial pricing and all of the other issues that make our industry unique and exclude independents from participating in a free market economy will come under scrutiny. The fact that a third party is paying for our services should not deny independents the right to compete freely and fairly in what should be a free market economy. As I said, I believe changes are coming. Unfortunately, these changes, no matter when they occur, will not compensate those who have gone out of business, not through any fault of their own, but because of their inability to compete in an industry that is plagued by injustices, illegal or otherwise.

Always remember, “Life may be unfair, but competition should not be.”

The Spirit of the Grinch

2009-12-21T10:41:00.000-08:00

Well, it just wouldn’t be the holiday season unless we got more of those professional faxes from our friends in Columbus. The spirit of the Grinch is alive indeed. This time it is another pricing structure advisory from the “National Glass Program” on behalf of another insurer. And naturally, the prices contained herein are not the “lowest available” to the insurer. No, they may not be, but, in my opinion, are just low enough to encourage the use of substandard glass and substandard installation procedures.

The notice goes on to advise that, “Our policyholders have the right of personal choice and preference in their selection of an automotive glass shop.” Is that really accurate? In my opinion, there is not a shop among us that does not participate in this network that is not familiar with the tactics that are used by this particular network. And labeling it harassment would be too complimentary.

This advisory, which once again lacks any hint of professionalism, proclaims that the insurer represented “does not consent to any assignment of proceeds of glass claims.” Excuse me, but Mr. Columbus Network, does not every single dispatch that you forward to the shop require our customer to sign your acknowledgement? Perhaps a little refresher is necessary.

“I authorize my insurance, fleet, or leasing company to pay XXXXXXX directly for this claim.” Isn’t that an assignment of proceeds? Is it instructing the glass shop that they better collect upfront, to make certain that they get paid? Or is this another modification intended purely to promote the best interests of the network/insurance company thereby shortchanging the policyholder? Believe me, I would much rather have my customer pay our shop for its services directly and have the insurance company reimburse its customer, the way it should be.

I have to admit, for a publicly traded company and the continued lack of professionalism, you sure keep me laughing like my stomach is a bowl full of jelly. A jolly old elf, indeed.

New Policy?

2009-12-08T10:40:00.000-08:00

Just as I was ready to leave the office the other night, one of those infamous faxes was coming over the fax machine—you know, the one that originates in the Midwest with no corporate letterhead, but appears to be an "official" policy statement from an insurance company. Its contents were the same nonsense that usually comes on any fax that originates out of this Midwestern call center and said something to the effect that if you start to repair a vehicle without the insured or the agent officially reporting the claim to the network, you will not get paid. If you haven't had the opportunity to read this "official" policy statement, please take the time to do so. After you are able to contain your laughter, try to decipher what the underlying motive might be.

You first might begin by asking yourself, are these people for real? Is this what you would expect from an "official" policy statement released by a major insurance company?
Since this document lacks any hint of professionalism, would anyone accept that this is an "official" document originating from the insurance company? An insurance company surely has the right to require any procedure to insure compliance with the product it sells, but issue the directive to the policyholder. After all, you have no business relationship with the shop.

Now, let's use some reasoning and see if we can dissect the real motive here. I believe that the TPA behind forwarding this fax has really stepped up its poaching of claims. You do not need to look too far—there are examples all over the Internet. Just the other day, we had two customers who were called back on at least two attempts to sway them to use the services of another shop. And guess what shop? I ask you Mr. CEO, is this educating the customer like the insurance companies supposedly ask you to do? I ask you Mr. CEO, in light of your company’s proclamation that so few policyholders have a shop in mind when they call in the first notice of loss, why two and three follow-up calls in an attempt to get them to change their minds after they insist on our shops? I ask you, Mr. CEO, why must your company do this when you have publicly proclaimed that your company is not our competition?

So just what is the real reason behind this document? Sorry, time is up. This procedural bulletin is nothing more than an opportunity to steal more of our business. If you haven't performed or started the work, guess what? They have more time on the clock to "educate" the customer. But in my humble opinion, I would rather replace the phrase "educate" with harass. After all, does it make any sense? If our customer has the glass addendum on their policy, they have the right to choose the service provider of their choice—a right protected by laws in many of the fifty states. Technically, all that our customer is doing is using a product, insurance, that they purchased for this very purpose—to indemnify them in the case of an accident. Mr. TPA, I assure you. One way or another we will get paid for our services.

And another thought. Now that we have dispelled the proclamation that "we are not your competition" as nonsense, I challenge you to compete with the independent shops fairly, and let us see who ultimately earns more business. Many independents are giving you more, quality glass and installs according to standards. Unfortunately, independents shops do not have the luxury of an "average guaranteed invoice."

Competitive Pricing?

2009-11-16T10:39:00.000-08:00

Recently, in response to a request for a short payment that I had initiated, the insurance company representative responded that the company already pays a “competitive price” for auto glass replacement and could not justify paying any more. I thought to myself, “Interesting, the insurer pays a competitive price.”

But just what is that “competitive price” to which he refers and how is it determined? Does “competitive price” mean paying the lowest price for “like kind and quality?” In other words, there is no apparent difference in the quality of the glass and the level of service provided by Shop A and Shop B, but Shop A charges less, so Shop A has set the “competitive price.” Well, I guess I could swallow that as being reasonable. But we certainly know this not to be the case.

And then another question comes to mind: why is the “competitive price” established by this particular insurance company so much less than the “competitive price” established by other companies? Are they operating within a different marketplace? Do they use different variables in calculating this “competitive price?” Throw standardized pricing and standardized labor hours for each job into this mix. Does a certain percentage off a list price allow us to conclude that there is any industry confidence in the established list price? Does a certain figure per labor hour allow us to conclude that there is any confidence in the book times established for each installation? All valid questions, don’t you agree?

On November 3, glassBYTEs reported that a shop’s AGRSS registration absolved it for removing a windshield and not reinstalling a new one because it would not be safe to do so. The article reported that the windshield that was removed was installed with bathtub caulking. Imagine that, installed with bathtub caulk. And if this was an insurance job, just how much do you think this shop was paid? Without a doubt, and let’s say it together, the prevailing “COMPETITIVE PRICE.” So it was not only a creative install, but in the eyes of the insurance company, a competitive install. I will go one step further and bet that this shop has its own certification program and is subject to self audit.

Folks, let’s get real. This is not an isolated incident. This happens frequently. However, we operate in an industry that is loosely regulated and subjected to arbitrary numbers. Include in this equation third-party administrators with major conflicts and we get shops that install windshields with bathtub caulk.

So I feel it is my professional responsibility to offer a solution. In my estimation, we need tiered pricing. First, we should have a “competitive price.” And then we should have a “creative price.” I think we can all agree that at the very least, insurers should not be paying a competitive price to shops using bathtub caulk. A shop using bathtub caulk should be paid a “creative price.” After all, the standardized price on bathtub caulk should be less than urethane, allowing insurance companies to pad their bottom lines even more.

It Doesn't Get Any Better Than This

2009-10-28T10:39:00.000-07:00

I was overcome with emotion when the “good hands people” notified our shop that we had attained “Distinguished Performer” status. With tears of joy streaming down my face, I continued to read on that with all the glass shops out there, we have been elevated. The hard work of our technicians, support staff and commitment to customer service was finally paying off. To the “good hands people” we were now ranked with the best of the best. And like they say in that well known beer commercial, “It doesn’t get any better than this.”

I had to re-read the short e-mail, received by our company’s president, because it was almost too good to be true. I have never considered myself to be a skeptic, but given the nature of the auto glass industry, an insurance company just doesn’t congratulate you without a hitch. It just doesn’t happen. So I reread the email and guess what? I was right, there was a catch. Imagine that. Not only were we now considered among the best, but on the date that we would be formally recognized as the best, we would have to continue to outperform, for less money. You just can’t beat that. And to top it off, there was no action required on our part. The transition to this “elite” status would be seamless.

In all honesty, we didn’t even have to think twice. Without hesitation, we will be cooperative and take care of our mutual customer, making you look good while you enhance your bottom line and we can sacrifice ours. It would be an honor. After all, these opportunities do not come by everyday. We wouldn’t think of using inferior glass or compromising our service. After all, we aren’t in business to make money. Rather, we are in business to serve the insurance companies. Who wouldn’t jump at that chance? Actually, we thrive on the challenge. Watch our profit margins erode and see how long we can stay in business.

To the executives at the helm and those with the creativity to develop these generous programs, I hope that you will take the time out of your hectic schedules, when your bonus checks are distributed, to take a moment and reflect. And maybe, just maybe, please consider sending out another congratulatory note, including thanks, to those of us who are most grateful that you had the dignity to throw us a few crumbs from the table.

Repair Awareness

2009-10-09T10:38:00.000-07:00

Friday afternoon, I took the afternoon off for some R and R. I was lounging by my pool and I fell asleep. While napping I had a very unusual dream.

I dreamt that after the Obama administration passed its healthcare legislation, the President decided that he wanted every citizen that was of legal driving age to own an automobile. Of course, it had to get the required mileage, etc. In addition, he wanted every automobile to be covered by insurance that included comprehensive coverage with an auto glass endorsement and no deductible.

There would be no restrictions such as pricing caps, etc. You would have the freedom to have your vehicle serviced by any collision or auto glass shop that you desired. What was very interesting was that unlike the healthcare policies that covered the President and members of the Congress, the very people that would pass this legislation wanted the ability to opt out and be able to subscribe to the same policy offered to the general public at large. You see, they were on some policy underwritten by some company whose ad prop was a green lizard type and they wanted to have the ability to have their auto glass replaced by a quality shop, using quality materials and employing quality technicians.

They did not want to be subjected to harassment by some third-party when calling in their claims. They simply wanted the freedom to have their cars serviced where they could trust that the job would be done correctly and safely. What was ironic was that everyone who attended the town hall meetings held by their representatives were adamant about having this program enacted. They actually wanted the government to legislate this new program. There was no concern for the cost of the program or the fact that the government would be involved.

People were tired about having to listen to some customer service representative for 20 minutes trying to talk them into taking their car to some box store styled repair and replacement shop. They were exhausted after simply trying to make an appointment with a shop of their choosing and getting railroaded by some individual located at some call center in the Midwest.

Well, after months of debate and public outcry, the bill was finally reconciled in a joint committee of both houses and the day finally came for it to come up for a vote. A short time after the voting began, I woke up after being licked across the face by my 140-pound black lab, Otis. Unfortunately, we will never know how the vote would turn out.

What a dream. In the course of a short, eventful half-hour snooze, the ills of the automotive glass repair and replacement industry were almost fixed. Back to the nightmare.

It's About Time

2009-09-08T10:37:00.000-07:00

An Unusual Dream

2009-08-18T10:36:00.000-07:00

Winds of Change

2009-08-04T10:36:00.000-07:00

Are the winds of change blowing through the United States Department of Justice (DOJ)? Is the Obama Administration concerned with fair and free competition and therefore in pursuit of corporations that are not playing within the rules? A recent article by the New York Times News sure makes it sound that way. In particular, the article introduces the readers to the top official of the antitrust division at the DOJ, Christine A. Varney (a Syracuse native, I might add). The article notes that the administration is determined to reign in several industries, including airlines, railroad and pharmaceuticals.

The administration’s stance differs from that of the previous administration in that the current spin is that domination hurts consumers. To the contrary, the article supports that the Bush Administration held the position that larger corporations would benefit consumers due to economies of scale. Having experienced the inner workings of the auto glass repair and replacement industry and hearing of similar circumstances in the auto body repair industry, it is my hope that a slide of these industries will be prepared for the microscope. When an insurance claim is introduced into the process, small business operators in either of these industries can attest to the unfair practices and that steering truly does exist. You do not need to convince me that current practices in the auto glass industry restrict free and fair competition. And when competition is restrained, consumers are harmed. Consumers benefit when they are free to choose a service provider without conditions or undue influence. In the case of an insurance claim, we know that both factors are present. Consumers are harmed when something as critical as a properly installed windshield is to their safety is being installed by anyone who will “accept” the insurance company’s price. No other qualifications, just accept the price and the job is yours. And when two of the largest auto glass claims processors (i.e., third-party administrators) have major conflicts of interest, need I say more?

In a recent glassBYTEs.com™ video newscast, we viewed the newest addition to the Safelite distribution network. We are witnessing the “Walmart-ization” of the auto glass repair and replacement industry. Let me remind you that the replacement of a windshield is not, is not, a commodity. It is a service and a critical service indeed. And when that service involves the safety of consumers, we should all be ashamed of ourselves, regulators, insurance representatives and AGRR industry participants that we allow this scenario to continue to unfold. I commend the efforts of the various associations that are working feverishly to promote consumer safety through certification programs and installation standards. Free and fair competition must replace the present system in the AGRR industry. Consumers must be assured that their windshields are installed based on safety and not that their insurance company paid the lowest price for the claim.

Is Bigger Always Better?

2009-07-17T10:35:00.000-07:00

In a recent blog, our friend Neil Duffy wrote about the entrepreneurial spirit and how independents must strive to maintain that spirit. I could not agree more. In this age of Super Wal-Marts and bigger is better, is bigger always in the best interests of the consuming public? When the commerce is a commodity, this concept may be acceptable. But when the commerce involves a service, it is not. Auto glass repair and replacement is a service, so the industry is certainly on the wrong track. And the consumer is surely a loser.

Competition is less, choice is stifled and public safety can be compromised. The “how low do you go?” mentality in the AGRR industry is prevalent. But any independent that has served this industry for any length of time knows better. And quality independents know that the product offered is not a commodity; rather it is a service. And many take pride in the service that they provide to their customers and the quality of glass they install.

The other day, someone posted a link to the ABC 20/20 report about the importance of proper and safe windshield installation, which originally aired many years ago, on the glassBYTEs.com™/AGRR Forum. After viewing that video, I took the time to reflect and I could not help but conclude that the macro atmosphere within the AGRR industry undermines the safe and proper installation of windshields, breeding exactly what we witness in this ABC production. Unfortunately, this report portrays the reality in our industry and I believe that the installers that were featured in this exclusive represent the majority of the laborers serving this industry rather than the minority. It is amazing how that report still portrays our industry today, some several years later. However, there are people in the industry that are working feverishly to change it for the better.

We independents are operating in an industry where the primary focus is on price, one size fits all, and when compared, an apple is the same as an orange. It doesn’t matter that the pinchweld is rusted and may require additional labor or the fact that the replacement windshield should not be installed at all. (How many of you refuse to do an install when you know that it would not be safe to do so?) It doesn’t matter that installers follow proper procedures. It doesn’t matter that the independent shop only employs certified technicians or subscribes to the AGRSS Standard. So why do we bother to go the extra mile to take care of our customers? Does it make sense? Why don’t we all become hacks, cut corners and make more profits? After all, if Hackits Auto Glass can do it, why can’t we? The answer is that many of us are true professionals and will not compromise our integrity or compromise the safety of our customers.

So put it all together, mix in all of the major issues confronting the auto glass repair and replacement industry, such as steering, unlicensed claims adjusters, improperly trained techs, pricing pressure and inferior glass and you have a recipe for disaster. The certification of technicians and a comprehensive standards program like AGRSS are definitely a step in the right direction. I believe that injuries related to improper and unsafe windshield installation, like the two included in the 20/20 report, are more common than reported. Just how did the AGRR industry, a serviced-based industry, make the transition to a commodity-based industry? And when you take into consideration that all of the major players in our industry are fully aware of the importance of the consumer safety issues at stake, these two incidents are two too many. Don’t you agree?

Indemnification—Or Not?

2009-07-02T10:34:00.000-07:00

You have just purchased an insurance policy, and saved 15 percent in fourteen minutes, twenty seconds. A new record beating the one previously held by a neanderthal. You leave the office and you feel great. Especially in current economic times, that 15 percent savings can be used to put gas in the tank of your late-model vehicle. After leaving the insurance agency, you enter the highway on your feel good ride home. Life is good, and your favorite tunes are blaring over your speakers. The sun is shining and you have more money in your pocket. And whack! A big stone just kicked up by the semi in front of you puts a crack in your windshield.

No problem. Your day is not totally ruined. You might be a little inconvenienced, but no worry. You have your new insurance policy and replacing the windshield is sure to be hassle free. After all, your new insurance company is known for its customer service. Pulling in the driveway, you decide to get your insurance card out of the glove box and call your new company to make the claim. You call the toll-free number on the back of the card and follow the instructions. After providing all of the claim information to the representative on the other end of the phone, you continue to advise the CSR that you want to take your car to Joe’s Auto Glass. Joe is the guy that you know that you can rely on to replace your windshield and do it right the first time.

Uh-oh, a snag. The CSR informs you that Joe’s Auto Glass is not on their “approved” list of auto glass repairers. “Joe’s isn’t what? Are you kidding me? You mean I cannot take my car to Joe? What’s with that?”

“Well, Joe doesn’t accept our rates and Joe doesn’t offer a lifetime warranty. However, I can refer you to a shop where I can assure you that the technicians do not abuse alcohol or illegal drugs. That’s right, we drug-test all of our technicians. And our shops do it for free, that’s right free!” says the CSR.

But I know I can rely on Joe. He’s been serving our community since 1945 and I have never heard of any problems with his work. He is an outstanding member of the Better Business Bureau.

I say, “No, that’s okay, I still would like to take my car to Joe. He’s the guy I want to do the work.”

The CSR replies, “You know if you do, there is a good chance that you will incur some out-of-pocket expenses?”

What? I do not believe that is what I purchased. I did not purchase “partial” insurance. You mean now I need gap insurance? I thought when I bought this policy, my car would be restored to pre-loss condition. That it would be just like it was before the stone hit the windshield. I guess I was duped. The sales rep never told me that there could be restrictions when I go to make a claim. So much for saving 15 percent. I guess it is a buyer-beware situation.

This scenario plays out everyday in every state, every city and every town. Just what are consumers buying when they purchase an automobile insurance policy? I have always known automobile insurance policies to be indemnification policies. According to Webster, to indemnify means to “secure against hurt, loss or damage.” How about diminished value? If the quality of the glass or service is based purely on price, is a policyholder assured that the vehicle is restored to pre-loss condition? I do not think so. Do you?

A Real Learning Experience

2009-06-23T10:30:00.000-07:00

Over the last couple of months, I have been an active participant on the glassBYTEs.com™/AGRR magazine forum and it has been an eye opener, to say the least. I have come to the realization that there are a lot of diverse views about the AGRR industry, and on many issues it will be best if we agree to disagree.

One topic about which I’m passionate is the subject of third-party administrators (TPAs) and the damage that their presence has done to our industry and the ability of each and every one of us to compete on a level playing field. I cannot tell you how many message board participants have suggested that many independent glass shops are failing because they are not using the proper business model; that they should disregard the presence of the networks and “work around” them. Then there are some that use the recurring theme “Who is the Customer?” and insist that they are in complete control of their customers. I have been told that I exert too much emphasis on the TPAs and have been labeled as stupid, uninformed and even naïve. Thus far, the criticisms have not pierced my skin and having had the opportunity to be a player in this industry for the past ten years, I do not believe that they ever will. What currently is going on in our industry may be the exception, but it must not remain the rule. I think that the majority of us believe that what is going on is anti-competitive and wrong. And, in my opinion, it certainly cannot be free speech.

While I continue to read on and reply, what troubles me is that there are shop owners that believe their businesses operate exclusive of TPA influence. And, to them I say, “nonsense.” There is no business model out there that is not impacted by the TPA presence in our industry. I do not care if your business is running on a purely cash basis. As long as your customers have insurance policies with the glass addendum, you are affected, one way or another. Although the insurance influence may only happen on occasion, you are not in total—let me reiterate: total—control of your business. If it only affects one customer, I argue, it affects your business.

Let me expand on this thought. Let’s assume that you do not bill insurance companies directly and are trying to operate a purely cash business and the phone rings. On the other end of the line, you hear, “I have a customer on the line that would like to use your shop.” How many of these types of calls have you received? This is a potential customer whose business is in jeopardy, and should not be.

My posts have been met with legal-based challenges, referring to court cases around this great land of ours. I have even witnessed the defense of actions by third-party administrators in the name of free speech. I have been challenged because I may not have read all these court cases. While I take every comment under consideration, I cannot help myself in thinking that we all know what is taking place in the auto glass repair and replacement industry is not fair.

The third-party administration model that affects each and every one of our businesses, in some respects dramatically, has transformed our industry. As shops operating in this industry, we no longer compete on our merits. Businesses have failed and are struggling, perhaps due to no fault of their own. Our services are treated like a commodity and it does not matter what kind of glass we install or the procedures adhered to by our techs. And even in the commodity world there are differences in the price that is charged; consider a store brand versus a national brand.

To everyone associated with this industry and maybe even fighting for survival, I say, fight on. Justice will ultimately prevail. Forums like the glassBYTEs/AGRR Forum give each and every one of us the opportunity to discuss issues that we all confront on a daily basis. And these discussion boards can offer a valuable source for technical assistance. They can serve a good purpose and I can offer that the discussions here truly invigorate me. How about you?