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September/October 2002

Insurance Talk

Pilkington Introduces Complete Claims

Toledo, Ohio-based Pilkington North America has introduced the Complete Claims insurance billing service. The web-based system is designed to process insurance claims using just a connection to the Internet and a current web browser, according to Bill George, e-business manager for Pilkington. George says the Complete Claims program allows anyone (including both consumers and insurance agents) to initiate a claim online and choose a shop in the same manner. If the consumer has a particular shop he wants to choose, he can type it in and get the number from the company’s vendor database (compiled by searching for auto glass shops across the country by SIC code), or can schedule the appointment online. In addition, retailers not listed there can go online and add themselves to the database. The advantage, according to George, is that no call center is needed and it eliminates an abundance of paperwork. He added that by sending all of the data through a centralized location on the Internet, it will be more accessible and more accurate, with less possibility of human error.

The company has teamed up with Quest Solutions and its data provider to develop the system in an effort to create an open marketplace.

“It just seems like some of the things that have been happening on the network side of the business in the last few years have been creating the environment of a closed marketplace,” George said.

At press time, the company was in the process of seeking insurance companies to sign up for the program, at which time it will go into effect for customers of those companies.

“We’ve had a tremendous amount of interest so far. The selling process is a rather long one, but we’re willing to do what it takes to get the marketplace more open right now,” George said.

George first introduced the service at the Independent Glass Association’s Independent’s Days in Orlando, Fla., in early April.  The company’s booth stayed filled throughout the event as George showed attendees how the system works.

Safelite Instates Flat-Fee Pricing

Columbus, Ohio-based Safelite Glass Corp. has offered Farmers Insurance a flat price, which is also referred to as “per-incident” pricing, of $214 per claim or 70 percent off of the NAGS list price, whichever is less. According to reports from the Independent Glass Association, Harmon Auto Glass has followed suit, and Pittsburgh-based LYNX Services has opted out of dealing with the XX-based insurer due to the price cut, saying it could not operate under such drastic measures. Some in the industry expect the offer to Farmers to become a trend. Safelite and Harmon have developed a program together called HelpPoint, in which only the insured or agent can call a special telephone number to report a claim to Farmers. The call will be answered by Safelite or Harmon.

In other news at Safelite, OneBeacon Insurance Group of Boston has selected the company to serve as its glass-claims processor.

See "Flatlined" for more information and the industry’s reaction.

 

Minnesota Dept. of Commerce Charges State Farm with Unfair Practices
The Minnesota Department of Commerce (MDOC) issued a statement on June 27 charging State Farm Insurance Co. with unfair trade and claim settlement practices in handling more than 1,800 glass claims. According to the MDOC, State Farm withheld funds belonging to policyholders or glass shops by paying less than the “fair and reasonable market price” on auto glass claims. Instead, State Farm paid a “network” price that it arbitrarily set—generally 55 percent off of the list price—according to the MDOC. Based on the market survey, the MDOC discovered that State Farm had committed more than 13,000 violations of Minnesota’s insurance laws. For example, the study showed that on at least 1,832 occasions, the company paid less than the “fair and reasonable market price” on auto glass claims to policyholders or glass hops. In addition, more than 100 policy holders were told they had to pay for glass repairs directly if they chose a shop not in State Farm’s network, and had to pay the difference between what the repair technician charged and what the company’s network would have charged. The MDOC also alleges that in more than 600 instances, State Farm has steered policyholders to select a glass shop that agreed to the insurer’s prices by leading them to believe they would only receive reimbursement for what the insurer was willing to pay.

The study also showed, according to the MDOC, that State Farm has not always adhered to statutory guidelines on deadlines on auto glass claims in the state of Minnesota. When questioned on these matters, State Farm also “failed to comply” with an order and subpoena for complete files on 2,000 auto glass claims.

If the claims are found to be true, State Farm could face censure, revocation of its license and civil penalties that could reach as much as $10,000 per violation. In September 2001, State Farm was fined $75,000 for sending payments for repairs to policyholders instead of the repair company.

Ohio Casualty Selects LYNX to Manage Auto Glass Claims
Ohio Casualty Insurance Co., a unit of Ohio Casualty Corp. based in Fairfield, Ohio, has announced that it has selected LYNX Services by PPG to manage its auto glass claims program. LYNX will manage glass claims for the company 24 hours a day, seven days a week, and policy holders will be offered auto glass repair and replacement by PPG PROSTARS certified technicians and other LYNX Services participants, according to a release issued by both companies today.

The insurer’s home office auto claim manager Phil Horst said the move to go with LYNX was determined based on the speed with which it hopes to serve policyholders.

“By contracting with PPG PROSTARS and LYNX, we’re supporting our vision of achieving superior speed and flexibility in servicing our policyholders,” Horst said.

However, according to LYNX’s network agreements with other shops, PROSTARS is only part of its regular rotation and often, Ohio Casualty policy holders will be directed to other shops, or, of course, can choose the shop of preference.

LYNX vice president of sales Chris Umble also joined Horst in announcing this new partnership.

“We’re very pleased that Ohio Casualty Insurance has come aboard with us,” he said. “Together I think we’ve developed a customized, comprehensive solution for Ohio Casualty’s auto glass claims that will help them achieve their business objectives.”

California Bill Could Outlaw Insurance Cos.’ Ownership of Collision Repair Facilities

The California state Senate currently is debating a bill that, if passed, would make it illegal for insurance companies to own auto body repair shops. In addition, the bill, S.B. 1648, would require any insurers with a current interest in a shop to divest itself within 3 years of the bill’s effective date. S.B. 1648 would also make it illegal for an insurer to offer an incentive or provide compensation to any person for the purpose of rewarding him for referring an insured person to an auto body shop in which the insurer maintains an ownership.

S.B. 1648 was introduced by Sen. Jackie Speir at the suggestion of the California Autobody Association (CAA), which was spurred by the purchase of the Sterling Collision Repair chain by Allstate Insurance Co., according to David McClune, executive director of the CAA.

“The CAA recently surveyed its member shops and it was overwhelming that they felt this was a conflict of interest for insurance companies to own auto body repair shops,” he said. “Everyone we discuss this issue with, [including] consumers, manufacturers [and] suppliers, say the same thing: ‘Shouldn’t that be illegal? It’s similar to having insurance companies owning the doctors in the medical profession.’ CAA believes that insurance ownership in repair shops is clearly not in the best interests of consumers.”

 

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