Insurance Changes Reveal Split in NWRA Members’ Opinions
The National Windshield Repair Association (NWRA) recently held its annual meeting at the Hyatt in Minneapolis. The group’s educational program centered around the recent announcement by State Farm to eliminate waiving the deductible for repair and what this means to the industry. Discussion about the issuance of a position paper revealed a split in opinion between members who view the move negatively and those who see it as positive.
Opening the day-long educational program, Glen Moses of Safelite Glass Corp. explained how licensing in Connecticut is affecting the repair industry.
Next on the agenda, Leo Cyr, vice president of the National Glass Association’s auto glass division and a board member of the association, discussed his group’s legislative activity. He pointed out how the 20/20 program about auto glass replacement had awakened the industry that it had to be active to defend itself from sensationalism. He admitted that NGA was unprepared to represent the industry until it started to work on the model act for legislation in September 2003.
Cyr reported that Texas house bill 305 had died in committee the week before the meeting and will not be considered again until 2007. “We were very surprised with what happened in Texas but we will not be surprised again,” he stated.
Shifting from licensing to insurers, Dave Taylor, Cindy Rowe Auto Glass and the secretary/treasurer of the association, examined the relationship between the industry and insurance companies. Taylor explained that the issue opened up for him when he started looking at his financial reports and realized that cash business was increasing.
One View of Cash
He asked two rhetorical questions: Will comprehensive glass coverage go out of the insurance business? Will they [the insurers] be successful in achieving this?
State Farm is rolling out its program to eliminate the waiver of the deductible for repair on a state by state basis because of its contractual obligation with policyholders, Taylor told attendees. “Why eliminate waivers for repair? If you are raising the deductible you don’t want to waive the deductible for the repair on a windshield that you don’t insure,” he stated.
For a number of years the insurance companies have been squeezing the auto glass industry and doing it very effectively, he stated. “How much more can they squeeze? I’d have said several years ago we were about as low as we could go, but they have continued,” Taylor added. “I can only say that we have to be near the bottom of our squeezing. I don’t think we’re (repair is) the target. But it [the waiver] is a controllable factor and it boils down to not paying for the windshield.”
What’s likely to happen? Taylor expects the process of change toward a cash market will go faster than networks taking over the market did. “For decades we have worked through referral points (approval lists, agents, networks). If we get to cash basis referral points, you’ll have to get your customers directly,” Taylor stated. He predicted that the market will fragment. “There will be more players going after these customers because more people will have an opportunity to sell to consumers,” he added. Taylor said that price and time to perform service will become big factors for customers. He pointed out that companies will have to look at the traditional things retailers do to attract customers. “Lots of glass shops will use price to set the view consumers have of their business,” Taylor said.
According to Taylor a cash market will lengthen the time from chip to repair because the cash is coming out of consumers’ pockets. This will level out over time, he said, but initially volumes will decline. Also he predicted that the industry will be more like all retail segments in responding to economic conditions. Insurance had tended to level out those peaks and valleys, he told attendees.
“My guess is that if we go to a cash market a third of repair companies will disappear as they did when the networks came in,” Taylor stated. However, not all doom and gloom, he also had remedies: Be willing to change and promote to consumers and keep in mind that satisfied consumers provide good word of mouth.
Not everyone agreed with Taylor analysis, which became evident at the board discussion which followed about the association’s possible issuance of a statement indicating its feelings about the State Farm action.
In bringing up the subject of an NWRA statement concerning repair and insurance, Taylor said, “If you want to influence this process, we have to do it now because in two or three years it will be too late.”
A discussion followed on a proposal to issue a statement saying that the group supports insurance companies that support windshield repair. This brought front and center the fact that people see the State Farm move affecting different members in different ways.
The main points of discussion were whether the price of repair would fall if insurance companies were no longer subsidizing it or if repair would be in better shape because consumers would see the value of repair versus replacement when they were paying for it.
Repair company owners, most vocally Dee Berge-Morse of Dee’s Windshield Repair and Dave Casey of SuperGlass, coalesced around the fact that they think the industry has to move past price to all the benefits of repair—it doesn’t break the seal, the work is warranted. Berge-Morse, whose company does no insurance work, said that she did not want to support having any statement concerning repair and insurance on the association Web site because she would then feel she is contradicting her company’s message which bypasses insurance completely.
One thing there was agreement on is that the industry is moving toward a cash market. Marketing yourself and choosing your own destiny became rallying cries.
Then came a series of votes. The board voted to accept a statement indicating that the NWRA supports insurers who support windshield repair. However, discussion started almost immediately after the vote that this was not a very definable position. Did the group not support this in the past? So the statement was refined to say: In light of State Farm’s recent decision to discontinue windshield deductible waivers, NWRA supports insurers who support windshield repair. This did not find much favor and was defeated by a vote of 8 to 3. There was further discussion of whether the original intent for the statement had been diluted. At that point a motion was made to add the word only to say “The NWRA only supports insurers who support windshield repair.” This passed by a margin of 7 to 2.
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