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Volume 7    Issue 3            May/June  2005

Expert Advice
     pros who know

When Insurance is Gone
By Kerry Wanstrath

The auto glass industry has always looked at insurance work as its bread and butter. With more than 400,000 repairs being performed in 2004 for just one major insurance company, itís apparent why we want this business. At an average repair rate of $55, that alone represents $22 million in potential revenue, so imagine the total revenue generated each year by insurance companies paying for repairs.

There is also little question as to the credit insurance companies deserve for embracing windshield repair years ago. When they decided to waive the customerís deductible if repair was chosen in lieu of replacement, it made it easier for repair because it allowed the education of the general public about the benefits of repair. 

However, all that could be changing in the not too distant future. There are several dynamics at work that could cause insurance companies to take a closer look at auto glass coverage overall. One is the cost of glass replacement. Replacement costs have been going down over the past few decades and that is especially true if indexed to inflation. Competition and market forces have pushed prices down benefiting primarily the insurance companies and the consumer. (Interestingly though, through this decline in replacement cost, repair prices have actually risen.) The point is that with prices down, why should auto glass be any different than any other repair needed on a car?

The whole purpose of insurance is to insure against a liability you canít afford to take on yourself. Insurance companies could reason, ďauto glass is no different than say a flat tire or any number of mechanical maintenance issues.Ē Just because insurance doesnít cover a flat tire repair, doesnít mean people arenít going to fix a flat. 

The second dynamic force is more complicated and convoluted. It involves the business relationship among the networks, insurance provider, service providers and even some glass manufacturers. I certainly donít profess to understand all the finer details of fair trade law, but what I do understand is that when this relationship becomes a potential liability rather than an asset, insurance companies will look very closely at the extent they want to become involved in the controversy. With new lawsuits popping up and undoubtedly additional ones being considered, insurance providers are no doubt contemplating the extent of their involvement in these situations.

If or when this occurs, have no fear itís not the end of the world. Market forces will take effect and repair will always have a place. In fact, I believe replacement and repair would actually do better. With no third parties between the customer and the service provider, everyone would have a fair opportunity, especially the small guy. 

Kerry Wanstrath is the vice president and chief operating officer of Glass Technology, which is based in Durango, Colo.


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