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Volume 7    Issue 3            May/June  2005

WGRReports
     repair news

Industry
State Farm Eliminating Deductible for Repair
At press time, AGRR obtained internal documents of vehicle insurer State Farm that laid out the company’s strategy to eliminate the waiving of the deductible in the case of windshield repair. The insurance giant is rolling out a pilot program in five states that begins this summer, and estimates that the program, one part of its new rewritten Car Policy, will be completed by 2010. 

The program, still in the testing phase, begins June 1, in Kansas and Oklahoma. This will be followed by Arkansas and Missouri on July 1 and Louisiana on July 15.

According to the State Farm document, the remaining states will receive an amendatory endorsement in 2005 and 2006 to establish the changes until those states receive the new policy.

Under the new program, if a policyholder chooses to have a windshield repaired and the repair fails, the cost of the replacement deductible will be reduced by the cost of the repair.

Dave Casey, president, SuperGlass Windshield Repair Inc., Orlando, Fla., sees the State Farm Action as “releasing a stranglehold on the industry” that will mean a more open market with increased volumes. He sees the State Farm change as taking repair out of the hands of networks and third-party administrators. “Now that they’re stepping away we’re going to be in an open market and the potential in an open market is so great,” he states.

Casey points out that the reasons State Farm give for the move in the memo are good, “because they are the right ones. They think policyholders are going to go for repair and that is good.”

Asked if he thinks other insurers will follow the move, Casey explains that because State Farm is a mutual company and most insurers aren’t they may not follow its lead. “There may be an opportunity here for other insurance companies to say, ‘Look what big impersonal State Farm is doing; we’ll still take care of your deductible.’”

He also does not see much price change for repair. “I don’t think that the cost of repairs will go up. I don’t see them raising or plummeting. They won’t go down because now with an open market it is going to require some business acumen to start and run a successful repair operation. One-man companies will not be able to rely on the networks to funnel business so that they can exist.”

Paul Syfko, Glass Medic, Westerville, Ohio, sees the situation differently. “Personally I don’t think it’s a good thing for the repair industry. It will reduce the number of repairs significantly, and the price will drop.”

He points out the influence the insurance industry has had on the market segment over the last decade. “Ten years ago, we were doing a million repairs and getting $19.95. Now, there are 3.5 million repairs and the price average is $50.”

Like a number of people interviewed for this article, he thinks that this move is “just the tip of the iceberg.” He states, “I think it shows what direction they’re going in and I don’t think it will be good for the glass industry to have insurers out of the market.”
Dave Taylor, secretary/treasurer for Cindy Rowe Auto Glass, Harrisburg, Pa., also sees the move as “the first step by an insurer to withdraw from the auto glass road hazard business and one that affects the entire industry, not just repair.” He calls this the “unstated issue.”

“Just as when the networks came in and companies had to learn how to refocus their business, we’re at the same place now,” he stated. “The basic dynamic of repair as opposed to replacement will remain. What changes is who pays.” To Taylor, companies that do a lot of insurance work will not like the move, while those which have not done as much insurance work will. But he points out, “This is an internal memo not a formal announcement, so this is supposition. But it does give us insight. If the initiative works for State Farm and gets it out of road hazard auto glass coverage, then others will follow,” he states.

Bob Simoni, owner of Dr. Bob’s Mobile Repair Service, East Hartford, Conn., which serves a regional area, points out that he doesn’t depend on insurance work and thinks the move will hurt State Farm more than it will him. “The way I see it, there’s taking away a service from the consumer.”

A company that does a lot of insurance work, and has been active in promoting repair, had this to say. “State Farm’s decision will not impact how Safelite AutoGlass conducts our business. We will continue to offer the repair option to customers for convenience and value,” said a spokesman for the Columbus, Ohio-based company.

“I don’t know where we’re going,” Taylor states, “but it’s not going to be 1990 again. It’s a new challenge and those businesses which adapt will be okay.”

COMPANIES
New Company Set Up for VeriFAST 
Saw and Machine Services Ltd., the original manufacturer of the VeriFAST windshield repair system, has formed VeriFAST Inc., a new Pittsburgh-based company, and has obtained the marketing and trademark rights for the patented windshield repair system of the same name from PPG Industries Inc. 

VeriFAST Inc. has named Paul Rice, a former PPG auto glass industry executive, as its president. 

Sam Jenniches, president of Saw and Machine Services and CEO of VeriFAST Inc., stated, “We have a great relationship with PPG, and are looking forward to continuing to support high quality windshield repair through VeriFAST Inc.”

“Windshield repair remains an important service for the auto glass and insurance industries, as well as for vehicle owners,” said Jeff Blum, director PPG automotive aftermarket alliance. “However, PPG felt adoption of this technology would accelerate through the efforts of an independent enterprise. We wish VeriFAST Inc. tremendous success.” 

LEGAL
Trial Date Set for Campfield Suit

January 26, 2006 has been set as the trail date for the lawsuit filed by Richard Campfield, president of Grand Junction, Colo.-based UltraBond, against State Farm Insurance and LYNX Services LLC alleging violations of the Colorado Consumer Protection Act (CCPA) and Colorado state law prohibiting tortuous interference with existing and prospective business contracts.

The case is currently in the discovery phase with the trial scheduled to take place in Federal Court in Denver. Depositions were scheduled to start the last week of April and continue through May.

The original lawsuit, filed last year, also alleged violations of the Sherman Anti-Trust Act. However, both State Farm and LYNX filed motions to dismiss the case, and Judge Robert Blackburn, a district court judge for the Sixteenth Judicial District of the State of Colorado, did so for those charges. The anti-trust claims were dismissed, the judge wrote, because “plaintiffs cannot conjure an anti-trust injury out of a mere business dispute simply by artificially defining the relevant market in such narrow terms.


AGRR
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