by Marc Anderson
As I see it, there are two problems in the auto glass industry. The first is what ‘they’ do to us. The second is what we do to ourselves. This article looks at both with a solution for each.
It’s been said that the IGA has all its eggs in the lawsuit basket. Wrong.
After the new board and staff took over last year, we focused primarily on raising the funds necessary to get our lawsuit filed. Now that we have delivered on that commitment and it is in the hands of the courts, we have moved to the next phase in our efforts.
The IGA is working to do four things: level the playing field and stop the fall of prices, provide glass shop owners with the tools and knowledge they need to make their own business more successful, increase the professionalism of the industry through programs which can only be offered by a national organization and last, but very exciting, we expect soon to bring “bolt on” businesses to your company which are proven moneymakers (more on that soon).
In this article, I am going to talk mostly about leveling the playing field.
It isn’t possible to run a trade association free of criticism. Even in the face of clearly illegal and anti-competitive practices, some criticize us for having filed the lawsuit. “It will cost hundreds of thousands of dollars, perhaps a million.”
Wrong. We’ve spent under $100,000. Others say lawsuits can do no good.
Wrong. The most important protections which the auto glass industry has to shield itself from wholesale slaughter have come from a few select lawsuits. The laws and insurance policy language is on our side.
When you hear such comments, keep in mind there are a lot of disparate interests in this industry and that some people profit from the status quo. Some people profit from steering. Some people profit from anti-competitive behavior, some profit from falling prices and all of them would like you out of business.
Before you give any credence to someone who is telling you the IGA lawsuit is bad and our efforts to level the playing field are misguided, step back and take a look at which side their bread is buttered on.
Since IGA sued Safelite (because our members asked us to) and we took a more aggressive attitude toward steering and the other abuses, our membership numbers have been going up dramatically.
Litigation is necessary because laws are being broken. There is no other way to stop illegal activity except in the courts. Ninety percent of all litigation in this country comes about when one corporation sues another for illegal activity.
While litigation is not our primary course of action, we will continue to do legal research and explore legal strategies. We continue to meet (for free) with and explain network and insurance practices to law firms and law professors.
Litigation is expensive and should not be undertaken lightly. However, understanding what practices are and are not legal is absolutely necessary for any industry, including ours.
Our lawsuit against Safelite is aimed primarily at its practices of adjusting claims with unlicensed personnel and illegal steering. Safelite has asked the judge to dismiss the case. It claims not every plaintiff suffers every injury. We didn’t say they do, so we expect some things to be dismissed, but we remain confident in the case.
Defining the Problem
How the auto glass industry articulates its problem matters a lot, because how we define the problem reveals how we can solve the problem. I believe the auto glass industry could do a lot better for itself, could go a long way to leveling the playing field, if it fully understood its potential strength from pooling resources and organizing itself in a meaningful way.
Insurance carriers hire companies that also install auto glass to adjust their auto glass claims. That’s the problem. The networks use the opportunity of adjusting the claim to disrespect laws protecting consumer choice and “steer” the consumer to a retail operation with which they have financial ties, usually through a common parent company. If the companies that own the networks were not allowed to adjust the claim or if they did not have a financial self interest in how the claim is adjusted, there would be no consolidation of market share. Without control of market share, they could not control price and hence your business.
There are three places to go to make structural changes in the market and industry: the courts, the bureaucracy and the state legislatures. We need to be in all three. And, there is one other place to go to bring pressure on those three and that is the media. The insurance industry and their surrogate regulators don’t like media coverage.
A lot of people don’t want to hear this, but, long term, the only way the auto glass industry can deal with the problem of falling prices is the same way all other industries deal with their issues, by interfacing with state government and building state level organizations which meet with the state regulators and state legislators.
We have the agenda, talking points, positions papers and legal briefs for these meetings. IGA is currently working with a number of states doing just this. Imagine two dozen state organizations all introducing the same exact legislation and holding the same meetings with their insurance commissioners and attorneys general.
It is often said, “The insurance commissioners are hacks from the insurance industry. They aren’t going to do anything.” This is true for many, but not all.
There are some who are ethical and conscientious and try to discharge their responsibilities professionally. Most of them have no knowledge of the problems you face, because you haven’t met with them and explained your problems. Maybe you don’t have what you want because you haven’t asked for it.
It is important to realize that we do not need to win on every front in every state. But, the insurance companies do. We only need to score in one or two places in any state.
If, for example, in New York where Attorney General Elliot Spitzer is already investigating the insurance industry, he were to open up an investigation into insurance industry abuses of consumers via the auto glass industry and conclude that illegal practices were occurring, the industry was anti competitive, and reforms needed to happen, that would be “the beginning of the end” we talk about because whatever one attorney general does easily can be spread into other states. Elliot Spitzer is not the only attorney general who can make this happen.
Bottom line: There is no place else to fight this fight but in court, before state regulators and in your legislature.
Marc Anderson is executive director of the Independent Glass Association.
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