Volume 8, Issue 3        May/June  2006

Field of Vision
f r o m   t h e   e d i t o r


ccumpston@glass.com

Insurance
by Charles Cumpston

The insurance industry is a large factor in our daily business lives (personal lives too, for that matter) and it is getting a lot of attention in this issue and on the AGRR Magazine Message Forum (almost daily posts of how it is controlling/ruining our industry) as well. In this issue, Les Shaver explores the relationship between the insurance and automotive replacement glass industries, getting each sideís point of view. 

As you can see from reading the articles, the two sides are very wary of each other but both confess that they want to communicate and work in tandem. More than just an expression of words is needed for that, but thatís like tackling the question of which came first, the chicken or the egg.

A couple of things, though, which seem to cause a lot of confusion and misunderstanding can be cleared up.

One misconception is that insurance companies are violating anti-trust laws and are monopolies that set prices they charge and pay for services.

Insurance companies are regulated. This is done at the state level, although there has been a push, from guess who, to have a national regulation rather than having to comply with 50 different entities. Each state oversees the insurance industry within its boundaries, primarily determining what price increases it can institute for the policies it issues. 

Though designed to be a service to consumers, we all know this is not necessarily the case. Too often, it seems, the state insurance commissioner works more on behalf of the industry he or she is regulating rather than consumers. But thatís the reality of the situation. My point is that insurance companies do not get together and decide what they are going to charge for insurance policies; but, itís not a free market either.

On the even more contentious part of this, payment, insurance companies, like any other group, are prohibited from getting together and setting prices. If it turns out that most insurance companies are paying the same amount for replacement or repairs, there are a number of factors which can account for this, but, unless itís being done illegally (and has not yet come to light), they are not sitting down in a room or writing memos agreeing on the prices they pay you for your services.

It is no secret that the insurance companies that have contracts with third-party administrators pay the same amount for the same work. It is certainly not uncommon for all the stores that buy a product from a specific manufacturer or distributor to charge the same price for that item. As long as the price being recommended from the source is sufficient for the buyer/seller to make what it wants for its profit, then the company will agree to charge that price.

A lot of business owners in our industry think the insurance industry is not looking out for the concerns their company. Donít expect it. The insurance company, rightly in my opinion, is looking out for its own interests. Understand how the insurance industry works and what role it plays in your business. But donít expect it to be looking out for your interests. Thatís just not the way the game is played.


AGRR
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