Volume 10, Issue 3 - May/June 2008

Repair Round Up
nwra reports

Flat Rates: What’s Next?
by Patrick Smith

The way the insurance industry pays for windshield repair may be in the middle of an evolution. Some insurance companies are transitioning to a flat rate reimbursement fee schedule. Recently, Progressive Group changed its pricing for windshield repair from $50 per windshield with $10 for each additional repair up to three total repairs to a flat fee of $55. Old Dominion Insurance has done the same with their pricing except their flat fee is now $70. Do these changes indicate a new attitude towards repair and/or a new pricing strategy by our insurance partners? If so, how will the changes affect the number of repairs performed annually?

Traditionally, insurers have paid a flat fee for a break and then a lesser fee for each additional repair on the same windshield. The logic behind this fee structure takes into account that the repair company is already on the job and fuel costs, labor costs, etc. should be reduced for the additional repairs meaning a lesser fee for additional repairs on the same vehicle. We are now seeing some providers eliminating the additional payments for second, third and multiple repairs. In many cases, the move to a flat fee is also accompanied by a rate that is slightly higher than the base fee from the previous tiered-fee schedule. 

Under these scenarios, a repair-only company doing a single repair on a windshield would obviously see a benefit but, if a repair company is performing multiple repairs on the same job, “flat fee” may not be as beneficial. Repair-only mobile companies will be the first companies to see the effects of these changes, especially if they see a lot of multi-repair jobs. Business owners will have to review their individual books of business to determine what kind of affect such price changes will have for them.

These fee changes also may create some challenging scenarios for repair companies. If a repair business is handling an insurance job and comes across an additional break when the insured only reported one, what does a repair technician do with the second repair? If the insurance contract does not specify a course of action then the repair technician has a decision to make. Repair the second break under the original flat fee? Have the vehicle owner call in a claim for the second break? Charge the vehicle owner a cash price out-of-pocket? What does the insurance company expect of the repair company? These protocols should be spelled specifically out in new contract language. 

The Value of Repair
Secondly, what do flat fees say about the value that insurance companies place on repair? Certainly insurers know it is less expensive to repair, rather than replace, a windshield. The more windshields an insurer can identify as repairable, the lower its claim-payouts will be and the lower insurance premiums could become. We will have to wait and see if this new flat structure encourages repair. I hope it does, but the jury is still out. 

There needs to be an honest conversation among insurers and repair companies concerning the services the repair industry provides. Repair companies need to open a dialogue with insurers about how the changes affect their businesses. Insurers also will need to assess honestly whether or not these new structures serve their policyholders by increasing the number of repairs performed. That should be the goal. 

Patrick Smith is the director of operations for the National Windshield Repair Association (NWRA). Mr. Smith’s opinions are solely his own and not necessarily those of this magazine.


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