The Insurance Equation: Round 2
by Kerry Wanstrath
It seems my last article about insurance companies being encouraged to
exit the auto glass market didn’t set too well with a few individuals
(see related story in January/February 2011 AGRR™ magazine, page 36).
That was no real surprise to me; I fully anticipated a barrage of e-mails
informing me that I had lost my mind.
Instead, I received two responses, and from the same fine state of Arizona
no less. I respect both of these two individuals’ opinions. In fact, I
agree with almost everything they have to say, with one small difference.
I’m not convinced that the average independent shop would not be better
off dealing directly with the customer on a cash basis.
Did TPAs Change Things?
Here is some food for thought. Prior to the advent of the third-party
administrators (TPAs), some 15 years ago, were you making more or less
per job? Were you actually quoting more jobs? Was every detail of the
nature of the actual work itself so carefully inspected and controlled?
The need for meticulous records and details about everything—from the
location of damage to rust in the pinchweld, to the location and type
of repairable damage, electronic billing, etc.—all is a result of an insurance
company’s effort to control and lower the per-claim dollar amount spent.
These duties are expected and performed at no cost to insurers, and these
requirements came about at the request of the insurer—not the TPA.
Most of us are inclined to blame the TPA for all the hoops we must jump
through, but who is telling them what they must do to maintain their exclusive
relationship/partnership? Insurance companies are the TPA’s customers,
and the automobile owner is second in line. Therefore, a TPA is just following
orders, right? In fact, most of us, if given the opportunity to have such
a sweetheart business relationship, would jump at the chance. It is the
combination of the two partners that continues to squeeze margins; one
is promising the volume so that it can require better pricing from its
partner, and this is a continuous, never-ending cycle.
So back to my original point, I believe our industry will never be able
to change the major TPAs’ operational model. But I do think because of
insurance vulnerability to public opinion and governmental regulation,
we have a better chance of influencing the TPAs’ insurance partners.
continue to have their windshields repaired and replaced regardless of
whether they have insurance.”
A Scary Thought
Yes, I admit it is somewhat scary to think about what would happen if
insurance companies ceased paying for windshield services. But, with insurance
paying now, have your profit margins grown? I doubt it. Without some interruption
in the circuit, the light will continue to dim for small auto glass shops.
Consumers will continue to have their windshields repaired and replaced
regardless of whether they have insurance; most are not willing to drive
a car with an unsafe windshield, or one that they can’t see through. I
am confident that, thanks to the inventive and creative spirit of American
small business owners, we would prosper if dealing directly with the customer
(without the involvement of an insurer).
Kerry Wanstrath is the president of the National Windshield Repair
Association. In addition, he serves as president of Glass Technology in
Durango, Colo. Mr. Wanstrath’s opinions are solely his own and not necessarily
those of this magazine.
Calling All Readers
What do you think about the idea that insurance policies should not
include glass coverage? One response to the January/February 2011 article
appears on page 22 of this issue. Do you think National Windshield Repair
Association (NWRA) president Kerry Wanstrath presents a valid argument?
Do you think this would help the industry? Please e-mail your thoughts
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No reproduction of any type without expressed written permission.