Volume 13, Issue 3 - May-June 2011

Feature

Inspection Rejection

Industry Feels Impact of Inspections by Insurers
by Katie Hodge

Inspections have become a hot topic for the auto glass industry the past few months. Some insurance companies have begun implementing random inspections of broken auto glass prior to authorizing work to ensure that a repair or replacement is necessary. Some say alleged cases of fraud sparked the idea for inspection programs and companies such as American Family,
GEICO and USAA reportedly all have implemented versions of these inspections.

“Basically we started this program because we received feedback from our members that some of them felt like they were coerced or pressured to make glass claims when, in reality, there may not have been any damage to their glass,” says USAA spokesperson Rebecca Hirsch. “…We enacted this to protect our members from any fraudulent activity.”

What is the NICB?
The National Insurance Crime Bureau (NICB) is an organization whose purpose is to fight cases of fraud and crime in regards to insurance. The NICB website states that the organization, “is a not-for-profit organization that receives support from approximately 1,000 property/casualty insurance companies. The NICB partners with insurers and law enforcement agencies to facilitate the identification, detection and prosecution of insurance criminals.”

Safelite Solutions officials, who in many cases send Safelite AutoGlass technicians to do the inspections, also say the inspections are beneficial. During a recent hearing related to an Arizona bill, Safelite corporate counsel Brian DiMasi said that insurance companies have seen significant drops in the number of claims since implementing the inspection programs.

“…We can see when the inspections went in place on August 1 in Arizona, the number of claims, and after 30-60-90 days it fell off a cliff,” he says. “We can see from the raw data that claims dropped.

Safelite has even promoted the alleged benefits of inspections to insurers, through such methods as a recent article in Claims Advisor.

“To date, pre-inspection programs have been implemented by several insurers in the following states: Arizona, California, Florida, New Jersey, New York, North Carolina, Texas and Virginia. Preliminary data from these pilot programs show a significant drop in questionable claims and customer complaints,” writes Safelite vice president of client sales support Peter Pearson in the article. “Depending on the work to be performed (repair or replacement) and the region of the country, when insurance companies implement a pre-inspection program, the claims reported by some specific glass shops are reduced by 50 percent to 70 percent on average.”

Recent reports from the National Insurance Crime Bureau (NICB) about a surge in “questionable” auto glass claims also are being used in the case for inspections (see related story in March/April AGRR™ magazine, page 18).

“It’s not rocket science but it’s profoundly effective when you look at the inspection process and when you see the NICB investigation, and you see the people at the carwashes, at the gas stations, and [auto glass shops that are] knocking door-to-door,” says DiMasi.

Insurance companies and third-party administrators aren’t the only ones who say they’ve seen a recent increase in auto glass fraud. Some auto glass shop representatives are seeing it, too.

“In the last five to ten years I have seen several glass companies come rolling through my door promising the world and not doing anything,” says Jason Ladewig, co-owner of Forest Car Wash and Detail in Dallas, whose company does windshield repair work. “I have seen my share of shabby, untrustworthy people coming through here wanting to fix people’s windshields so I can see why USAA and some of the others are wanting to take a little bit more control over what is going on. I bet they are paying out a lot of claims that don’t need to be paid.”

How It Works
The insurance companies that have implemented inspections have chosen glass repair and replacement powerhouse, Safelite Solutions, in its role as a third-party administrator to handle the inspections in some cases. In turn, Safelite technicians review the damage.

“The insurance company will, based on customer data, look at certain glass shops and see spikes in claims and determine we want to inspect the vehicle,” says DiMasi. “So we always honor customer choice, the scripting allows the insured to pick a glass shop of choice, and the insurance companies likewise have the right to pre-inspect any vehicle they want for any claim, but that’s the insurance company’s prerogative.”

Not all inspections are done in person.

“The way it works is some of the inspections are done over the phone. We’ll ask the policyholder to go out and look at the windshield,” says DiMasi. “Can you cover the damage by a dollar bill? We’ll have a policyholder verify it over the phone. Other times the inspector will go out, look at the glass, and then simply call it in to the insurance company glass program to Safelite Solutions and say ‘yes there is damage and it’s approved for replacement or repair’ and life is good.”

Inspector Who?
While some understand the frustration surrounding possibly fraudulent repairs, others still fear a negative impact from the inspections. For many While some understand the frustration surrounding possibly fraudulent repairs, others still fear a negative impact from the inspections. For many auto glass companies the choice of inspectors—Safelite technicians—has further frustrated an industry plagued by alleged steering issues with third-party administrators and their related glass installation companies.

“I think the main problem is that they designated one company to ensure everyone else is being honest and no one is policing that one company, which is Safelite,” says Ladewig. “USAA is putting all their eggs in Safelite’s basket. For us, that is horrible because there are people out there that need windshields fixed and people are just going with the Safelite reputation. While I’m not implying that Safelite is talking poorly about us, they are definitely trying to steal our business, and because of these inspections, we are now basically referring people to Safelite and that is the frustrating part.”

B rian Smith, sales manager for The Auto Glass Guy in Warner Robbins, Ga., used to work in a unique part of the industry. He was an operator at a call center, Glass Service Center in Scottsdale, Ariz., which would call previous customers to see if they needed work on their auto glass. Smith ultimately left the company, but he claims that American Family required an inspection of almost every job. (Attempts to reach Glass Service Center for comment had been unsuccessful at press time.)

While Smith thinks his former employee deserved to be inspected, he still thinks inspections can be dangerous for many auto glass shops.

“Safelite, whom we thought was just trying to drive traffic away from us, was handling inspections for American Family and they were flagging us on almost every call and would tell the customer that they had been chosen for a random inspection,” says Smith.

“They would tell the customer that it was random, but it was not random at all. I think that it could be a way to hold up business so that another business can move in and the customer can be steered to them. I was led to believe that sometimes,” he adds.

“Instead of just an inspector, they are sending out Safelite and they are telling the customer not to let our shop do the repair, but to let [Safelite] fix it on the spot right there,” says Jimmy Nale, co-owner of Forest Car Wash and Detail in Dallas. “It’s annoying and making customers mad because they come in here looking for a convenient, quick service and instead it’s turning into a long, drawn-out ordeal.”

One Arizona shop owner who declined to be identified says he has had at least one customer fall victim to an alleged steering attempt.

“We had one GEICO job we lost to Safelite when the Safelite installer went out to do the ‘random inspection’ and conveniently had the glass for that vehicle on his truck,” he says. “The customer [told me], ‘the installer told me the insurance company sent him out to inspect the vehicle’s damage and he had my windshield on his truck if I would like him to install it right now.’ Unfortunately it was a new customer to us and she had it done right then due to her busy schedule.”

Safelite officials, however, have denied that steering is an issue when it comes to inspections.

“It’s a lot easier to allege than it is to prove,” commented DiMasi. “We don’t go out to any inspection with a piece of glass, ready to snatch it away...”

USAA spokesperson Rebecca Hirsch also agrees that steering is not an issue.

“ … I do want to emphasize again that we respect member choice,” adds Hirsch. “If damage is found, our members are free to choose their own auto glass shop provider.”

(Attempts to reach GEICO and American Family Insurance for comment had been unsuccessful at press time.)

In some cases, according to Nale, steering isn’t the only problem. He says he’s also observed a classic case of the bait-and-switch method occur, too.

“In one instance, Safelite showed up with a whole windshield for the car that just had a chip and suggested to them that they get a new windshield,” says Nale.

Hurry Up and Wait
Potential steering issues aside, some auto glass shops are reporting that its customers also are having to wait much longer than in the past. According to Nale and Smith, it has not been uncommon for consumers to wait days for the inspection and repair to be completed.

“What used to be a simple phone call to let them know how many chips we are fixing, where it is being done, and the pricing. Now, all of the sudden, it’s different. They are telling me not to do the repair because they need to set up an appointment to send out an inspector to make sure that the windshield really does need to be repaired,” says Nale.

“The insurance companies likewise have the right to pre-inspect any vehicle they want for any claim, but that’s the insurance company’s prerogative.”
—Brian DiMasi,
Safelite corporate counsel

“There are some companies out there doing shady work that give those of us doing good, honest work a bad name,” adds Nale. “However, the inspections slow us down and make our customers mad. They don’t want to take hours out of their day and have to make three appointments. It is just an inconvenience to the customer.”

“We would sometimes wait two to three days and we would get in contact with the insurance company and they would say that they hadn’t made the appointment yet or didn’t get in touch with the customer yet,” adds Smith.

Safelite officials claim that the inspections are being done in a timely manner, though.

“There’s no set period of time,” said DiMasi. “…Typically what happens is when a claim gets called in, the [insurance company] says [it’s] going to exercise [its] right for an inspection, and usually within a day or two, very very quickly … the inspector goes out to determine if there’s glass damage.”

Best Defense
Despite frustrations with possible steering and delays, some auto glass companies still attempt to ensure that inspections don’t cause them to lose a job. According to Nale, educating the customer before the inspection seems to help maintain his/her original choice of shop.

“One of the Safelite technicians did argue with one of my customers and tell them that they could get the job done now and it would be more convenient, but since I coached my customer they just shot Safelite down,” says Nale.

Some auto glass companies say they have waited to report a job to the insurance company until the work is done.

“The last couple USAA claims I called in were after the repair was done,” says Nale. “I just tell them that I need to turn it in and that tends to make it go through because they can’t argue with me about the repair then. You can’t re-repair something that has already been done.”

“Those of us doing windshield repair honestly are paying the price with these inspections.
”—Jason Ladewig, of Forest Car Wash and Detail

Rich Campfield, owner of Ultra Bond in Grand Junction, Colo., says his shop has had requests for inspections a few times with claims involving The Hartford. In these cases, Campfield says that the CSR has asked whether the repair has already been done.

“[The CSR] asked [the customer] if [the glass was] repaired yet or not, then they stated that the damage might have to be inspected by Hartford,” says Campfield, who observed the conversation as the customer called the insurer from his shop, utilizing a speaker phone. “The consumer told [the CSR that he was] at the shop and wanted the repair done then.”

Campfield ended up being able to complete the work without an inspection.

Future Findings
While insurance companies and Safelite, in its role as a third-party administrator, have promoted the positive effects of inspections, the future of programs like these remains to be seen.

“We only recently enacted the program and are still evaluating it, so we haven’t made a determination yet as to whether or not to extend it,” says Hirsch.

While it’s uncertain how long the inspection programs may last, Ladewig says perhaps there is no good solution for the issues that the industry has had with fraud.

“Those of us doing windshield repair honestly are paying the price with these inspections. Is there a way to set up the system to be fair? There isn’t really a solution,” says Ladewig. “If someone is trustworthy they are going to only do a job that needs to be done. It’s just a bad situation and I don’t really see a way where everything can be fair for everyone.”

Katie Hodge is an assistant editor for AGRR™ magazine.


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