Volume 13, Issue 5 - September/October 2011

Feature


Allstate Goes Toward the ’Lite
Behemoth Allstate Partners with Safelite Solutions
by Penny Stacey


For years rumors have circulated throughout the industry that Allstate was moving its glass claims business to Safelite Solutions. So on July 22 when the company announced it was making such a move, eyebrows were raised; eyes were rolled; and many asked, “is it true?”

This time, it was.

Allstate officially announced it with a simple, straightforward note: Effective January 1, 2012, Allstate will be utilizing Safelite Solutions for the administration of its glass repair and replacement claims. As a valued participant to the Allstate Glass Network administered by LYNX Services, we would like to thank you for your service to our mutual customers.

In a follow-up interview with AGRR™ magazine, Allstate spokesperson April Eaton offered a bit of insight into the move, and said it came as the result of a “competitive bid process.”

“On a regular basis Allstate reviews our supplier services to determine if there’s a better way for us to do business, enhance customer service, leverage new technology or reduce costs for those services,” says Eaton.

She declined to comment on how often the Northbrook, Ill.-based insurer reviews its third-party administrator agreement.

Of course, this is a major coup for Safelite—and company officials no doubt are aware of this.

“It is a huge honor for all of Safelite that Allstate recognizes the value our company can provide them, their agents and policyholders,” says Tom Feeney, Safelite president and chief executive officer (see full interview with Feeney on below).

Old Friends
Though some were surprised about the July 22 announcement, Safelite Solutions and Allstate certainly are not strangers. In fact, it was just short of eleven years ago, in September 2000, that Allstate announced that it was leaving Safelite Solutions and moving its business to LYNX Services (see related story in September/October 2000 AGRR™ magazine, page 20).

But the Safelite claims administration company it rejoins now is a very different animal than it was in 2000. Today, Safelite Solutions claims to provide third-party administration services to 19 of the top 30 property and casualty insurance companies in the United States.

A quick scan of the top 25 private passenger automotive insurers in the United States (based on premiums collected) from the National Association of Insurance Commissioners (NAIC) reinforces this. It includes a number of Safelite Solutions insurance partners, including GEICO, Progressive, Zurich, Liberty Mutual, USAA, Nationwide, Travelers, American Family, The Hartford, Mercury, Erie, Unitrin and Hanover (just to name a few).

Allstate itself holds 10.2 percent of the U.S. market share for personal auto insurance, according to the NAIC. It falls only second behind State Farm—the nation’s largest personal automotive insurer, which reportedly controls 18.7 percent of the market.

Though State Farm’s glass claims administration remains with LYNX—it only takes the addition of a few other companies combined with All state’s 10 percent market share to surpass the 18.7 percent market quickly.

The Impact
So what does this all mean for independent glass shops across the United States, many of whom look to such networks for referrals? LYNX Services has been lauded by many independent shops over the years for not having a retail arm that competes with others on the network. Such is not the case with Safelite Solutions, which is affiliated with Safelite AutoGlass. And it’s this affiliation that creates concerns about steering for many in the industry.

“There will be simply less work because Safelite Solutions is not an external referral service,” says Neil Duffy, owner of Auto Glass Menders in San Jose, Calif.

“My concern is that it is more or less a restriction of trade and a monopoly,” adds James Darienzo, owner of Active Auto Glass in Long Island, N.Y. “We all know how they work and use scripts to better position themselves with the consumer. It all comes down to consumer choice, and at this point in time, they are in the driver’s seat.”

Some weren’t surprised by the partnership, but suggest that Safelite AutoGlass’s recent emphasis on windshield repair in its commercials (see related story on page 44) could be related to the timing—along with a recent emphasis on guaranteed average invoices in third-party administrator contracts (see related story in May/June AGRR, page 10).

“I believe that this is tied at the hip with the commercials about repair and I believe it ties back to the guaranteed average invoice,” says Dave Zoldowski, president of Auto One in Brighton, Mich. “Because of what I believe to be this monopolistic hold on the industry, no one from a third-party administrator standpoint can compete with them.”

“I think it reflects a sign that all insurance carriers and independent glass retailers should take note of,” says Paul Gross, president of Harmon Solutions Group. “It reflects a massive consolidation of business into a single provider that is providing both TPA and retail automotive services.”

Gross says both insurers and retailers should consider what this means.

“Carriers that have got all of their eggs in one basket or those retailers who are out there operating in the market should take notice of this move,” he says. “It has a fairly profound impact on the entire industry.”

Darienzo says it’s the last straw in an already-tense business environment.

“I can’t turn around and say that their business model is wrong … However, this is just going too far at this point,” says Darienzo. “It means everything for everyone’s business … ”

Though many industry representatives expressed concern and frustration about what this move could do to their businesses. Eaton says the company’s policy on consumer choice remains in place.

“Even though we will have a supplier change next year, our policy on glass service providers has not changed,” says Eaton. “Customers may select the auto glass service provider of their choice.”

LYNX vice president of strategic development Chris Umble issued the following statement about the move.

“We are both surprised and greatly disappointed with the announcement that Allstate made,” says Umble. “We had been privileged to serve them for 11 years with contract extensions during that time. We are very committed to continue to serve with distinction through the balance of the contract term.”

Penny Stacey is the editor of AGRR™ magazine.


Inside the Move
Safelite CEO Tom Feeney Discusses Allstate

Safelite president and chief executive officer Tom Feeney took the time just two weeks after Allstate announced the move of its third-party glass claims administration business to Safelite Solutions to discuss the change.

AGRR: Will there be any immediate changes for shops that currently work with Allstate and participate in the company’s program?
Tom Feeney (TF): Allstate has engaged Safelite Solutions to manage their glass program, and the management of that program will be similar to the way we manage other glass programs for the many clients that we serve.

AGRR: Have you all had any discussions about the Key Performance Indicator program that they had introduced in 2009? Are you able to comment on whether that will remain in place?

TF: It’s a little bit too early in the process. The implementation phase is still ongoing right now, as the program doesn’t start until January [2012].

AGRR: I’m sure your phones will be ringing a bit more once this move takes place. Are you making any changes to prepare for that?
TF:
It’s not going to impact us that significantly. While we will be hiring some CSRs and technicians, the number of resources we currently have in place are sufficient to integrate Allstate into our business. We have been building and investing in all of Safelite for the last five years and this is just one more building block that fits into our overall growth strategy. Opening new call centers, investing in technicians, investing in training programs, enhancing our supply chain with two new distribution centers and several new and expanded warehouses—it’s all is part of our overall strategy to grow our business.

AGRR: What should shops that currently work with Allstate, but aren’t on Safelite’s network, do to make sure they can continue working with Allstate?
TF: I’m sure that many of the shops that are on the Allstate network are already part of the Safelite Solutions network. For those that are not, I’d encourage them to go visit the site sgcnetwork.com and look at the criteria and file an application.

AGRR: We understand the move takes effect on January 2, but how will claims that are filed prior to that date, but not fully resolved by then, be handled? Who should shops contact at that point to resolve them?
TF: That’s another detail that hasn’t been worked out yet, but I can tell you that we’ll be very cooperative with LYNX and I’m sure they’ll be very cooperative with us to get the billing set correctly and make sure the shops are paid for the work and service they provide. I know Allstate will support that as well. From the shop’s perspective I think this will be very seamless.

AGRR: When did your discussions with Allstate begin?
TF: Well, I’ve been with Safelite for 23 years and we’ve been talking to them for all 23 years. I can’t think of the specific date when we began discussing this with Allstate. I know the industry was aware that Allstate had issued an RFP [request for proposals]. We believe very strongly in our value proposition and all we offer to insurance carriers and their customers as well as commercial accounts and consumers. The total Safelite value proposition is predicated on quality service through our Safelite Solutions offering, well-trained technicians, background checks, drug checks, advanced equipment and supplies, all backed up with phenomenal technology that enhances the overall customer experience from the beginning of the call until the end of the process. It’s a pretty good value proposition that more insurance carriers, fleet companies and commercial accounts want to take advantage of.

AGRR: This isn’t the first time Allstate and Safelite Solutions have worked together, and the company had switched to LYNX Services in 2000. What do you think made them come back around now?
TF: Interesting enough this is the first time Allstate selected Safelite Solutions. Ten years ago when we were affiliated with Allstate it really was as a result of the merger between Vistar and Safelite. This is the first time Allstate has selected Safelite Solutions and I believe they selected us based on the value we can provide them, their customers and agents. That value in my mind is around our award-winning contact centers, the technology we use, the commitment to delighting customers, the many processes we have to assure that the customer experience is a very good one.

AGRR: There’s been a lot of talk in the industry about the fact that Safelite Solutions, through its affiliation with Safelite Auto Glass, can provide a guaranteed average invoice amount to insurers—do you think this influenced Allstate’s decision to move?
TF: Pricing is confidential between us and Allstate. I can’t comment even on whether LYNX could or couldn’t offer a particular pricing proposal to Allstate. I don’t believe Allstate’s decision to select Safelite Solutions was predicated on price. I believe it was predicated on value and all that we can offer them, which, by the way, includes fraud protection and detection and the many advantages that accrue to a company like Allstate and its agents. Remember, we have 275 field sales personnel in the various markets that can visit the Allstate agents. This is all part of our total value proposition.

AGRR: How would you respond to independent shop owners who have been working with Allstate and fear that that might change now?
TF: I would say to all the independent shops that they should be focused on delivering quality service, advising Allstate through their agency force of what they do that’s unique and how they can provide great service to the customers and let the customer’s choice be the driving factor. As you know we honor customer choice. We always have and we believe very strongly in it, and this program will be no different. Customer choice will be honored.

 

 


AGRR
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