What Will the Future of the Repair/Insurance Interface Bring?
by Jenna Reed
The relationship between the insurance industry and auto glass repair businesses has been contentious for many years. When third-party administrators (TPAs) were introduced to the mix to help insurers manage claims, the auto glass repair industry saw immediate effects. The ripple effect from this still is noticeable today.
The days of auto glass professionals working with local agents to secure insurance business has fallen by the wayside. Now more than ever, insurers tend to look to larger providers and preferred networks to service claims and provide auto glass repair services at a low price point. Independent auto glass businesses can either opt into preferred networks through claims servicers such as Safelite Solutions and Lynx Services, or they find themselves fighting for business.
“Prior to the TPAs (third-party administrators), a windshield repair company could market directly to the insurance company representative, the insurance agent,” says David Casey, president of SuperGlass Windshield Repair in Orlando, Fla. “The business owner could show the quality of [his] work and professional image and explain [his company’s] customer service policies.”
Casey says that today TPAs take 95 percent of all insurance claim calls and distribute these jobs.
“When they can dispatch a job to themselves, they do that,” Casey says. “The customer isn’t getting a vendor based on successful repair ratio, quality of repair or a sterling track record of response and customer service; they are getting the TPA’s choice because the TPA controls the call.”
Kerry Soat, CEO of Fas-Break in Chandler, Ariz., has a similar take.
“TPAs came into play in the health industry, also called PPOs (preferred provider organization). It’s the same principle, except in the auto glass industry the TPAs can be owned and operated by a glass company. I am not aware of any PPO organizations owned and operated by a group of hospitals, doctors, labs or any competing entity in the health industry with the express purpose of steering business to itself,” Soat says.
“I do not understand how any shop being asked to participate in ‘negotiating pricing and quality of parts’ with a competitor for payment from an insurance company is legal,” he adds.
TPAs are also accused of affecting business is via steering. Auto glass repair shop owners point to inspections as a way TPAs are inserting their foot in the door with the customer even if the customer is standing inside an independent shop.
Are Inspections a Necessary Disruption?
According to several auto glass repair shop owners, inspections by insurance companies can throw a wrench in their business. The latest company to require inspections of a break prior to repair is Farmers’ Insurance. It joins USAA, Elephant and Geico, which have been running or testing similar programs for years.
“The (Farmers’) program started in January and now everyone has to be inspected,” says Deborah Van Zaun of Onsight Auto Glass, which has three locations in Colorado. “One guy wanted three [separate] windshields repaired and we were finally able to do the work a week later.”
She says inspections can take up to a week and customers don’t like it. They will complain right on the spot.
“I’m at a standstill,” Van Zaun says. “It’s just really odd that everyone has to be inspected. A lot of people are waiting for chip repair.”
Ina Machuca of Alternative View, also based in Denver, is seeing the same trend with customers insured by Farmers.
“The biggest one doing this is Farmers’ Insurance,” she says. “We got a notice in November or December that customers had to call in their repairs. December and January went just fine. Even up until February, things were going smoothly. But then all of the sudden we got a Farmers’ customer who needed an inspection. It was at least 24 hours to get approval and get an adjuster to look at the auto glass.”
She calls this a “detriment” to her business.
Farmers confirmed the inspections are taking place.
“We launched this glass inspection program across the country in response to concerns raised by some of our customers regarding glass repair claims,” says Mark Toohey, head of media relations for Farmers.
“The bottom line is that we took this action in an effort to provide the best possible service to our customers,” he adds.
Casey indicates that he and fellow shop owners are seeing this trend of inspections as another attempt at steering.
“I see it as a blatant move by Safelite [Safelite Solutions serves as claims servicer for Farmers] to circumvent another company from performing the repair,” he says. “Once Safelite inspects it, they usually repair it as the same time, regardless of the prior vendor’s involvement.”
Casey says he sees some consumers getting upset when they hear about possible steering taking place.
“I do see policyholders becoming irate at the tactics of the TPAs and recognizing the conflict of interest when a replacement company is deciding who gets repairs,” he says. “The common sense of the motorist is underestimated by the insurance companies and the TPAs. Once the policyholder understands the TPA relationship and how their vendor was chosen, they become quite offended.”
The Florida repair owner says he looks forward to the possibility of an open market where the motorist searches for the best value and quality and is given all the information to make the right choice, “not just sent down the TPA pipeline to an inevitable replacement.”
Soat says inspections are a way of disrupting the repair process and giving the TPA a chance to “steer” the client to where they want them to go. He also has concerns about the TPA’s control over the process.
“The thing I find very upsetting is the TPA will state any claim that does not follow procedure will not be paid. How can any TPA determine whether a claim should be paid or not? Since when did a TPA become a licensed claim adjuster for the insurance company?” he asks.
Because of the role TPAs play in the industry, some auto glass repair shop owners think it would be better if repair was an uninsured service. While some stress that glass is a safety feature and should be covered, others wish the insurers would stop covering glass. This would mean consumers would pay out-of-pocket for all repairs, removing insurance companies from the equation.
Is Auto Glass Coverage in Question?
The response by repair professionals is mixed. Soat says glass is a safety feature which will always be insured, while Casey says he looks forward to the day when glass will not be covered.
“When I have asked the insurance companies directly about this, they laughed,” Soat says. “The glass is a safety feature of the vehicle and clearly falls under their liability to repair and replace any unsafe glass. The proponents of this talk state the glass should be treated like tires. Tires are also a safety feature of the vehicle and are also covered under the policy.”
Meanwhile, Casey looks at the topic from a different perspective.
“I personally would love to see the insurance companies get out of the glass business and leave the motorist to make their own choice for value, service and quality,” he says. “Certainly, the repair industry will see more motorists in that scenario than the current trickle of claims from TPAs that are too far for them to drive,” he concludes.
Jenna Reed is the editor of AGRR™ magazine/glassBYTEs.com™. Connect with on LinkedIn, follow her on Twitter @agrrmagazine and like AGRR magazine on Facebook to receive the latest updates.
© Copyright 2013 Key Communications Inc. All rights reserved.
No reproduction of any type without expressed written permission.