BAR Cites California Shops; Safelite Changes Network Policy
The Bureau of Automotive Repair (BAR) in California has forced Safelite Glass Corporation of Columbus, OH, to change its network practices in California by citing a number of glass shops in the state for not following its business practices. Under the citations, both glass shops and networks were reprimanded for neglecting to include pricing information on invoices.
Several shops in California were cited for not following Californias business professionalism practices, said Donn Harter of the California Glass Association. Harter declined to comment any further about the BARs investigation saying there was an on-going investigation.
What happened is that BAR investigated a number of auto glass shops and we were one company found in violation of BAR regulations, said Dee Uttermohlen, marketing manager from Safelite. They were all paperwork issues. However, it is important to know that no customer paid too much and no insurance company paid more than it was supposed to.
The BAR also communicated to us that they were not happy with how we were doing paperwork with our network, Uttermohlen said. It expressed concern about how networks didnt include pricing on their invoices. We continue to assign jobs to glass shops in the state of California, however it is now of a referral basis instead of a subcontractor basis.
While Safelite has had to change its system, LYNX Services from PPG Industries of Pittsburgh does not operate under a subcontracting system. We have not had to change because our network because of the way we run it. We believe our process meets Californias requirements, said Chris Umble, director of national sales and marketing for LYNX. Our process does not involve subcontracting and therefore the amount that the insurance company pays is the amount that the glass shops receive. So there is not an issue.
Under the subcontracting system, the company bills the network without tax and the network bills the insurance company with tax. The glass shops does the work for the network and it sells it to the insurance company, said Uttermohlen.
Under Safelites new referral system in California, the network will ask the shop if they want to do the job. If the shop does take the job, it either bills the insurance company directly with tax or bills the insurance company with tax through the network. This means all of our network shops can stay in compliance with the BAR because they will have the information to print on invoices, said Uttermohlen.
Glass Medic Headquarters Moves; Employees Terminated
In a move that it says is designed to streamline operations, Safelite Glass Corporation of Columbus, OH, has announced that it has moved the Glass Medic headquarters from Eden Prairie, MN, to Columbus. According to Dave Schuh, general manager of Glass Medic, the Glass Medic employees were given the news about the move during an October 11 meeting.
Schuh says Safelite terminated all of the employees at the Eden Prairie office. There is no one in the current organization who is going to stay on in a permanent position with the company, he said.
However, Safelite says it is keeping some of the Glass Medic employees. We are keeping one or two of the current Glass Medic employees, said Dee Uttermohlen, marketing manager for Safelite. Safelite will staff the remainder of the Glass Medic organization from within.
Uttermohlen says the companys decision to move Glass Medic, a producer of windshield repair systems, was dictated by customer service concerns. It is easier to service our customers when everything is together [in Columbus], she said. It is purely an efficiencies situation, where it is easier to work things from one location. We have the billing, shipping and everything else in the same place.
According to Schuh, Glass Medic was one of the original windshield repair companies. After being founded by Mort Gallub in 1975 the company changed hands a number of times.
Gallub sold it to Belron in the late 1980s and then Belron sold it to Dave Schuh in 1991. In 1997, Schuh resold the business to Belron, which also owns Safelite.
Legislators/Insurance Commission Investigate Insurance Family Deal
Several legislators and the Commissioner of Insurance in Wisconsin are questioning the recent claims management agreement between Safelite Glass Corporation of Columbus, OH, and American Family Mutual Insurance Company of Madison, WI, according to the Wisconsin State Journal.
The paper reports that one of those questioning the deal is Representative Mary Hubler. She has written a letter to the state insurance commissioners office that explains her concerns about the deal shifting business from local shops to an out-of-state entity. American Family has a large part of the insurance market share in our part of the state and this move limits clients choices, she said. It is resulting in a shift of business from a number of state and local companies to an out-of-state firm.
Huber also questions American Familys willingness to offer its customers alternatives to Safelite. In northern Wisconsin, access to Safelite facilities is very limited and American Family is not always offering clients the closer local alternatives.
Philip B. Kress, chief of the property and casualty section for the Wisconsin Office of the Commissioner of Insurance has written a letter to Vanessa Mosley of American Family Mutual Insurance Company, asking a number of questions relating to the Safelite network. Kresss questions concern the affect of the agreement on independent glass shops and American Familys plans for pricing repair and replacement.
Safelite currently has four shops and 12 mobile repair technicians in Wisconsin, however it is planning to add more in the future, according to the paper. This is consistent with the information Safelite vice president/CFO Doug Herron gave to investment professionals in a recent talk. During their conversation, Herron said Safelite plans to open approximately five shops in the Wisconsin and Minnesota areas in an effort to service the American Family account.
Herron said Safelite will have to subcontract work through its network during the first few months of this program, but with the new shops and Mobile Pros operations, it eventually plans to do the work itself. One company hurt by this new agreement is Auto Glass Specialists (AGS) of Madison, WI. We are concerned about lost business and customer choice laws, said Paul Spira of AGS. American Family is across town from us and we have been working with them for a number of years.
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