View From The Trenches

When I heard the news yesterday that the National Insurance Crime Bureau (NICB) has named Safelite Solutions as a “strategic partner,” I truly was overcome with emotion. Does this mean that glass claims fraud will be at last rooted out and stopped? Or is it a classic case of having the fox stand guard over the chicken coop?

First of all, who is the NICB? Since it is not connected with any state or federal regulatory agency, why does it exist? I must surmise that it must be indeed the brainchild of the public relations department for the insurance industry. Does the NICB supervise fraud prevention or does it just report and compile statistics that are sent to them? Does the NICB serve a real purpose or is it just a mouthpiece for insurers to justify claims management?

It would be my fondest wish that the auto glass industry would be perceived as possessing great integrity. I would hope that every American consumer could get the highest craftsmanship, quality products and the greatest value when their need for auto glass arises. In truth, it is roulette plain and simple. From the largest installation company to the smallest mini-pickup purveyor, a customer is taking his chances on getting the best that the industry can offer.

Right now, that “best” hardly would make a needle move on a quality meter. First of all, a tech is only as good as the products they install. Wholesale glass prices have dropped tremendously over the past 15 years, but so has the quality of those products. It is my strongest belief that much of the aftermarket glass is of substandard quality, in strength, fit or clarity in comparison to what was branded as original equipment. The substitution of moulding products is rampant, the application (or non-use) of primers and adhesives is unprofessional, and the technical expertise and pride of far too many installers is non-existent.

Oh yes, Virginia, fraud does exist. Given the creativity of the human mind (and cyber one as well), numerous scams and schemes have been uncovered and continue to bedevil insurers in a timeless and tireless manner. Now a self-proclaimed super hero has come forward to help insurers combat this apparent assault on insurer profits.

Over the past 10 to 15 years, a marriage of convenience has existed between insurers and a very small group of glass companies through a corporate entity known as third-party administrators (TPA). TPAs have relieved much of the economic burden on insurers of both internal and externals costs that would be associated with glass claims. One popular feature that a TPA like Safelite Solutions uses to attract new insurer clients is its Guaranteed Average Invoice pricing. One way a company like Safelite Solutions can live by such contractual limits is that it happens to be owned by the nation’s largest (albeit the world’s as well) glass installation concern. Much has been said and written about the perceived abuses this corporate gatekeeper has allegedly inflicted upon its competition, both large and small at the time of first contact with a claiming policyholder. Now as a strategic partner for the NICB, the company seems to be working it way into being the “top cop” against fraud.

Look at what Safelite’s parent company, Belron, has developed into here in the United States over the past ten years. By its own words, the company is the TPA for 19of the top 30 insurers in this country. The company just wrestled Allstate away from LYNX Services, leaving State Farm as the only vehicle insurer of any real size that is not a Safelite Solutions client. The amount of claims and client data Safelite has amassed over the years is astronomical and while it can be said that the company can provide insurers with needed proof for fraud, the opportunity for abuse is just as great. That greatly concerns me.

Fighting “windshield bullies” is one matter. Alerting clients to a flood of chip repairs is another, but who is to say that this is not corporate altruism but self preservation of the ugliest kind? Windshield repair is a highly profitable revenue stream for Safelite. If that is threatened in certain areas by an aggressive competitor, who is paying for and providing fraud detection? One would bet that video surveillance and undercover operations are not being conducted by the NICB.

The issue of glass inspections has become a very contentious one for independent glass shops. An insurer has every right to ask for, or, in fact, demand to inspect glass damage prior to a repair of any kind. However, most insurers do not want to waste their limited adjuster resources on common claims. However, it becomes a whole different issue when a repair or replacement technician from the TPA’s sister’s stable shows up fully prepared to complete the claim once the “inspection” takes place at the expense of a delayed competitor. This is not altruism but outright theft. To broach another subject, how many “repairs” have been turned into profitable replacements by our nation’s largest? Does that sort of tactic get reported to the NICB under “questionable claims practices?” I would bet Mitt Romney the answer would be no.

Last of all, it is fact that Safelite owns the lion’s share of the insurance market. What if a competitor emerges to try to challenge the company in either a regional or on a national level? Will that challenger be immune from all sorts of claim reviews that emanate from one particular TPA? Also the data collected from previous claims can be used strategically against the newcomer to help thwart its growth. Who is to say that won’t or hasn’t happened?

From this viewpoint, I believe the NICB spews factoids to help fill newspaper space. Its sole purpose is to place in the American public’s mind that it is simply “not safe” to think independently when it comes to making a claim. The implicit message the NICB is trying to transmit is that you should trust the insurer’s judgment when it suggests an “approved” vendor when a claim arises. That becomes Claims 101 in consumer “education.”

If the TPA was truly independent from any corporate glass connection, fraud detection would certainly be a reasonable activity to undertake. However, with that not being the case, the process is gravely tainted. It is one more reason to legally demand TPAs should not be owned or controlled by any company with a connection to auto glass. What we have now is completely unacceptable with the fox plumping up the chickens to ensure a steady food supply for years to come.

I had one of those cosmic moments just before the Thanksgiving holiday. I like coming into contact with clients who “get it.”

The story starts as follows.

I was contacted by our leading third-party administrator (TPA) asking if I would accept a job after a customer requested my shop services. The first question I asked before the CSR went over her insurer’s pricing limits was whether the client had requested OE glass, because almost all my referrals come directly from long-time dealer accounts. After a long pause, the CSR replied, “No.” I suggested she should check first before the conversation went further. She returned to me within a few minutes saying her caller did want original.

It turns out the client has a 2007 Acura and he wanted dealer glass. I had a chance to talk with him after the CSR dropped off the call. First of all, the customer says he made it a point to tell the TPA CSR that he wanted OE glass from the very start. After she returned to his line after my question concerning dealer glass, he was apparently read a script on what was “fair and reasonable” and he was given a price based on either that insurer’s or the TPA’s concept of that nebulous concept.

One of the first things my customer brought up to me when we talked was the “fair and reasonable” price he was given by the CSR. It seems he went on line and visited the TPA’s owner’s very own website during his claims contact time and got an online bid for his model vehicle. We both got a chuckle over the fact that the price quoted by the CSR was lower by around hundred dollars than what the corporate website gave him.

“They try to jam it to you,” he said.

“You, too,” was my reply since the difference for dealer glass would be $100 less if they allowed him the amount the website used for its cash price.

What I see is hopeful is the growing number of consumers who resist becoming lemmings. If I am right, one experiment being carried out by an insurer will fail. This is where a client agrees to have a data sensor plugged into his vehicle in exchange for a lower premium. What is not being said in advertising is that data from that plug can and would be used to determine if the client drives in a manner that is deemed “unsafe” by the insurer. That could cause premiums to be raised or claims or coverage denied.

Look at the tone and tenor of car insurance ads. Insurers have become hip, cute or just cheap. The fact that any and every claim will be managed toward the company’s benefit is a subject that is avoided. Who is approved to complete repairs and the basis for that blessing from insurers is another issue that could use some sunlight for its policyholders.

When testifying before a South Carolina legislative committee, a Nationwide representative once admitted that a single corporate shop received 80 percent of the company’s glass claims during a particular year. The remaining 20 percent was divided up between the state’s other 280 glass vendors. That shop and the TPA for Nationwide just happened to share ownership. A South Carolinian who purchased Nationwide Insurance may get into an accident, but it is obviously no accident that a certain glass shop receives preferential treatment in that state. One obvious question is: For how many other insurers that uses this TPA does that market share penetration hold true for on a national basis?

We as independents have the absolute responsibility to help consumers learn and discern the misinformation they receive when claimants contact who they think are company representatives. We should also seek financial support from OE glass manufacturers to help deliver that message since their own survival may be tied into ours as well. This issue just doesn’t involve the insurance sector of auto glass. I have no illusions that as that market flattens out to a no-growth status, those multinational companies who literally control large blocs of insurer and fleet glass installs will look for new areas of opportunity.

Independents should realize that we are providing the means to help them continue to dominate. Think of “participating shops” as sharecroppers because we provide the fill-in labor making it possible for the TPA’s owner to fulfill its contracts. We are told what to charge and are limited by that charge to provide a certain level of quality of product. They profit in some way even when we perform the work. Do insurers send out year end 1099s? No, the TPA does. Any payment delay is blamed on the insurer, but whose name is on the check when it arrives at the shop?

I realize many of us got into the auto glass business to provide us the means to make a good living. Perhaps some of us dreamed of becoming the founder of a chain of shops that would bring us success and wealth. Well, as things stand now, many of us are rapidly approaching the one percent status that the Occupy Wall Street movement rails against. However, it is only because perhaps we are only receiving one percent of the insurance work that is available in our area. The rich get richer and that maxim holds true very much so in our industry. It won’t change unless we push for reform. I’ve always worked to be a “one percenter” but not in this way.

I have just left middle age this week and entered what some people call “The Golden Years.” I don’t feel like what awaits me needs a residence at Fort Knox much less Fort Myers. They say wine improves with age but time can also cause it to become vinegar. It seems the same thing happens to people. I’m trying my best not to become the auto glass version of Andy Rooney.

I still install. Although I can truthfully say I wish I didn’t, I still love the trade. My stomach can still produce acid reflux when working on a top-line car but there is a very strong sense of accomplishment and pride as I pack up my tools and gaze upon a completed install. With that truism stated, I still have my days when I want to whistle and pray that for a variety of reasons I never see the vehicle I just finished as well.

My mother wanted me to become a physician. Despite a few years attending an Ivy League college, the closest thing I have to resembling a doctor’s life is bad handwriting and insurance billing woes. I do play golf, however. I started playing the game just after I got into the auto glass business. I do believe that silly game has affected my outlook on both life and business. If I am allowed a wish as I try to blow out a wildfire causing number of candles this week, perhaps merging some concepts of golf with auto glass would be the outcome of that fantasy.

Golf has rules—34 of them to be exact. No matter where in the world you play in competition, you are expected to follow all of them with no wiggle room. Following those 34 rules of golf has created a Bible-sized book of decisions that attempts to cover all sorts of unusual situations that have occurred over time in trying to obey both the letter and spirit of those rules.

Auto glass can use some rules. The real trouble is that there is no collegial attitude within this industry that creates respect. Cheat in golf and one usually is banned from competing. Cheat at auto glass on either the business or craft side and all one gets is a wink or a yawn. I can’t fathom an incompetent technician or an offending company admitting fault voluntarily and penalizing themselves in some way.

Installing auto glass is comparable to playing golf. The results (except for a bad product) are up to the technician and no one else. Many a golfer can conjure up excuses for a bad shot as will a technician cast blame elsewhere. Still the end result is most dependant on the actions and talents of the person themselves. Auto glass is the same way.

However, golf is not a fair game. One may very well endure bad outcomes at any time during play. How many good honest retailers have gone out of business due to conditions out of their control?

Ironically I see management of corporate glass needing to embrace the spirit of golf in company practices instead of just trying to play it at their country clubs. Perhaps that is the issue. It’s their intent to create and follow their own rules and limit access to anyone else wanting to join. Very exclusive clubs are not unusual in golf but anyone can play the game at a public course. I’ve competed against many a player who are members of elite clubs. Some of those players possess such a distain for “commoners” that is unsettling, but makes it very pleasing outcome for this “muni rat” to beat them. Most times, however, the love of this game acts as a common bond for long-term friendships and connects those with diverse backgrounds.

Like golf, installing auto glass requires no formal training. However, if anyone ever has had to play behind a novice or just a bad player, it is a painful (if not frustrating) experience. Proving competency in either endeavor would improve the experience for all involved.

You can play golf well into retirement. It might not be pretty, but having both an activity and a purpose sure helps one endure the ravages of time. Slapping in auto glass over a few decades does nothing to make the aging process less destructive. Hands, shoulders and backs take the brunt of that dissipation. Time may make us smarter but we pay a price in pain. By the way, it doesn’t help the golf either.

I better wrap this essay up before my train of thought completely derails due to early dementia. I embrace capitalism but honor and pride mean more to me than money. You first have to respect themselves and then the product of your labor. We are not islands. A bad install reflects upon us all. Build a mediocre product and the outcome is never positive at the end of the supply chain.

Last but not least … I miss Andy Rooney.