an iga viewpoint
Solutions to Steering
by Tim Smale
In the business school course, “Global Legal and Social Environment of Business,” taught by Mark Phelps, a professor at the University of Oregon, students are taught to analyze ethical problems in business. He teaches his students to ask certain questions when analyzing ethical issues to come up with reasonable solutions. I used the method to analyze the unethical practice of steering in the auto glass replacement industry and come up with some solutions.
What are the Possible Alternatives?
Networks have the financial incentive to continue whatever business practices they see fit to service their obligations to insurers, especially as it seems to be working for them so far.
• Diamond Triumph could win its case and Safelite could be forced to revise its methods and end any steering tactics found occurring in the court case.
• Diamond Triumph and Safelite could agree to an out-of-court settlement and then everything would be up for grabs.
• Networks could stop steering on their own initiative and this issue could just go away.
• Legislative solutions could be developed in states by using specific legal language that outlaws the tactics that networks use to steer
• More litigation could be started against networks and insurers who continue the practice of steering.
What Are the Practical Constraints?
Lawsuits are all unique and sometimes don’t turn out the way you think they will, especially if an out-of-court settlement is reached. Legislative work and litigation are a time-consuming, tedious, expensive, but powerful, way to create lasting change. Grass-roots efforts to get tougher anti-steering legislation passed is underway in many IGA chapters across the United States and will continue to grow in the coming years. Lawsuits could provide the resolutions we need and the IGA is looking into possible litigation to alleviate the steering situation for independents everywhere.
What Actions Can Be Taken?
The chances of one of the first four alternatives mentioned above being favorable for independents is so unpredictable that the only proactive solutions are the last two: to pass state-specific laws and to litigate where possible. The best way we can change laws is to have a grass-roots effort in states, working with IGA chapters or other state or regional association chapters to change state legislation. One of these recently culminated in Minnesota, where the Commerce Department charged State Farm Insurance with a number of allegations, including some related to steering and underpaying auto glass shops for their work. (See "AGRReports" for related story.)
Hundreds of glass retailers are helping the IGA’s efforts to end steering by sharing evidence of steering incidents. I encourage you to obtain a Steering Report Form from the IGA and record the facts about steering incidents that you encounter. The form can be found at www.iga.org, or faxed upon request by calling 909/659-5972.
Secondly, if you have an opportunity to speak to a customer before the network, inform them about the safety risks involved with improper auto glass replacement. Tell them about your company’s commitment to safety, your warranty and your pricing and billing methods. Finally, tell your customers about steering tactics they may encounter when they call the toll-free telephone number on their insurance cards. Inform them that they have a choice, they will not have to pay out-of-pocket costs and they are covered by your company warranty, a nationwide guarantee offered by your franchise or the IGA’s Americare Nationwide Bonded Guarantee.™
Finally, the last approach is to continue our efforts within the IGA and the industry to support those billing systems that do not steer work and offer fair and reasonable pricing. It doesn’t make any sense to me that collision shops regularly receive list prices or more for auto glass work, but auto glass shops that specialize in this type work are offered only 61 percent off list price from State Farm. We desperately need insurance billing systems to recognize our plight and join with us to entice insurers to offer fair pricing and no steering in return for higher compliance numbers.
I am encouraged by Pilkington’s new CompleteClaims™ service that promises to help independents and closely matches the goals and structure of IGA’s e-direct bill service. Other systems, such as Mitchell’s online service currently underway with Travelers and new offerings by LYNX, may help end steering and help independents regain their former position as leaders in delivering safety, quality and fair prices to insurers and consumers for auto glass work.
You can hear more about all these issues at the IGA National Convention and Glass Show in Reno, Nev., February 5-7, 2003.
Tim Smale is the chief executive officer of the Independent Glass Association. Smale serves on the board of directors of the AGRSS Council and on three AGRSS sub-committees.
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