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July/August 2002

Steer Crazy
What the Industry is Saying in the Wake of the Colossal Steering Suit
by Penny Beverage

Once upon a time, consumers called their insurance agents to report broken windshields and the agents asked, “Where would you like to take your vehicle?” The consumer either had a suggestion, or the insurance agent offered one.

But that all changed in the mid-1980s, when the networks came into play and the insurance companies began passing glass claims processing duties to third-party administrators. The most well-known of these are Columbus, Ohio-based Safelite Glass Corp. and Pittsburgh-based LYNX Services.
Now, nearly 15 years later, some in the industry are taking action against alleged steering practices. Recently, one of the industry’s biggest players, Kingston, Pa.-based Diamond Triumph Auto Glass filed a landmark suit against Safelite for steering (i.e., encouraging insurance policyholders to use Safelite at the exclusion of the other shops on the network list), encouraging others to speak out against problem. (See May/June 2002 AGRR, page 10.

The Diamond Triumph-Safelite suit was filed on April 1, the day Diamond Triumph’s network agreement with Safelite expired. Diamond Triumph also subsequently chose not to renew its network agreement with the Ohio-based glass company and glass claims administrator. However, many, such as Frank Lucier, owner of Frank’s Auto Glass in Fargo, N.D., do not feel that is an option for independents, who depend on the networks for their business.

Julie Pihl, owner of First Class Glass Inc. in Hicksville, Pa., said she wishes she had the ability to file the suit herself and that it has been long-awaited. However, she finds the circumstances of the case ironic—the fact that it is one giant glass company against another, both leaving the independents such as her behind.

“I think it’s actually ironic because they’ve always cut each other’s throats, and now they’re stepping on each other’s toes,” Pihl said. “I’ve wanted to sue [Safelite] myself, but I don’t have Triumph’s pockets. I have no great like for either one, though.”

There are a number of different types of steering, as shown in the Diamond Triumph v. Safelite suit. First, there’s the obvious—only referring companies to the shops ran by the network glass claims administrator, or encouraging them by saying things such as, “we can only guarantee the work of certain shops.” There are also alleged cases where the network will refer and schedule the work with another glass shop, but then will call back to reschedule with a network-ran shop, or will even just go to the address where the work will be done and complete the job early. Finally, there have even been alleged cases (cited in the Diamond Triumph-Safelite court document) in which networks have feigned a bad connection with policyholders, then returned the call beginning with the question, “When would you like to schedule the work with Safelite?”

The Defendant
Defendant Safelite also does not see the steering accusation as a problem, despite the fact it does in fact operate retail facilities for repairing and replacing auto glass and is currently involved in the suit filed by Diamond Triumph. However, Safelite spokesperson Dee Uttermohlen said that consumer choice is also the glass claims administrator’s goal.

“We honor policyholder preference. We do not require, nor do our clients require, that a claimant use a particular glass company,” she said.

However, Uttermohlen said the company does recommend Safelite “for many reasons, including the high quality and products that [it] offers.”

She said the company does not track how many complaints about steering it receives, but does research their accuracy.

“We are more concerned about the validity of the complaints that we do receive. Our research into these complaints supports that we honor policyholder preference and execute our clients’ programs according to their direction,” Uttermohlen said.

In addition, Safelite says it keeps tapes of its calls on-hand and refers to these when a question of steering arises. However, in Safelite’s answer to the suit filed by Diamond Triumph, it claims there is no record of any wrongdoing or steering practices on its part, despite the specific phoned accounts to which Diamond Triumph refers.

“We provide a fact-based assessment back to the shop and share the tape of the policyholder call in question with our clients, as needed,” she said. “Our clients have found that the facts support Safelite’s execution of their programs according to their direction.”

Safelite, which has handled glass claims since the early 1990s, claims its goal is to provide insurance companies with a cost-effective method for handling glass claims, which “helps them hold the line on premium prices.”

In regard to the most recent case versus Diamond Triumph, Safelite holds that it has committed no wrongdoing toward the Pennsylvania-based auto glass chain.

“It is important to remember that just because we have been sued does not mean we are liable, but that is what Diamond Triumph would like [people] to believe,” Utterhmohlen said. “Diamond Triumph is required by law to prove by specific facts that we are liable. The facts that we have discovered to date regarding the specific policyholder transactions cited in the lawsuit indicate that we have honored policyholder preference and executed the program according to our client’s direction.”
Officials from Diamond Triumph were not available for comment.

The Beginning
Most glass shop owners interviewed for this story say that steering began with the appearance of networks and the removal of claims control from local insurance agents. Most say when insurance companies were handling glass claims themselves, it rarely occurred.

Jody Korman, owner of the Windshield Doctor in Virginia Beach, Va., said this is surely true in her case.

“It began when the glass shops began using the networks for billing,” Korman said.

Pihl agreed, and said that as the networks take on more and more clients, the problem has only 

“It’s been going on for so long and it’s getting aggressively worse,” she said. “It’s been going on at least since 1989, and it’s gotten drastically worse over the last five years.”

However, Lucier said in his ten years in the industry, it has been a consistent issue.

“I think [steering] has always been in effect,” he said.

But this is the first time a glass giant has sued because of it.

“Our history shows we are not a litigious company,” said Diamond Triumph in a statement issued after the suit was filed. “Unfortunately, due to the substantial harm done to our business, we had no choice but to file this lawsuit.”

The Size of the Problem
Throughout the country and in various markets, the size of the steering issue varies.

Lucier, a member of the Independent Glass Association (IGA), said many of his fellow auto glass installers think the problem is the worst in big cities and metropolitan areas, but he disagrees.

“Steering is alive and well in North Dakota,” he said. “Many think we may be small potatoes up here, but steering is here, too.”

Many also feel that fighting an insurance company—or its glass claims network—could be the end of their businesses.

“They’re too afraid to go after the insurance companies because that’s their bread and butter,” he added.

Pihl, however, has stopped depending on insurance companies for business.

“I just procure my own customers through referrals and such,” she said.

Korman does a lot of insurance work, but usually talks to the customer first and utilizes three-way calling to ensure she doesn’t lose a job.

“I think I’m luckier than most because I’m good on the phone with customers and I have them not call the insurance company until I get there,” Korman said, “but does it still affect my business? Definitely.”

Lucier said his company offers incentives—which are still legal in North Dakota—to encourage customers to choose his shop, and if he were not allowed to do so, expects he would not be in business.

“Everything goes through the networks now, so pretty much I don’t get any referrals from the insurance companies,” he said. “People call me based on my advertising and then they take the bills to the insurance companies themselves.”

The Numbers
Before the networks came into play, Pihl, who has been in the business for more than 15 years, received approximately 85 percent more work from insurance companies than she now does.
Korman’s shop is on the LYNX network, but she only receives three to five of the 60 jobs she does a week from its referrals.

Lucier, who ones of the larger auto glass shops in the town of Fargo, said he does not receive any work from certain insurance companies in the area.

The Insurance Companies’ Responses
Officials from most of the major insurance companies did not wish to comment on the topic. Fredericksburg, Va.-based GEICO’s Ron Williams, vice president of marketing for the company, said it’s the company’s policy not to comment on such topics.

Travelers Insurance spokesperson Kim DiMaria said that of course the company does not steer, but that they could not comment publicly on it either.

Calls to Columbus, Ohio-based Progressive glass claims center were not returned.

Lucier has had a similar fortune in trying to reach insurers.

“There are a lot of us writing letters to insurance companies trying to get them involved, but it’s a bit round-about,” he said.

At press time, he had gotten no responses.

Lucier’s calls to the insurers have had similar outcomes.

“They respond in ways of ‘it’s not my problem, you’ll have to talk to this person,’ and then you talk to that person and he steers you to another person,” Lucier said.

The Right to Choose
Those retailers interviewed for this article said their number-one complaint with the issue of steering is that they think consumers don’t realize they have the right to choose and are led to believe they must take their vehicles to certain shops to have the work covered.

“When you’re at a point where a competitor cuts a check to get the job done, administers the claim, handles the call and actually uses a P.O. box that looks like an insurance company address, there’s a problem,” she said, “and when the customer calls and insurance company and hits a certain button for a glass claim and it goes directly to a competitor, then you’ve really got problems.”

“Their wording is such that they think they have to use their glass shops, “ Korman said. “I’ve had people tell me, ‘they said they have to use that glass shop,’ and I tell them you only have to do two things, pay taxes and die.”

The Perceived Victims
While auto glass shops across the United States say they are suffering from the consequences of alleged steering practices by glass claims administrators, they say that the consumer is also suffering—whether he knows it or not.

“The insurance companies are after the lowest bidders and you’re not necessarily going to get a quality job in correlation with being the lowest bidder,” Pihl said.

Korman agreed.

“The loss is greatest for the customer,” she said.

In addition, as a repair-only shop, Korman finds that the networks also perpetuate the “bait-and-switch” method. (See September/October 2001 AGRR, page 62, for related story.)

“[The network-owned shops] are also replacing things that don’t need to be replaced,” she added.

The Solution?

Diamond Triumph is requesting monetary retributions for the alleged damage steering has caused to its business, in addition to a cessation of the practice. However, the decision is yet to be decided.

Others, who cannot afford to sue for monetary retributions, said the answer is simple: to disengage the networks all together, and for insurance companies to return to handling their own glass claims.

“The solution is to end third-party billing,” Pihl said.

Korman suggests a simpler solution.

“The solution is that the glass networks need to ask one question, ‘do you have a glass shop you’d like to use?’ If they asked that one question then they’d give the customer the opportunity to make a choice,” she said.

However, Lucier said that, like many of his colleagues in the industry, sometimes it’s best to remain quiet about the issues.

“If you’re a trouble, you’re in trouble,” he said. “I don’t feel I’m a troublemaker, though. I just feel that I have rights.” 


Inside LYNX

While many of the insurance companies were hesitant to comment on steering, LYNX Services spokesperson, Chris Umble, offered insight into why an insurer chooses to handle glass claims this way, and the way LYNX handles each claim. In addition, he held that the company has received very few complaints of steering, despite the current uproar in the industry over this issue.

LYNX, which has been in business since 1993 and is a subsidiary of Pittsburgh-based PPG Industries, considers itself an “open business model,” so the idea of steering business to its own shops when it doesn’t have any shops is not an issue, Umble said.

“We are absent of that retail profit motive, so in effect, we don’t care who does the work,” Umble said.

But, is steering an issue at all then? Umble said it’s obviously an issue, as there’s legislation designed to prevent it, but it’s not an issue for his company.

“Obviously [steering] is an issue and it’s outlawed in 35 states, but for LYNX Services it’s not a problem,” Umble said.

Umble says his company receives very few complaints of steering practices.

“It’s very rare [that LYNX receives steering complaints]. We’ve had complaints certainly, because generally there is a question of trust that surrounds the role of any intermediary, so most of the time when there have been questions of steering it has been early in a program, early in the State Farm program or early in the Allstate program … but it simply is not a serious or persistent problem.”

When an insured calls Allstate or State Farm, or one of the 45 other insurance companies for which LYNX handles glass claims, the call is directed to LYNX’s call center and the company first verifies that the policyholder is covered and then first asks the customer, “Do you have a shop in mind?” If the customer says no, then the customer service representative names a list of several shops. If the customer still expresses no preferences, several more are named—until the customer chooses one, according to Umble.

While LYNX has few complaints of steering, Umble said the problem is certainly not a new one.
“The issue of steering has been in the marketplace since the 1980s at least. Some of the legislation goes back to that time,” Umble said. “It was a problem long before LYNX Services was created. In fact part of how we set up LYNX Services was to get involved with solving that problem.”

Gathering Examples

While many independents are unable to fight the problems of steering due to monetary issues, the Independent Glass Association (IGA), based in Idyllwild, Calif., is attempting to unite its members to end the practice of steering by third-party glass claims administrators, according to the association. The IGA issued a bulletin on Friday, June 7, requesting that its members report cases of steering to IGA to use in the case filed by Kingston, Pa.-based Diamond Triumph Auto Glass against Columbus, Ohio-based Safelite Glass Corp.

“We plan to use these reports as evidence to prove that steering and stealing [jobs from others] does occur, and to support our effort to put an end to these third-party administrators’ deceptive practices,” Tim Smale, chief executive officer of the IGA, writes in the bulletin. Smale was urged by Chuck Lloyd, attorney in the law firm of Livgard and Rabuse P.L.L.P. and an AGRR columnist, to gather the information. Lloyd is representing Diamond Triumph in the case and suggested that Smale gather this information to use in either his work for his client, or in a future lawsuit the IGA hopes to file. The IGA met with Lloyd and other members of its board of directors in February about the possibility of filing its own suit.

"Since Chuck Lloyd is working on both cases and the Diamond Triumph suit is already filed, the IGA is sharing information with attorney Llody to strengthen the case against Safelite," said Smale said.
Smale said Lloyd will only utilize the information concerning Safelite at this time, but the IGA still wishes to gather all the information possible on steering for “possible future legal action.” 

A form was attached to the bulletin requesting very specific information such as when the incident occurred, who was involved, whether the phone call was recorded and an explanation of the entire incident.

At the IGA’s recent glass show and convention in Orlando, Fla., held in Orlando, Fla., in April, Lloyd spoke on the issue of steering.

Penny Beverage is the editor of AGRR magazine.



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