Volume 11, Issue 6 - November/December 2009


A New Era
Three Trends Driving Repair
by Les Shaver

A decade ago, HSG (formerly Harmon Solutions Group) probably had a repair rate of somewhere in the high teens or low twenties. Now, the Eau Claire, Wis.-based network, the third largest in the total solutions provider realm, says its repairs constitute almost half of its business—46 to 48 percent to be accurate.

“I definitely think that repair is coming into its own element or has fully matured,” says Paul Gross, president and chief executive officer of HSG. “There’s been a substantial movement from that standpoint in terms of repair at the insurance carrier level.”

Others in the industry are also seeing this trend. “We’re starting to see more and more people doing windshield repair,” says Dan Mock, vice president of operations for Glass Doctor, a replacement and repair provider based in Waco, Texas.

While the sentiment expressed by Mock and Gross isn’t universal, there’s definitely a feeling that the repair has some headwind behind it. There’s the environmental movement, the cost savings in repair, and the ability to maintain the integrity of the windshield’s original seal pushing the business.

“We’re saving them deductibles and time and people are starting to see the environmental aspect of windshield repair,” Mock says. “I think there are a lot of things at play. It’s not just one single thing that’s making a big difference. I think there are several different things coming together at once—kind of a perfect storm.”

But some industry veterans think still more steps need to be taken before repair reaches its potential. They feel it may be some time still before the industry reaches its full potential.

1. Cost Savings
The Scenario:
As the recession has taken hold, unemployment is rising to almost ten percent and wages are falling. People are taking pay cuts, furloughs and watching their retirement accounts dry up. They don’t want to spend money. “Everybody is trying to pinch a few pennies and save money where they can,” Mock says.

Repairing a windshield costs much less than replacing one. “Based on the economy, there are more and more people taking repair seriously,” says Rory Most, general manager of Glass Technology in Durango, Colo. “Repair started because it was a cost-effective alternative to replacement.”

And it’s still effective. “I think windshield repair is recession-proof,” says Peter Jones, owner of Glass Technology, a one-man windshield repair business in Boston. “It’s an item that has to be fixed to [pass] your inspection.”

Many insurance companies are helping promote repair even more by waiving a customer’s deductible if they choose repair over the more costly replacement. “The cost savings to the policyholder is dollar for dollar of what their deductible is,” Gross says.
“The costs savings to the carrier will depend on what the deductible is too. In a state like Florida or Massachusetts, where there is no deductible, the carrier will save every dollar of that.”

Just before press time, Safelite also had started running television ads focusing on repair and the fact that it is often free when processed as an insurance claim (see related story on page 28).
Also, driving insurers to repair is the “per incident” pricing trend, popularized a few years ago. Under this type of agreement, an insurer guarantees to pay a network a certain amount per glass claim. Since, repair is less expensive, it makes sense for the network to prefer repair.

“Per incident pricing has been out there for many, many years,” Mock says. “It’s a way of lowering your overall cost for an insurance company to do business with you. If they can save a few dollars here or there, it all impacts their bottom line.”

Hurdles to Cross:
If repair has higher profit margins than replacement, does it really matter when people don’t know the advantages? That’s what Kerry Soat, owner of Fas Break Windshield Repair and Replacement Glass Systems, a repair system manufacturer in Mesa, Ariz., wants to know. He thinks a lot of people still don’t even realize that their deductibles could be waived in repair.
“I was at a franchise show in Chicago last fall,” he says. “I was shocked by the number of people that didn’t know an insurance company would pay for a repair and waive the deductible. The majority of people with whom I talked were paying for their own repairs.”

And, some companies are moving away from waiving deductibles altogether. “One that has is State Farm.,” Most says. “State Farm is one of the only companies that doesn’t offer free repair to its full customer base. It only offers free repair to people with full glass coverage. They used to offer it to everyone. They stopped doing it three or four years ago. But nobody has followed their lead and adapted their policy.”

Dave Casey, president of Orlando-based SuperGlass Windshield Repair, thinks other insurers could eventually follow the State Farm lead. Ultimately, Casey doesn’t buy the argument that the recession is augmenting repair. He thinks the industry may also be getting hurt from the recession.

“We’re seeing growth as far as awareness and receptiveness [of repair] and being considered the proper thing to do,” he says. “As far as growth in volume, rent-a-car companies have downsized, car sales are way down, trucking is fairly static, and rent-a-car fleets have downsized massively,” he says. “On a per-car-capita basis, that stuff is down. On the number of new customers getting involved, then that’s up.”

Lucien Bollanger, owner of A-1 Windshield Doctor in Seekonk, Mass., hasn’t really seen sales increases either. “Quite a few people just have liability,” he says. “They have to pay for [repair.]”

2. Environmental Concerns
The Scenario:
As HSG has seen glass repair business increase among consumers, the gain has come in some surprising places—Florida, Massachusetts, and South Carolina. “We actually drive a substantial repair percentage in those zero-deductible climates,” Gross says. “I would say ten years ago, people in zero-deductible areas thought repair was not viable in states like Florida, South Carolina or Massachusetts, where there’s no economic advantage to the policyholder. But we’re seeing a dramatic improvement, largely because of how we approach it.”

Gross isn’t approaching it by talking about the economy, but other benefits associated with windshield repair, namely the environmental advantages. “I think in this day and age, people want to do whatever is responsible,” he says. “That’s getting more traction. That’s where we see the incentives. In those zero-deductible areas, we’re talking about everything other than economic incentives and demonstrating how it’s the responsible choice.”

In a society that’s seen to be more focused on environmental factors, repair does have some advantages. Right now, there’s no simple way to recycle windshields. With 275 million pounds of auto glass going into landfills a year, according to the Global Glass Conservation Alliance (GGCA), that’s a huge deal. And, add the 15.2 million BTUs in energy used to produce a ton of glass, it’s easy to see how consumers might opt for the environmental friendliness of repair.

“We educate our customers that the windshields, at least not right now, are a non-recycled item,” Most says. “There are a lot of people who are learning that. More people are learning more about repair because they realize it helps save the environment.”

That’s what the folks at insurer Esurance think, according to Gross. The Sioux Falls, S.D.-based web-based insurance company doesn’t print anything and they e-mail everything.

“It’s all electronic and they have a really strong track record of embracing the environmental responsibility for how they conduct business,” Gross says. “Windshield repair fits nicely into that campaign. They are enamored with the environmental side of this. That’s been their motivation for repair. We’ve actually created a campaign with them where for every windshield repair that we commit to planting a tree on their behalf. It’s a great example to how industry has shifted from cost saving to other favorable impacts that are a direct result of repair.”

Gross sees more insurers following this trend. (Editor’s Note: State Farm and some other major insurers declined to comment for this story). “That’s a trend you wouldn’t have seen five years ago,” Gross says. “I think the environmental aspect is huge.”

The environmental aspect has created such a boom for the industry that the National Windshield Repair Association (NWRA) recently became a part of the newly formed GGCA. The GGCA’s goal is to bring awareness to the public about the benefits of glass repair, restoration, reuse and recycling. The NWRA now acts as a council of the GGCA (see related story on page 38).

“I think windshield repair is recession-proof.”
—Peter Jones,
Glass Technology, Boston

Hurdles to Cross:
While there are those like Gross and Most who think the environmental movement can provide a great boon to the repair industry, others aren’t so sure.

“Landfills have been there for 35 years. I didn’t see anyone jumping on it 35 years ago,” Soat says.

Casey agrees. “The environment is great marketing pitch,” he says. “These days it seems like there’s a lot to deal with—whether it’s the economy or swine flu and the environment takes a back seat. It [marketing the environment] is a great concept, but I don’t see people buying on it. There’s more reason to tout the environment than ever, but I think there’s less concern.”

3. Saving the Seal
The Scenario:

While the environment may not be first and foremost in the minds of windshield repair customers, they do have other goals that seem to be in line aligned with what the repair industry can provide. Take, for instance, a woman for whom Bollanger did a repair. She had a nasty break that could have been repaired. She knew nothing about the environmental advantages of repair, but she didn’t want the factory seal in her windshield broken because she feared leaking.

“They [customers] are more concerned with keeping their windshields from leaking,” Bollanger says. “They don’t want the windshield to leak or have wind noises … It’s what everyone is concerned about.”

Jones sees much of the same thing. “I tell them [customers] they have to them to keep the original seal in as long as possible,” he says.

And, Jones finds that message has traction. The cry to save the factory seal has long been a battle cry in the repair industry, but the main driver wasn’t wind or noise. The industry’s has traditionally pushed repair’s ability to save the factory seal and possibly save lives. The rationale: it’s more likely for the windshield to stay in the event of an accident if it has the factory seal.

“I don’t know of a lawsuit where the windshield was repaired and they sued the company,” Bollanger says. “I can recall countless incidents where people were pushed out of a car and sued.

Hurdles to Cross:
Unfortunately, many customers have little idea that windshield repair can cut down on leaks and noise while possibly making them safer. In a way, this misunderstanding is symbolic of the bigger perception problem that repair has—few people know about it or what it can do for them, their pocketbooks, and the environment. That’s a bridge the industry must cross.

“I see that [preserving the seal] as a huge advantage, but most policyholders don’t understand the materiality of preserving that factory seal,” Gross says. “Obviously you need to have some education.”

Les Shaver is a contributing editor for AGRR magazine.

© Copyright 2009 Key Communications Inc. All rights reserved.
No reproduction of any type without expressed written permission.