Volume 12, Issue 5 - September/October 2010

Independent’s Day
an iga viewpoint

Wanted: A Free Marketplace
by Alan Epley

The basic underlying principles of the auto glass repair and replacement (AGRR) industry should be no different than any other service industry operating in the United States. Capitalists undertake unknown risks and invest their capital in a business venture to provide auto glass repair and replacement services to fill a need in the marketplace. These entrepreneurs open their doors and begin to provide a service, and, on the very basis of the service that they provide and the price that they charge, should either succeed or fail.

The Same But Different?
Though the auto glass business should be much like any other, the fact is that it is not. Any shop owner will be the first to attest that access to the marketplace is riddled with barriers to access and that the service they provide is subject to price controls. In the AGRR industry, the market forces that were taught in Economics 101—supply and demand, free and fair competition—are not present at all. Rather, the marketplace is controlled and dominated by the presence of another industry, the insurance industry, which has been allowed to portray that it knows what is best for its customers. In many of the business transactions taking place at the shop, the customer contracting the shop’s services also is a customer of the paying insurer. The fact that many consumers use proceeds from an insurance policy to pay for the services changes the entire landscape of the industry.

In the early 1990s, the insurance industry determined that it would be in the best interests of its operations to spin off the administration of auto glass claims to third parties that could execute this part of their business on a more-cost effective basis.

So the third-party administrator (TPA) was introduced into the auto glass repair and replacement industry and signified the beginning of the end of shop owners having free access to the marketplace. A new force, the TPA, was introduced into the realm of traditional economic market forces that were supposed to make the free market system work. As the leverage of the TPAs has evolved, basic business practices like marketing campaigns and the underlying theme of free competition (i.e., “you get what you pay for”) have transitioned into a one-size-fits-all philosophy.

“Basic business practices like marketing campaigns and the underlying theme of free competition have transitioned into a one-size-fits-all philosophy.”

Today’s Market
Customers paying with cash have the right to shop around. Customers using their insurance policies to pay for services are subjected to sway points by the insurers themselves or their TPA partners trying to get them to use their preferred shops. The motivation to do so is based purely on cost. And, taking it one step further, customers believing that they have insurance coverage—only to discover that they either have a high deductible or no coverage at all—are being diverted to shops other than the ones they intended to use before making the call.

The Right to Choose
Free market forces were intended for a purpose. Every customer should have the ability to have his/her car serviced at a shop of his/her choice and it should not matter how he/she is paying the bill for those services. Independent shop owners/operators are not looking for any new laws or favors to tip the scales to their benefit. Unfortunately, shop owners are confronted with the challenge to have existing laws enforced in order to ensure equal access to the market and the uninhibited ability to serve every customer who chooses to contract our services.

Every entrepreneur participating in this industry should have every opportunity to succeed or fail on his/her own merit. There is no place for artificial barriers in any industry or any market—especially when those same barriers place have the potential to compromise consumer safety.

Alan Epley
is president of the Independent Glass Association (IGA). He also serves as president of Southern Glass and Plastic in Columbia, S.C. Mr. Epley’s opinions are solely his own and not necessarily those of this magazine.

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