Volume 33, Number 2, February 1998

Issue At Hand

A Tale of Two Windshields

by Debra Levy

My head hit the makeshift pillow on Mom’s sofa bed at around one a.m. Christmas Eve Night / Day morning. I felt both relief and exhaustion that everything to be done for the Holidays was now done or just wouldn’t get done. After racing around like a seasonal fool, I finally collapsed, exhausted, knowing it would only be a few hours before the 15-year-old in the house was up looking for a new skateboard under the tree. The radio blared Joy to the World; but I should have felt more like dead to the world.

Yet I couldn’t sleep, couldn’t go from 100 rpm to 0 that quickly. So I searched for something to put me out. I’d already read most of my Mom’s magazines (like Mother like daughter), but I noticed one I don’t receive: Consumer Reports. "Pretty dry," I thought, "that’ll put me out fast."

The magazine was doing a good job of just that until I reached page nine. There, under the headline "Insurance is paying? Hike the price?" was the story of Mr. Rueven Epstein and his 1984 Ford LTD, which had required not one, but two windshield replacements in less than a week. Both had been replaced by Stockton Glass of Sacramento, CA. The first replacement, through State Farm, was billed at $391.73; the second, for which Epstein paid cash, was $150.

Consumer Reports went on to say that it had hired a consultant to shop anonymously. "Of 27 shops from which direct comparative process were obtained, 11 charged more if insurance was paying," said the article. "A larger sample showed that insurers are charged a median price of $288 . . . The median price for a buyer off the street: $242."

The article continued by quoting an industry representative saying that State Farm "buys as cheaply as any big insurer can." "They can and should," chided the article. "The alternative is higher premiums for all of us."

Well, I’ve got a few words for Consumer Reports. While I won’t comment on one particular case such as Stockton’s, I’ll tell you what I think about the random survey CR did. The $46 average difference in cost is a bargain. It’s not cause for embarrassment within the industry.

First, many businesses offer cash discounts. It’s a normal business practice. Processing an auto glass claim is a service done for the consumer and someone has to pay for it. Before insurers got cute, they used to pay for it. They realized their cost per claim for auto glass was very high. So they tried to eliminate that cost by making the claims processing electronic. Well, they didn’t eliminate the cost, they just moved it a little-to the auto glass company.

The issue has little to do with whether the bill is being paid by insurance or not. It has to do with whether the shop is going to get its cash-in-hand now, without a lot of electronic paperwork, or later, through an electronic bureaucracy.

When you consider that in order to do business with insurance companies, the average AGR shop needs to have a fully-staffed shop (no answering machines allowed), a dedicated fax line, must transmit invoices electronically and/or pay fees up to six percent of the invoice, some must wait as long as 60 days to be paid, and has a good chance of being kicked out at audit time, $46 is a bargain as an insurance surcharge.

Now the one thing I think our industry is guilty of is treating this cash price as its dirty little secret. It should be out in the open, right on the wall of every shop. That way, if insured's want to avoid the insurance surcharge, they could, in theory, pay the glass shop directly and deal with their insurance company themselves. Who knows, this may also help keep down those premiums that Consumer Reports is so worried about.

I find it a bit ironic that when the TV news/tabloid show Hard Copy decided to pick up on the CR story, they couldn’t find anyone who would talk about it on camera - not insurance companies, not glass companies nor anyone from the groups that represent them.

Well, on Christmas Eve, I told myself I was not going to take this one lying down (even though I was at the time), that someone needed to explain all this to media and the public. So when Hard Copy called, despite my hesitancy about appearing on camera, I did. I told them just what I thought. As always, I am very interested in hearing what you thing of these "radical" ideas.

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Speaking of radical ideas, watch for a major announcement by a commanding auto glass manufacturer on the development of a new "network-like" structure for its distributor and dealerships. The company is weeks away from a major announcement that will once again rock the AGR industry.

- Deb


Copyright 1998 Key Communications, Inc. All rights reserved. No reproduction of any type without expressed written permission.