Often I see contributors misusing this term. Their posts usually show that their understanding of the term is incorrect. The average is not used to set each individual invoice. The average is achieved by converting a number of claims calls for replacements into repairs. Which is why the phone csr is always inquiring " ...how big is the damage area". The objective is to root out repairs as opposed to replacing all the windshields that the insured's ask for.

The numbers guys at the big TPAs can predict what the average invoice will be from the previous years invoices (collected from the entire country-remember they see all the invoices!) and estimating the totals for the coming year.

The TPAs are shooting to convert 15-20% of replacements to repairs. Tally all the invoices at the end of a year and then refund the amount to the insurance carrier for the "miss" on the GAI.

This is how it was explained to me by a shaved-headed guy that ran the programs for one of the TPAs.

What is the correct spelling of re-insurance...fraud?

Can you not see how the GAI model is corrupt?

First, the TPA is then under the gun to push for repairs and to enforce prices that have not been negotiated but set at depressed rates by the insurer.

Second, if the TPA is also a service provider, it can negotiate a higher GAI especially if it also manufactures and sells aftermarket auto glass. A TPA with that kind of market power can adjust the invoices of its sister service provider up even higher than the GAI as long as it can offset it with a lower invoice of a competitor. The insurer only cares that the agreed upon GAI is met for the specified period in question. The TPA, with todays computing power, can monitor the situation in real time!

To fool the regulators, the insurer suggests that service providers voluntarily join networks which are "procompetitive" because it helps keep costs in line so that consumer premiums will be lower.

The only problem with that is that it is nothing more than a smokescreen. In reality, service providers are coerced into joining the networks to keep TPA's from suggesting that they are not on the proverbial "list" of preferred providers etc. Also, the insurers are able to transfer administrative costs on to service providers and increase their own profits at the expense of the service provider.

Now, we are back to the 1963 Consent Decree where Bobby Kennedy saw through the smoke and how the auto insurers were (and are still), in fact, violating the Sherman Antitrust Act.

My understanding of GAI in the case of some TPAs who also repair/replace is that they establish a guaranteed average price for every invoice. Let's call it 300 quid. Of course they want to do every bogus repair they can, cause they can charge 300 quid for it. Their cost? A guy running around in a HHR getting paid squat.

Yes-The TPA business model is corrupt.

A flat/set price is the same for all invoices. A GAI is the average of all invoices.

No argument that the TPA is a negative for the AGR industry. Call up Tom F. and ask him what is a GAI?

How can any TPA use the GAI model unless they are conflicted with service providers?

Why would any service provider join a network unless it were coerced, especially when referrals slim to none?

The biggest question is why would any network participant continue being a participant under the current conditions?

Sanchez, you're missing the point. We're speaking of GAI contracts, or so I thought....perhaps I'm mistaken.

In that I believe we are speaking of GAI's:

No reinsurers nor insurers are taking on additional risk in the GAI scenario.

The CLAIMS PROCESSOR, the TPA, the NETWORK who set up the GAI contract is assuming the RISK OF LOSS, not an INSURER. And they're doing it for PROFIT. That is the short definition of INSURER, or RE INSURER in any state I've read the laws in.

If they go OVER the GAI, money goes back to the insurer, if they stay UNDER the GAI, since we don't have actual court testimony on that second part of the question, one can only assume they KEEP the money (or, the "float").

If that does not provide the incentive to lowball, impersonate contractor/subcontractors, set rates, short pay, ect ect ect...well, I certainly don't know what does.

JMHNLO

The bald guy in Columbus was not forthcoming about what happened if the Average Invoice came in under the GAI.

In a typical re-insurance scenario everybody has a license and contracts are legal.
In this case the re-insurance is a wink wink nudge nudge agreement, with the understanding
work will be steered, and rates manipulated to ensure profit for both participants of the wink wink nudge nudge agreement. This creates an exchange which would not exist in the free market, where future claims are settled prior to happening. If you can't see this maybe you are a willing participant.