ccc states-
I still find it funny that the ins. co. talk so much and refer so much to NAGS data, and yet not one ins. company I know accepts all of the NAGS data.
Response-
We use the NAGS part number, suggested labor times, and suggested retail.
CCC response- suggested retail? So that is what NAGS tells you it is? Or is SGC telling you that? Funny, NAGS tells us it is simply a benchmark not meant to be a price at all, even thought it oddly has a $ attached to it.

CCC states-
Not one ins. co. pays full NAGS list plus labor with no discount. Most do not recognize that NAGS does not price all parts, but leaves 'R' parts out in the wind for all of us to haggle over, and then tries to say "NAGS says there are no more 'R' parts" not understanding that NAGS simply choosing to not price them does not mean they do not exist.
Response-
Not an accurate statement. I allow 100% of NAGS in some market areas, and I suspect other carriers to as well. We recognize that some net priced parts will be required--and we allow appropriate markups when the NAGS list in not applicable.
CCC response- I believe it is a true statement HAL. Not one ins. co, including yours, lets any of us charge 100% NAGS list plus labor without a discount as you and every other ins. co discount our labor rates. Do you know what the average labor rate is in other automotive industries? Not the $30 an hour you so generously offer thru your TPA. Locally we see $65 to $95 an hour. So HAL you do indeed discount NAGS +labor, you just sell it off as “we give you 100% NAGS”. Sorry to differ with you on this one HAL, but I do. Do you pay different labor rates in different areas like you discount NAGS in certain areas?

CCC states-
If NAGS is so great then why do most companies not trust it? Why does every ins. co. want a discount off NAGS list? Why do some not trust the labor times or the new trap being laid out for agr companies "if 2 men are required it will take you less time". Why, if NAGS is such a great guide for the ins. industry do you guys play with it, try to manipulate it, etc.?
Response-
My company has confidence in NAGS data, but we use it at guide rather than a bible.
CCC response-have to give you that on HAL, that was a great line. /applaud
Of course you “have confidence” in the data, the NAGS data has only lowered agr profits. You say your ACPC (average cost per claim) has remained neutral since the rebalance, but not one glass shop I have talked to, especially those on networks can say that their profits on autoglass have. Why is that? It doesn’t seem to make any sense to me, but what do I know?

CCC states-
I am really interested in your answer HAL. You push for accurate data and an accurate benchmark (which has only killed agr shop profits since 1999 while the insurance industry has never been more profitable) and yet every time NAGS revises their data, you still want to adjust it further? Where does it end?
response-
We adopted the NAGS rebalance concept and attempted to do a revenue neutral conversion on our pricing. If it was revenue neutral--shop's profit would remain constant.

You mention insurance company profits. My average cost per claim has remained constant for the last few years. Our profits come from other areas--not short paying glass claims. Glass is not a source of 'windfall' insurance profits.
CCC response – see response directly above. Maybe one reason your average cost per claim remains the same is so much of your policy holders work is being “farmed” out to your TPA’s glass shops. We all know their business model. Starve the market with pricing, file bankruptcy while hiding behind the courts, including not paying AGR shops that are owed for network jobs, and start all over. But I could be wrong.

CCC states-
It ends when we all in the agr industry REFUSE to use NAGS data. We start billing based on real costs, not the made up (or rather undisclosed formula, sorry) someone in San Diego cooked up who doesn't even install windshields on a daily basis nor run an agr company.

Response-
I agree it makes sense to bill based on real costs! You should be permitted a fair mark up for goods and services provided. A realistic list price and honest labor allowances are a 'step' in the right direction for both of us.
CCC response-it is interesting how most networks, TPA’s, ins. co. are allowing on average a 15% markup on the glass part for NET items or ‘r’ parts formerly. Have you compared this to most other automotive industries HAL? Many other industries make about a 400% markup on the part as their final invoice price. That would be a target invoice including parts, labor, etc. Any of you reading this should punch some numbers and see where the TPA’s have us at. Test what percentage your glass part cost is of your total ticket price.

I still find it amazing when I hear ins. co. saying “well our pricing must be fair and reasonable because so many shops are participating” when in reality we participate whether we like it or not. Even if we decide to be a NON-participating company most ins. companies hold us to the very same pricing structures. Many, like Progressive, only pay one price to participant and non-participant shops. Do you not see that all you are doing is moving and motivating the masses, unknown to you, to put forth and lobby the powers that be and make sure that the power to price our services and goods forever remains in our hands? That the guise of ‘we must control claims to protect and assure premiums remain constant” will soon be exposed for what it is?

CCC states-
Keep smilin HAL. Not attacking you personally, but I really want to know how you guys think and what your reasoning is on NAGS data.
Response-
Certainly no offense taken. I hope my responses answer some questions. We can learn from each other-if we listen. This can help us work effectively together.
CCC response- once again this is only directed to you HAL as so far no one else has the courage, or are otherwise restrained, from conversing with us in this forum. I still greatly respect your input and do look forward to someday meeting you in person.

Best wishes – and same to you HAL

ccc... nice post.

CCC to HAL cont.

ccc states-
I still find it funny that the ins. co. talk so much and refer so much to NAGS data, and yet not one ins. company I know accepts all of the NAGS data.
Response-
We use the NAGS part number, suggested labor times, and suggested retail.
CCC response- suggested retail? So that is what NAGS tells you it is? Or is SGC telling you that? Funny, NAGS tells us it is simply a benchmark not meant to be a price at all, even thought it oddly has a $ attached to it.

*REPLY--I do use the NAGS list when appropriate. If a net priced part, I allow a 25% mark up.

CCC states-
Not one ins. co. pays full NAGS list plus labor with no discount. Most do not recognize that NAGS does not price all parts, but leaves 'R' parts out in the wind for all of us to haggle over, and then tries to say "NAGS says there are no more 'R' parts" not understanding that NAGS simply choosing to not price them does not mean they do not exist.
Response-
Not an accurate statement. I allow 100% of NAGS in some market areas, and I suspect other carriers to as well. We recognize that some net priced parts will be required--and we allow appropriate markups when the NAGS list in not applicable.
CCC response- I believe it is a true statement HAL. Not one ins. co, including yours, lets any of us charge 100% NAGS list plus labor without a discount as you and every other ins. co discount our labor rates. Do you know what the average labor rate is in other automotive industries? Not the $30 an hour you so generously offer thru your TPA. Locally we see $65 to $95 an hour. So HAL you do indeed discount NAGS +labor, you just sell it off as “we give you 100% NAGS”. Sorry to differ with you on this one HAL, but I do. Do you pay different labor rates in different areas like you discount NAGS in certain areas?

*REPLY--You do have a point, I guess it is how you look at it. Did you factor in the base fee which we allow over and above the $30.00 per NAGS hour? That could impact your calculations. I can see an arguement for glass labor to track closer to body shop labor rates.

CCC states-
If NAGS is so great then why do most companies not trust it? Why does every ins. co. want a discount off NAGS list? Why do some not trust the labor times or the new trap being laid out for agr companies "if 2 men are required it will take you less time". Why, if NAGS is such a great guide for the ins. industry do you guys play with it, try to manipulate it, etc.?
Response-
My company has confidence in NAGS data, but we use it at guide rather than a bible.
CCC response-have to give you that on HAL, that was a great line. /applaud
Of course you “have confidence” in the data, the NAGS data has only lowered agr profits. You say your ACPC (average cost per claim) has remained neutral since the rebalance, but not one glass shop I have talked to, especially those on networks can say that their profits on autoglass have. Why is that? It doesn’t seem to make any sense to me, but what do I know?

*REPLY--I don't have an answer either! I don't think fuel price issues would be the sole cause.

CCC states-
I am really interested in your answer HAL. You push for accurate data and an accurate benchmark (which has only killed agr shop profits since 1999 while the insurance industry has never been more profitable) and yet every time NAGS revises their data, you still want to adjust it further? Where does it end?
response-
We adopted the NAGS rebalance concept and attempted to do a revenue neutral conversion on our pricing. If it was revenue neutral--shop's profit would remain constant.

You mention insurance company profits. My average cost per claim has remained constant for the last few years. Our profits come from other areas--not short paying glass claims. Glass is not a source of 'windfall' insurance profits.
CCC response – see response directly above. Maybe one reason your average cost per claim remains the same is so much of your policy holders work is being “farmed” out to your TPA’s glass shops. We all know their business model. Starve the market with pricing, file bankruptcy while hiding behind the courts, including not paying AGR shops that are owed for network jobs, and start all over. But I could be wrong.

*REPLY--My t.p.a. installs on about 20% of my claims and their contract affiliates do almost 30%. I have 40% of my business split between Approved Providers and non-network shops. I don't think we are starving anyone with these type numbers. We do have opportunities available for more players.

CCC states-
It ends when we all in the agr industry REFUSE to use NAGS data. We start billing based on real costs, not the made up (or rather undisclosed formula, sorry) someone in San Diego cooked up who doesn't even install windshields on a daily basis nor run an agr company.

Response-
I agree it makes sense to bill based on real costs! You should be permitted a fair mark up for goods and services provided. A realistic list price and honest labor allowances are a 'step' in the right direction for both of us.
CCC response-it is interesting how most networks, TPA’s, ins. co. are allowing on average a 15% markup on the glass part for NET items or ‘r’ parts formerly. Have you compared this to most other automotive industries HAL? Many other industries make about a 400% markup on the part as their final invoice price. That would be a target invoice including parts, labor, etc. Any of you reading this should punch some numbers and see where the TPA’s have us at. Test what percentage your glass part cost is of your total ticket price.

I still find it amazing when I hear ins. co. saying “well our pricing must be fair and reasonable because so many shops are participating” when in reality we participate whether we like it or not. Even if we decide to be a NON-participating company most ins. companies hold us to the very same pricing structures. Many, like Progressive, only pay one price to participant and non-participant shops. Do you not see that all you are doing is moving and motivating the masses, unknown to you, to put forth and lobby the powers that be and make sure that the power to price our services and goods forever remains in our hands? That the guise of ‘we must control claims to protect and assure premiums remain constant” will soon be exposed for what it is?

*REPLY--I have some reservations about your 400% model!
Seems like prices should be 'market driven' once we establish a starting model.

CCC states-
Keep smilin HAL. Not attacking you personally, but I really want to know how you guys think and what your reasoning is on NAGS data.
Response-
Certainly no offense taken. I hope my responses answer some questions. We can learn from each other-if we listen. This can help us work effectively together.
CCC response- once again this is only directed to you HAL as so far no one else has the courage, or are otherwise restrained, from conversing with us in this forum. I still greatly respect your input and do look forward to someday meeting you in person.

*REPLY--Hope to meet you as well!

Best wishes – and same to you HAL

This has been a great dialog Hal and I have thoroughly enjoyed it.

We both know neither of us, or even our industries have all the answers. I guess the main point is that through dialog we can and will break down a lot of the barriers and misunderstandings that now exist.

I hope I speak for all AGR people on this board when I say THANK YOU HAL for the entire dialog you have participated in.

Hal do you really feel a 25% mark up is a reasonable profit margin? With the cost of liability insurance workers comp. etc. I wonder how many Insurance companies could survive on a 25% mark up of their cost of doing business? With the liability these shops have to take on I don't think it's realistic. Most major companies think 33% is break even profit.Nothing against you Hal but I don't agree.

Oh for heaven’s sake, I can’t stand this “stuff” about 25% mark-ups.

Hal, please explain why your company has to have roughly a 210% markup to clear earnings of 13.1% for the year????????

Why should you expect that, when you account for every thing that goes along with business in YOUR business besides actual costs of goods and labor, you don’t think that it works that way in other businesses?

C’mon Hal, if it takes a markup like that to make it in your business, why would you think that a 25% gross markup is fair and reasonable in our business?

Please don’t reference autobody labor or material rates, Hal, you know as well as I do that the collision industry is in a uproar over both of those. Those that show a measly 1% to 2% net profit at the end of the year with the DRP rates and discounts and concessions are admittedly cost-shifting the heck out of repairs to make ends meet, and they are the ones that enjoy steering by being ON the DRP programs. (and they NEED the quantity steering provides to make that 2% amount to any actual $ at the end of the year)

Cost shifting may work when you have numerous items to hide things behind in a collision repair invoice, but with only three items on a glass invoice, the only way for shops to remain profitable is to cut corners, and that obviously isn’t working either. Reference the financials: Safelite, Harmon, DT. Check the companies being sold and do some background work on the reasons, the ones that Belron is buying. Belron knows it is cheaper to buy existing than it is to build new, and they are smart enough to know the glass biz is a buyers market right now. Sellers are bailing out.

I appreciate your posts too, Hal, but seriously, either you’re acting naïve, or you're treating us as naïve.

Finally, Hal, you said: “Seems like prices should be 'market driven' once we establish a starting model.” Why didn’t you just come right out and say “once we establish a PRICE CAP” rather than a “starting model”?




Numbers from an earlier post by Mark1 below, that you seemed to agree with.


STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
518 EAST BROAD STREET
COLUMBUS OH 43215-3976
614/464-5000
TYPE OF COMPANY: Mutual
YEAR INC: 1921
STATE OF DOMICILE: OH


NET INCOME: $31,468,124
ASSETS:$1,654,197,514
LIABILITIES:$564,915,546
NAIC ID:25135
POLICYHOLDERS SURPLUS: $1,089,281,968
DIRECT PREMIUMS WRITTEN $488,329,899
DIRECT PREMIUMS EARNED $488,547,912
DIRECT LOSSES PAID $247,211,855
DIRECT LOSSES INCURRED $230,752,727
DIRECT LOSS RATIO 47%

One of the points that SGC network customers use to show the fairness of their particular program is the addage "only 20% (or 30, or 25 or whatever) of our claims are done by Safelite stores.

There are over 10,000 legitimate glass shops in the US. Safelite, at it's peak had about 600 brick and mortar stores, the number now has to be closer to 200 or so. Saying that 20% of your business is centered in 2% of the stores is pretty good reinforcement to the rest of us that the deck IS stacked and system is NOT a fair indicator of true market preferences.

If Safelite enjoyed a market share like this in the "open" market, they wouldn't need the network, or the steering. You guys are creating the market, not responding to it.

Eyes Wide Open-
-Granted, a 25% mark up may be arbitrary. We had to start with an allowance for our pricing model and 25% seemed fair at the time.
-If the average w/s cost was $185.00, the difference between a 25% mark up and a 33% markup would $14.80! I felt labor allowances would have a more significant impact.

Hal

What does labor have to with markup?

I agree with RO. The mark up on the part should take into account the fact that it is a fragile product that we are taking full responsibility for. We screw up, we eat it. Labor is Labor.

I believe Hal sees a formula, which brings him from the average cost of a replacement to the effect on his claims bottom line.

How that formula works in the glass business probably isn't really important to him, save what his TPA has told him they use to justify the use of it on the glass industry.

He's doing his job.

I look forward to seeing "your" 2005 numbers Hal. If the loss ratio keeps dropping as it has the last few years, you should be up for a nice bonus.

Why do you guys keep taking your markup percentage on COST rather than on SELL? Profit on SELL is a whole lot more business like. If a w/s costs you $185 and you're willing to settle for a 25% profit, then do NOT take $185 x 1.25 = $231.25 for a $46.25 profit.
Take $185 divided by .75 = $246.67. Your profit is then $61.67. 25% of your selling price of $246.67 = a profit of $61.67 That is what the "big boys" do.
A profit of $46.25 is only a 20% profit. (20% of $231.25 = $46.25)

I have a question Hal do you use same mark up guides for pricing ins. to someone.If you used your example most would be out of bussiness.You use credit reports and driving records.Why should we not look at hold ups on our money for 30 to 90 days sometimes.Isnt it correct the ins. money is credited to the ins. co. within 72 hours of our bill.Why do they cut us short,then use our money to collect interest.

Ryans check the timely payment law in your state.

We have 20 day timely payment law, which includes the language "third party administrator" in it as well. When an invoice is not paid in 20 days we send a copy of a deliquent letter to the ins. co., the TPA, and the state ins. commissioner.

Ins. Co. can be fined and even suspended after multiple fines, for not meeting the timely payment statutes in some states.

CCC WELL i CAN DOCUMENT THAT IS NOT TRUE ,NOT ONLY FROM EXPEREINCDE BUT HAVE FAMILY(2) THAT ARE VPS WITH MAJOR TPAS AND COUSIN WAS IN CHARGE OF mAJOR nc INS CO. tHAT IS NOT TRUE .n.c fARM bUREAU CREDIT lYNX WITHIN 48 HOURS, WHY DO WE HAVE TO WAIT.As Hal feels screw glass shops,I for 1 will not put up with it.Let the 6 week trained installer fix a 60,000.00 car let them pay for mistakes .I will flip burgers at Mcdonalds before I will give in to Lynx or Safelite,less think Lynx can fine me at their will.The glass futures have gone.PPG and their decepegtive practices should be looked into.

Hal, Here's the deal... We all know and some of us can prove that Safelite steers and effectively steals a significant percentage of jobs that independents bring to the network by our hard work and valuable advertising dollars.... All of which benefits you because they've contracted with you to do the work for less and not charge you processing fees on their own jobs. Correct? So, basically... you benefit directly when they break the law and steal our customers. We all know this is true. You can go on blindly pretending that you are innocent. However, you bear the full guilt of going along with an inherently unjust and truely illegal system...

Your costs for auto glass should be higher than they are...

Safelite has created an artificial "market"..

Current "market" pricing is below what a quality shop can afford to do work at. What does that mean exactly? That means that good glass businesses will be forced to one of three things during the next year

1. No longer do quality work (can't afford to)
2. Continue to slowly go out of business trying to do quality work and run a decent business at substandard pricing.
3. Fight back... Go down in a ball of flames if necessary.

But why would you care? That's just more work for Safelite to be done for you at your cheaper contract pricing...

I mean, are you serious? How can there be no compensation based on quality?

Don't you understand that this system rewards the guy that uses substandard materials and labor?? He get the same pay as someone who does a quality job...

That's not just wrong, it's stupid.

Very interesting!

How do you know this?

RYANS - Maybe I am confused?

I am not sure what you mean when you say "that is not true"?

Just trying to understand your point of view and your frustrations my friend.

David ----

Playing devils advocate here....

But how can you prove your statement? You have no proof to offer that one shop, or shops using NGA techs, or AGRSS shops, or any other affiliation, do better work, or have better customer satisfaction than other shops.

We all know there are differences in these areas, but how do you/we prove that?

How do you arm Ins. Co. employees like HAL (whom I do believe would pay more for quality and greater assured customer satisfaction) with the facts they need to justify to their bosses why they are paying more for a windshield installed by any group of companies or organization members over another group?

HAL (for example), I assume, would need evidence that paying you more to do it right the first time will save his company money in the long run, lead to greater customer satisfaction (thus retaining policy holders), and provide evidence that your competition is clearly sub par in those areas.

HAL can correct me if my assumptions are wrong here.

But I do think some in the insurance industry are willing to pay more per replacement, pay more for a much better value, pay more for increased customer satisfaction, and really do want to work with all of us to determine what truely is "fair and reasonable". But without evidence to prove these points we and they are seeking something unattainable at this time.

Bash METRYX all you want, but that is part of the goal LYNX has for METRYX. To compile data to prove these points. It is data that other networks do not, or will not have for many years to come. Some will most likely never have that data as it will clearly show how superior independant shops are to their own. Others simply do not have the technology and/or financial means (like the NGA as Leo Cyr stated in a recent article) at this time to prove these points either.

LYNX may have other motives as well for METRYX. I am not here to say METRYX is the best thing since sliced bread, but I do understand and appreciate these goals for METRYX. What LYNX does with that data is the tricky part. And what Statefarm and Allstate do with it is another.

But there are those that want to figure this AGR mess out like all of us do. They are not going back to the "get 3 bids" or "handling claims in-house" again anytime soon. They do not trust a lot of the AGR industry(understandable in some ways), they are as confused as most of us about AGR pricing, NAGS lists, net items, etc.

I think we rush to blame them to much, and need to realize many times they are simply operating only on the information they have available to them, and who provides that information to them can greatly distort their view and trust with all of us.

Just my thoughts and I am not meaning to represent or offend anyone.

I hope everyone has a GREAT holiday season and gets to spend some quality time with their family and friends.

It seems it would be pretty easy to me...

Price should be based on factors over and above NAGS.

A shop should have the opportunity to make more per job by providing the additional proofs.. some could be updated on a regular (quarterly/Semi-annual) basis and some would need to be documented with every job.

1. Actual urethane system used. (a shop should get paid more for using one-hour systems and being able to document a safe drive away time on each job.

2. A company should be paid more for labor on jobs that it can show are done by a tech who is both NGA and urethane system certified.

3. A company should be paid more if they can show proof that they maintain the proper both liability, garage keepers and workmen's comp insurance.

4. A company should be paid more if they maintain an above average customer satisfaction program and.

5. A company should be paid a higher margin on the materials based on the brand of glass being used.

6. A company should be paid more if they are AGRSS registered, members of BBB in good standing etc.


i.e. Mopar, European + 25% (to whatever is the current agreed on nags discount.)

Carlite +15%

LOF / PPG +10%

Guardian / FYG / Safelite / Off Brand etc. +0%

Reality is we could do it cheaper to make more money. Who loses in this scenario? The customer

CCC The way I can prove this is by payment records and the fact I can prove when they get paid,and how long they use our money.I have talked to NC Farm bureau on a claim have paperwork shows they were paid 3 days after job done and we waited 45 days.

David you hit the nail on the head with your last sentenc.e


"Reality is we could do it cheaper to make more money. Who loses in this scenario? The customer"

Now, who GAINS? The insurance company. Bling, Bling, Bling.

Where is the system that is used to justify how one insurer charges more than the next? Why don't we just use THAT system?

OH YEAH.....there isn't one, is there? Insurance prices are all over the place, aren't they? But HOW can that BE, if they are all EXPERTS on "Fair and Reasonable"??

I'd like to hear Hal explain how he holds us to a standard that his own company isn't held to.

If insurers want proof that our quality is worth more, they can come take a look. Just like my customers do. We've got the experience, the track record, the training, and the surviving customers of multiple rollovers to prove we do excellent work. No piece of paper does that. If that's not good enough proof for the networks or insurers, tough. They aren't my customer.

CCC, you wasnt' kidding when you said "playing devil's advocate'. I'll bite my tounge about Metrix's goals because you were 'playing'. lol lol

I wish everybody a happy thanksgiving too.

Hope you all had a great Thanksgiving Holiday!

Mark 2-
Insurance rates are approved by each State. Each State caps the maximum that we can charge. We can discount from this maximum to meet our marketing plans or needs. Not quite the same system you are using.

I do think that you may see changes in the future. Instead of 2, 3 or 5 market pricing areas, we could see 20 to 50 pricing tiers which would allow for local market issues.

Best wishes,

It seems it would be pretty easy to me...

Price should be based on factors over and above NAGS.

CCC – Let me start by saying I agree with almost every point you make in this reply. But my question remains “how do we convince or prove it” to the ins. co. or the insured that all of our hard work and education is worth paying more for? Maybe the first question is why do we have to? Or should we have to? Maybe there are other means to force them to do these things? Maybe not. Maybe they are to big and powerful to ever convince to change? I do not think they are, but we shall see.

The bottom line sadly is $$$$. The ins. co. will not pay more to any of us just because we are “nice guys”. They are in business to make money plain and simple. Where the issues of customer satisfaction, policy holder safety, etc. falls is further down the list sadly in many cases.

A shop should have the opportunity to make more per job by providing the additional proofs.. some could be updated on a regular (quarterly/Semi-annual) basis and some would need to be documented with every job.

1. Actual urethane system used. (a shop should get paid more for using one-hour systems and being able to document a safe drive away time on each job.

CCC- I agree with you that we SHOULD. But how do we convince the ins. co. it is to their benefit to do so? I also believe AGRSS should require a SDA be given in writing to the consumer, but that is another issue.

2. A company should be paid more for labor on jobs that it can show are done by a tech who is both NGA and urethane system certified.

CCC- I agree. But why? How do we prove that NGA techs are worth more?

3. A company should be paid more if they can show proof that they maintain the proper both liability, garage keepers and workmen's comp insurance.

CCC-yes they SHOULD. But how to we get proof to the powers that be so they can do so? They need proof that one company , or group of shops that are properly insured are a) safer for employees and policy holders and b) better for them to work with to worth paying more.

4. A company should be paid more if they maintain an above average customer satisfaction program and.

CCC- now you are on to something. This is the key one right here. But again, how do you prove you have a better rating that XYZ across the street. You may know you have a much higher satisfaction rating because his(xyz) customers come to you to fix his mistakes all the time. But how do you prove this to the Ins. Co. by verifiable independent means?

5. A company should be paid a higher margin on the materials based on the brand of glass being used.

CCC- To many issues going on with this one. We choose OE suppliers because it makes our job easier in most cases and because of the average higher quality it increases our customer satisfaction. So, how to we prove to the Ins. Co. that the same is true for them. That by paying us to use OE supplier glass it will save them money in the long run?

6. A company should be paid more if they are AGRSS registered, members of BBB in good standing etc.

CCC- Yes they should. Not sure about the BBB part of that, but AGRSS I would agree with. But how do we prove or give evidence that AGRSS shops are better and do provide a sizable difference in customer satisfaction? We all know we do, but how do we back this up with facts?


i.e. Mopar, European + 25% (to whatever is the current agreed on nags discount.)

Carlite +15%

LOF / PPG +10%

Guardian / FYG / Safelite / Off Brand etc. +0%

Reality is we could do it cheaper to make more money. Who loses in this scenario? The customer

CCC- exactly. And that is why many of us DO NOT do it "cheaper". Many of us have taken loses in profits to maintain out current high standards because we do care about the consumer driving in the vehicle. We do not and we will not take "short cuts" or put consumers at risk just to make a buck.

Hal,

I have been mulling over the relationships involved in any glass transaction and trying to adjust our marketing approach. Can you give a rough number of what State Auto's average deductible is for the non-waive states? I have a pretty good idea but your input sure would help.

Thanks

Ryans - then the next step is to check into the laws of your state and see what you can do about it.

What is the timely payment law in your state if you have one? If not work on getting one passed. Call your local officials, get it going, incluse the TPA language and see what you can do.

I agree it is not "right" to sit on your funds for 45 days and collect the interest off of it. But until pressure is applied on all sides this battle will continue.

Educate customers(teach them how and where to find what rights they have under their policies, many do not know they have any). Work with your competitors to get laws passed that protect your common business interests. And work with those in the insurance industry that are willing to help. They aren't all bad and some really do want to help when and where they can. If for no other reason it makes their jobs a lot easier to get us off their backs.

Mark2 -

Insurance companies are the big winners. They continue to find ways to pay out less, be liable for less, and in my opinion deceive policy holders into thinking there is nothing they can do about it. And guess what? Sadly it works. It works because too many people in this country think there is nothing any of us can do about it.

About the ins. co. pricing- If you were referring to auto glass pricing on O&A then you are correct. The way O&A pricing is all over the place is a great example of how little the ins. industry knows about our industry. They are approached by a TPA, who gives them a guideline or “promise” and they go with it. They hear some of us, maybe even some policy holders complaining, but it has little effect as long as they are saving money, a lot of money. We see (A market) pricing from 38% off NAGS and $30 flat to 20% mark up over NAGS and $60 an hour.

They really have no clue. Like I have said in the past rather reluctantly, have the ins. co. stopped to think how much they might really save if they let the FREE MARKET actually exist? No more interference from them, or TPA’s. Let the best shops compete and win their customers. And they will in a FREE MARKET. If XYZ continues to keep his customer happy, beats my price, and pays his taxes then so be it. He is the better man/woman and he deserves to put me out of business unless I can find a better way to compete with him.

And as far as METYRX- I am still very leery myself of what and whom this all will benefit in the end. But as far as the database goes, we do need a tool to provide hard evidence that one group is truly superior to another, that one organizations members provide far superior service than another, and arm the ins. co. with the data they need to pay some of us more to “do it right the first time” I am all for it. That is a HUGE if.

Nothing and no one has promised any of us more money if the data proves we are indeed the best shop in our areas. And most likely no one ever will. But can we see a day in the near future where as HAL put it, they are 20 to 30 pricing tiers instead of the 3 to 5 we see now? Can we see ins. co. paying you 2% more per invoice for being AGRSS registered? Another 2% for having all techs NGA certified (not just a NGA member like some companies)? I think the answer could be YES. Yes, we might actually be paid more in the next few years for all the hard work, the continued education we and our installers maintain, and the high level of customer satisfaction we provide to their policy holders each and every time they visit one of our facilities. I think this is what most of us want(in the absense of a FREE market), truly fair and reasonable pricing based on our professionalism and the level of customer satisfaction we provide.

CCC

I agree with everything except the part that we will see a price increase from doing the job correct and using technicians with good credentials. The networks will always find a way to take our money before we see it!

The networks were created to save the insurance company money not help the glass shop prosper. We cannot beat the system, we need a mechanism to allow shops to offer there own bids without the influence of a third party administrator to negotiate on our behalf and only looking out for there best interest.

We need an independent company to survey and show prices to the insurance companies without the influence of a middle man. I do not understand why I am paid so many different prices for the same piece of glass. There are to many one sided flaws in the survey system(HAHA)that is manipulating glass prices.

Hal, you sidestepped the question about your 210% markup, vs. our allowed 20% markup. I thought it was important to point that out.

Also, you said: "Mark 2-
Insurance rates are approved by each State. Each State caps the maximum that we can charge."

Actually Hal, I don't think you were being completely 'accurate'. Don't you mean to say that each state approves or disapproves your requests for rate increases, or in fairness, decreases, based on your financials, or PROFIT statements? I believe that most states view your P&L to decide if you will be allowed to raise rates. With your current impressive loss ratios, I would doubt that you would earn much support from DOIs to raise rates, but then also, to see your gross profit vs your net profit of 13%, I have to wonder about a great many things.

With that said, no state CAPS what you may charge, unless they feel your PROFITS are so high that you simply don't need to be raising rates. These are one of the govenmental agencies whose job, amongst others, is to protect consumers. One of those protections is to make sure that insurers don't become insolvent. Hence, you are allowed to be profitable, and raise rates only when you need to. But they do not in any way CAP your rates, as you do the rates of the glass industry, under the premise of fair and reasonable. Those same DOIs protect you from becoming insolvent by allowing you to raise your prices/rates, now don't they, Hal?

Now, please tell me how you expense the fees you pay your glass network. Do you expense them as outsourcing and a CLAIMS cost in your financials to DOIs, as a reason to add to the cost of claims and therefore raise rates? Or do you expense them as a cost of internal overhead, a cost of doing business?

Insurers tell the consumer and regulators that they have glass networks there to save money and keep rates down. Hope that's so, Hal, and that insurers aren't cost shifting the cost of processing claims right back to insureds in the form of higher premiums.

To CCC,

You said: "About the ins. co. pricing- If you were referring to auto glass pricing on O&A then you are correct. The way O&A pricing is all over the place is a great example of how little the ins. industry knows about our industry. They are approached by a TPA, who gives them a guideline or “promise” and they go with it."

You always make good points, bud. But no, I wasn't referring to insurance company allowed pricing of autoglass, I was referring to insurance rates that are so completely ridiculously far apart by comparisons done recently for a specific person in a specific city with a specific set of constant variables and have more than a thousand dollars difference for the same coverage........was what I was speaking of.

Perhaps insruers should really be regulated as to what they can charge as Hal implied. It sure ain't so, and I think the insurers would scream bloody murder if anybody tried. Funny how they seem to think it's fine to do it to us.

m-
I don't have an easy way to collect stats on deductibles-maybe other insurers can offer their thoughts on the subject?

However, I have noted that deductibles are not attractive to consumers in most States. The discount offered to take a $250.00 deductible is quite small-and viewed as not worth the risk.

The only exception I noted was in Minnesota. One MN model I ordered showed a $175.00 discount with the selection of a $250.00 deductible!

As more and more agents offer $250, $500, and higher deductibles which, along with State Farm's new policy towards waiving deductibles for repairs, it brings into question why the glass industry continues to allow the insurance industry to dictate pricing, policy, and protocol for conducting business.

If a w/s sells for $300 (pricing determined by insurance)and the insured picks up $250 of this, there's something wrong with this picture. The insurance company has negatively affected pricing for a transaction that they are only going to pay a small percentage of the bill. Who's the real customer here?

Also, it has to be getting to the point where the transaction costs (TPA processing fees, internal claims admin expenses, etc.) are getting close to the claims payments themselves. I'm sure Hal is spending close to $25 per claim to SGC and at least that much to his staff to administer a glass claim. Does it make sense to spend $50 to pay a $50 claim after the deductible has been picked up by the insured?

M, you are correct. Take it further also.

The insurer was never the customer. They contract with the insured to indemnify against loss. They never contracted with shops to do repairs, the insured contracted with the shop.

A line in there that insurers never crossed, with reason.

I find it hard to believe that the Insurer can not provide the % of deductibles that are 0 50 100 etc. After all these are the brilliant statisticians that have figures on anything from red tricycle accidents to hang gliding in a lightning storm's risks at a stroke of a couple of keys .

TSi-
All data is available, but I do not have the resources to have a special computer run for this
request.