Senate bill referees small business vs. Safelite complaint
A bill headed to the Senate floor pits a larger multi-national company and insurance interests against a group of small businesses in the state.
Business owners on both sides crowded Senate Banking and Insurance Committee
Wednesday, state senators amended and approved H. 4042 to attempt to spur competition in windshield repair. Attorneys and business owners on both sides of the issue were out in force at the Statehouse as senators wrestled with the bill that easily passed the House.
At issue: Safelite Solutions operates a claims call center for more than 100 insurance providers, and Safelite AutoGlass is a major repair vendor. Smaller, locally owned companies want a state law to control this connection as well as any of the market advantage Safelite may get from the information it collects.
Alan Epley, an independent glass repair contractor says, “They have the conflict of interest of having glass installation facilities around the state, but yet are also taking claims calls. Therefore they have a financial interest in directing each and every claim to their own facilities.”
But insurance companies depend on call centers like this, known as third-party administrators (TPAs), to distribute claims to an insurance-approved network of repair shops. Insurance industry spokesman Russ Dubisky says the bill–and a last-minute amendment to it–may undermine the networks they established to assure a certain quality of work. The bill as amended mandates that TPAs offer a rotating list of choices, but may include any business who wants to be on the list.
Brian DiMasi, Safelite’s senior corporate attorney was at the Senate Banking and Insurance Committee meeting. He says insurance customers should worry about “fly by night” windshield harvesters being on that list.
Insurance industry consultant Bob Herlong says a law like this could increase costs to consumers, whom he says are not complaining about the way things are handled now.
“We don’t even think its the proper role of government to interfere in the business process to keep small businesses in business. We always pull for the small business but there’s no guarantee that any business has that by law it will succeed,” says Herlong.
Frank Knapp of the SC Small Business Chamber of Commerce says that his clients want fair access to customers.
“It hits to the heart of protection of small businesses and having a level playing field,” he says.
The amended bill attempts to address the complaints of the smaller contractors but the insurance industry wants to weigh in since it regulates how it will serve its customers.
But the measure heads to a crowded Senate, with a minority report attached, making it less likely to get debated this session.
15 Responses to Senate bill referees small business vs. Safelite complaint
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I have the same sentiment as other people who have posted. The conflict of interest here is disgraceful and its unbelievable that it has gone on this long. I do business in an area where the nearest Safelite is 30 miles from my customers and they STILL insist on trying to steer them away. Its funny too, how the operators at SGC act differently on the telephone when they know that they are on speakerphone with my customer and me as opposed to thinking its just the customer listening. It’s a pretty shady way to do business in the very least. I fully support this bill and can only pray that it leads to nationwide changes. I think the public would even be outraged if they knew the whole situation. I know many of my customers are appalled by Safelite’s behavior when they call.
I am all for this bill I am an Auto Glass Company and have been in business for twelve years and Safelite tries to steer our customers into using them. They are selling glass to our customers and tools to our body shops. We have lost a lot of business because of Safelite. The Insurance companies never send us any work. The only insurance work we get are from perferred customers that request us and then Safelite tries to talk them out of it. We installed a new windshield at a body shop and before the vehicle left Safelite went out there and pulled our new windshield out and replaced it with theirs for the same claim. We lost that body shop because Safelite started selling them glass and several others. They are going all out to put us out of business. Something needs to be done soon. I was on another line with a customer and Safelite and Safelite told them they would not warranty our work and tried to get them to use them, but I told them I warranty my on work and Safelite told me I’ll fax that wright to you. If I had not been on that line they would have taken that job away from me. That was the second call. I don’t think this bill is enough and somehow Safelite will get around this as always.
The comment by Daveycrewcut is by far, the best suggestion. Make an insurer provide an alternate way (or the Independents may provide one) for an Independent to file a glass claim to an insurer. This is the only appropriate compromise to the steering that takes place daily.
The only problem with this idea is that insurers know that Safelite steers to protect their contract terms (also known as the Guaranteed Average Invoice – GAI terms). Once in place, this term creates the self-fulfilling “circle of steering.” In other words, the GAI keeps prices down… but Safelite needs to steer to themselves to guarantee the low prices to insurers. The comment by the Safelite employee in the hearings regarding “… We need the “volume”…” to provide the low prices should make complete sense to even a stranger to these proceedings.
It should now be obvious to the legislators that the auto glass industry at large DOES NOT set their own prices when these GAI/steering mechanisms are in place. Thus, they are being set by insurers/networks and NOT the way the Sherman Anti-Trust laws read they should.
Why these local legislators choose to ignore these facts, laws, and precedents is beyond me. What are they scared of? Who will find out what?
I own a glass company in Alabama. I also happen to be a third generation glass man. My grandfather and I constantly discuss these issues that we a facing.
I use to work at a safelite facility so I am very aware that the last company that should be discussing warranty, quality, or customer satisfaction should be them.I was in a customers place of business where I over heard his insurance agent tell him, ” When you call your windshield claim in dont let them send you to safelite, they dont even seem to be able to do windshield repairs anymore.” This Particular agent was representing an insurance company that was a member of the SGC network.
What seems to be a little odd to me is the considerable differences in discounts that SGC associated insurance companies require VS. the insurance companies on other networks. i.e Lxnx. It has almost got to the point to where you cant even afford to do a SGC associated claim anymore because of the ridiculous discounts that I am required to give insurances companies on their network.
I have been in business for three years and I am yet to see one SGC affiliated referral. I dont think for one second that there is a “list” that they refer customers to. I would be more than happy to do an interview or a take a call of any kind regarding these issues.
P.S. To all business owners. One thing that you can do for the time being is not to support safelite in any way. DONT BY GLASS FROM THEM. THEY ARE YOUR WORST FORM OF COMPETITION!!!!!!!!!
The argument with Safelite is insurance premiums will increase. Safelite makes more than any glass shop and gets paid for handling the claim. They have been steering for years and use various tactics to scare the customer. They often times tell the customer an adjuster will have to come out and look at the glass when all they do is send a van and replace the glass. They make it a nightmare to file a claim asking questions that are completely irrelevant to the claim time of day,mile marker,and how many passengers. They do all they can to say they can’t verify coverage or the glass shop doesn’t guarantee work. Ask anyone in the glass business they will tell you they have had customers steered numerous times. Time for change and hopefully this will put the brakes on Safelite and give independents a level playing field.
We own a glass shop in a State other than South Carolina and Safelite behaves the same everywhere. What is being said here is true. How would any business owner feel if you had to call your direct competitor for permission to do the job (including how much you could charge)? How long do you think you could remain in business? Could you make any profit? Not really. It is only a matter of time before a larger competitor (with the “buying power” and “steering” influence they have from being the “First Notice of Loss” for a consumer or a shop to call to begin work) will monopolize a market or a country. It is shameful that legislators cannot read through Safelite’s effort to monopolize and then colonize the USA.
This is the only industry that operates like this. If Verizon had to call AT&T for permission to provide service to me (and was told what Verizon could charge me)… how long do you think the U.S. Attorney General would wait before they stopped it? 30 days tops.
When we call (on behalf of a customer who wants to use their insurance proceeds as payment for our services) Safelite… within the first minute Safelite (our competitor) is collecting the phone number, any other contact phone number (for a spouse/house phone), and their e-mail address. They then use this information to “back door” any repair or replacement job that isn’t immediately scheduled that same day. If I make an appointment for 48 hours later (because it is more convenient for the customer), I guarantee that Safelite will have made one or two efforts to contact my customer to find out if they can do anything to expedite the job. This is “code” for using the information they obtained from us to “steer” the job to themselves.
To illustrate an example from another automotive scenario (one my husband uses)… If I called the dealership and reported a problem with my car and they told me that it was covered under “warranty” thru the manufacturer and that they’d like to make an appointment to get me to the dealership to correct this warranty issue; do you think the manufacturer would be calling me at home or on my cell phone to verify that I was in fact, still going to the dealership in the next two days for my warranty work to be completed. No they wouldn’t… but Safelite feels that it is necessary to make inquiries even after my customer has made an appointment with me.
It becomes just a matter of time before a husband and wife get confused or angry or scared and they cave into the suggestion that “… we (Safelite) can have someone at your home in 45 minutes… to replace your windshield… we have one in stock.” This happens once a month to us without fail because of where our store is located (outside of the larger city limits).
Please help your local glass shops survive this ruthless effort to steal from your local glass shops. They already get every job where the customer has no preference… isn’t that enough?
Perhaps the legislation should be directed at the Insurance Industry.
Make it illegal for any Insurance Company to require independent businesses to file claims through one of their competitors or an affiliate of a competitor. Then if an insurance company wanted to continue to allow Safelite to administer their own claims they would have to provide an alternative way for independents to bill them.
The more we speak up, the more they will take us serious…. If Safelite was to just go back to a 3rd party dispatcher ONLY, there would not be so many problems with us independents just trying to make a living.
Safelite has been getting by with this not just in one state but in almost every state, period. Their CEO has an accounting background, volume sales such as Walmart does work if set up right. They are both quite simular if you notice where they buy most of their products & so forth. This CEO has put in place a distrubution system like Walmart’s and now with his runaway spending in the U.S. (lobbists,lawyers,warehouses,advertising,equipment & etc.)has forced himself to implement even more sales. He’s smart though, what better way than to get set up with all the insurance networks at a lower cost to them. If he “just” makes .01% over costs it becomes a profit. Single companies can’t do that and survive & he knows that. His big picture however is the volume profit percentage he’s going to make on all the glass he intends to sell thru all of these insurance networks. Thus, putting pressure on everybody else in his company. This is were corporate says just get it done, want to keep your job? This is where we all run into them steering & “I’ll call you back not a good connection” on a conference call & etc. Plain & simple their German Co. has plenty of money, their well diversifed now and intend on taking all the business they can get. Even an “idot” can see this is a conflict of interest and it needs to be re-structured or real soon it will be just one major company doing 95% of the business in the U.S. There going to say they have done this & that but how many businesses are going to go under all over the U.S. because of them. Look what Walmart did to every town it went into, other businesses went under & jobs were lost. It’s called corporate greed in short, we can only pray someone looks out for the small people that are just trying to make an honest living. Also, these “hack installers” out there need to go. Everyone should have to have a store front along with accountable tech.’s and the proper insurance “all year long” & so forth. This auto glass business in not regulated enough in certain areas, that’s what really hurts all consumers in the long run. I just hope when all the dust settles that everybody comes away from this with a job & a better way of doing business for all concerned.
As the networks all started back 20yrs ago they were ALL impartial by just being a middle man (3rd party) distributing out work to shops willing to work within the guide lines of the network. Then as Safelite saw all the money they were losing they bought Windshields of America to be one of the installers and to try to keep all the work internal for themselves. then they bought a windshield repair company to do the same thing…. They would throw us a bone every now and again when we bitch loud enough…. Safelite is the ONLY network that has their own replacement / repair service within there corporation….
If you are going to be a network distributor, then you should not be the installer also.
I have been dealing with the networks for 20yr plus yrs and it is to the point we can not get around them anymore..
Please stop safelite from stealing work from all if us. have them reset back to what they were originally set out to do. 3rd party distributed only.
Safelite conducts business in an unfair manner. Period. This is nothing new, it is going on for years, and they ”always appear” to come away with it. Both in court and the media. Not this time, I hope.
Is there anybody out there, believing that there is no conflict of interest? Are you kidding me? Come on, of course there is.
What they do is, obviously, against the law ie: illegal.
Safelite should be stopped. It is very, very childish to defend your own wrongdoing by pointing out the fly-by-nights in our trade. Indeed the fly-by-night-vendors may be a problem, but it is nothing compared to what Safelite is doing -for a long time. Also: it got nothing to do with the ”Safelite” issue really. The issue is Safelite’s unfair practices, let’s focus on this.
We have been on top of this for many years.
Media and/or others may contact me.
Another scare tactic by Safelite. Their claims cannot be farther from the truth! Illegal steering and control of the market is alive and well. It is about time action is being taken to protect the smaller companies. We are glad the legislature is listening. We agree whole heartedly with previous comments. Go legislature, and thank you for listening!
I also own an independent auto glass company and have been battling Safelite and its TPA, SGC Network for years. The previous two responders are absolutely correct in that insurance industry consultant, Bob Herlong, is merely trying to scare an unknowing public, as well as government officials, with his cry that this bill could increase the cost to consumers. Most, but not all, auto glass companies performing work for insurance companies agree to pricing before the work is ever performed. If Mr. Herlong is genuinely concerned about the cost to consumers, why doesn’t he go back to Safelite and suggest they accept the exact same payment as independent shops receive for doing a repair and replacement.
While I agree it’s not be the government’s role to interfere in the business process to keep small businesses in business, Mr. Herlong is sadly mistaken if he believes it’s not the government’s role to step in and interfere when a large conglomerate such as Safelite monopolizes an entire industry. Small independent shops are not looking for the government or anyone else to “give” us anything, other than a level playing field. How can anyone, including these three gentlemen speaking to support Safelite’s attempt to remain a monopoly, sincerely not recognize what the independents are hollering about. We don’t want fly-by-night auto glass companies anymore than they do. We don’t want the cost to consumers to go up either, after all, we too are consumers. The only thing we beg the government to do is limit the power that one HUGE company can have to require, intimidate, pressure or entice a consumer to use their “preferred provider”.
When I read that this could raise cost to the customers, nothing could be further from the truth. This is a scare tactic. Period. As for they have had no complaints so far, the ultimate consumer has no idea they are being steered. When the customer is told that the shop is not on our preferred list, or we cannot guarantee their work, again this is a scare tactic. Period. They have tried to hide their steering in very distinctive phrases.(To be legal). The customer has no idea they have been swayed to a competitors shop. I do agree that Government does not belong in all facets of business, but it is our representatives job to see to a just and fair playing field. Good luck to this Bill seeing approval. Something has to be done or their is only going to be one place to have a glass replaced, and we all know where that will be.
I am fully behind this bill. I am a auto glass company with 4 stores and have been fighting the steering by Safelite for along time. They will not voluntarily send the work but will talk to customers to influence them to their store. We have had a insurance agent call them and request us and then call us to tell us they had and we never got a call from the network voluntarily. We had to call and fight them for it and would get it then. Since they have shops it always works that way they always have a excuse and say they look at recordings. With the Lynx network that State Farm and Country Financial use along with others we get the work when asked for no conflict of interest. When Safelite took over Allstate the first order that was called to them by a ageny the CSR at the agents office had to get very demanding to make sure they would send it to us and we got it. We do not give gifts and gratuities to agency staff for work. Safelite questions our warranty and I do not know what theirs is or what they require off the top of my head but my company warranty is for as long as you own the car from leakage unless their is a rust problem. We would take glass out and they get rust fixed and we would reinstall it if necessary. We have a real small call back rate less than 1.4% annually, There are not any fly by nite companies around in the area all are credible. Safelite it trying to squeeze dsout the small shops and the quality is better there than they can provide.