Inside the New York Insurance Agent Kickbacks—One Shop Owner's Story
October 21, 2009

Rick Galluzzi, owner of Bison Glass in Buffalo, N.Y., got into the auto glass business in 1988—when profits were high and networks were just starting to form. Agents were his main source of business, and Galluzzi says he soon realized that providing agents with gifts in exchange for work was a common practice in his area. He eventually reported the practice to the New York State Insurance Department and his shop was named in a release last week as several fines were levied against insurance agents for accepting various gifts (CLICK HERE for related story). Galluzzi took the time this week to tell his story to™/AGRR magazine.

"We found out that it was movie passes, free lunch, golf outings, a free windshield now and then," Galluzzi told™/AGRR magazine. "And then from that it went to gift certificates to the mall, the local grocery store or clothing store, and then cash."

And these weren't in small amounts.

"It varied from $20 to $25 and it went up to $45, and then $65, and then at one time it peaked at $100 and $120," he recalls. "This went on for years."

Though Galluzzi says he didn't like the practice, he felt it was what he had to do to get work.

"We did it just like everyone else did it," he says. "We weren't the ones who started it, but we did it, because if we didn't, my phones wouldn't ring."

Galluzzi says when the gifts were provided, the referrals came rolling in.

"The agents would recommend us because they knew we would be right there with the kickbacks," says Galluzzi.

However, with the advent of the networks in the 1990s, profits started to shrink, and providing such rewards started to prove difficult, Galluzzi says.

"Our profit went to absolutely nothing to [install] a windshield," he says. "It got to a point where there was no money to give anyone anything."

Soon after, in 2004, Galluzzi says he made the difficult choice to cease the practice.

"I got to a point when I said, 'I shouldn't have to buy my business,'" he recalls. "We've always done the job right the first time … I never liked it when we did it, but believe me, if we didn't, we didn't get business."

As soon as the company stopped the practice, Galluzzi says he saw an 85 percent drop in business—overnight.

"I couldn't believe that I'd been doing business with these people for a lot of years, and they'd just cut me off at the knees," he says.

And the agents didn't stop expecting the rewards either, Galluzzi says.

"I even had a recording of an agent saying to my [CSR], 'So and so is giving me $45, what are you going to give me?'" he says.

That's when Galluzzi decided to go public with his story, in an attempt to cease the practice. He went straight to the state's Insurance Department, which deems it legal for auto glass shops to provide gifts, but illegal for insurance agents to take them in exchange for work. But the investigation was not a short one.

"It took the State of New York three years to finalize it and set the fines and fine the agents," he says.

Today, he's still in business, and even has added several additional branches; Galluzzi purchased a flat glass business in 2000, along with a race track.

"I saw the writing on the wall and I had to do other things," Galluzzi says. "I knew I could never survive the auto glass business the way it was going."

Still, he hopes his efforts in reporting the practice, though not popular with agents, may help the industry and other shop owners like him.

"A lot of the glass companies are thanking me for doing this, and a lot of the glass companies hate me for doing this—but those are the ones that were the busiest ones," he says.

And, though auto glass is a small portion of his income these days, Galluzzi notes that he's determined to press on.

"I wasn't going to let them put me out," he says. "I'm still in business and I'm working every day and I don't give kickbacks to anyone."

But will this change anything? Galluzzi isn't so sure.

"Some of the agents were fined $250, and some were fined $5,000—you can bet the agent fined $5,000 will never take another kickback," he says. "The guy who was fined $250—he [may have] made $50,000 in kickbacks last year, so that $250 [fine] meant nothing to him."

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