Explaining the Labor Rate

There still seems to be some confusion about the labor rates being offered on many insurance companies' O&As. (see GlassBYTEs™ item of February 4.)
A number of providers have chosen a labor structure that offers a \$40 base fee (mistakenly being called a flat fee), plus \$30 per hour for labor. So for an installation that requires two hours, the labor fee paid would be \$100 (\$40 + (2x\$30)). A 3-hour installation would provide \$130 in labor (\$40+(3x\$30)).

"We are concerned a bit that when people see the pricing structure, they will see \$40 flat and think that's it," said one insurance representative who preferred not to be identified. "It's a double-tiered structure, it's a \$40 flat fee plus \$30 per hour for all hours of labor."

To help avoid confusion in the industry, AGRR/glassbytes.com will refer to this \$40 fee as a base fee, rather than a flat fee.

Here are examples provided by Safelite using the base and hourly fee structure:

Rebalanced Invoices with Fixed Plus Variable Labor Component

National Auto Glass Specifications (NAGS) is implementing new list prices effective February 28, 2005. In recognition of this revaluation, several insurance companies have updated their pricing structures and/or rates. To assist providers in understanding how invoices will be calculated based on new structures, following are examples of a pricing structure that includes a \$40 fixed labor charge plus \$30 per NAGS hour, a \$15 charge per standard urethane kit and a NAGS discount or NAGS plus rate based on the benchmark prices.

The insurance company rates shown below are for illustration purposes only. Actual discount rates will vary by insurance company and geographic area. Please refer to each insurance company's rate communication for actual discounts, kit prices and labor rates.

 Example #1:Windshield New NAGS Benchmark Example Insurance Company Rates Example Calculation Invoice Amount Before Tax Part \$189.70 20% off (-) NAGS list \$189.70 x 0.80 \$151.76 Labor 2.2 NAGS hours \$40 fixed + \$30 per hour \$40 + \$66 (\$30 x 2.2) \$106.00 Kit 2 urethane kits \$15 per standard kit \$15 x 2 \$30.00 Total Before Tax - - - \$287.76

Here's how the rates for Example #1 will appear on a work order:
W/S LIST: -20.0% LABR: \$40.00 FLAT PLUS \$30.00 PER HOUR
KIT: \$15.00 2-PT: \$30.00 H/M KIT: \$65.00 H/M 2-PT: \$125.00

 Example #2: Windshield New NAGS Benchmark Example Insurance Company Rates Example Calculation Invoice Amount Before Tax Part \$189.70 5% above (+) NAGS list \$189.70 x 1.05 \$199.19 Labor 2.2 NAGS hours \$40 fixed + \$30 per hour \$40 + \$66 (\$30 x 2.2) \$106.00 Kit 2 urethane kits \$15 per standard kit \$15 x 2 \$30.00 Total Before Tax - - - \$335.19

Here's how the rates for Example #2 will appear on a work order:
W/S LIST: +5.0% LABR: \$40.00 FLAT PLUS \$30.00 PER HOUR
KIT: \$15.00 2-PT: \$30.00 H/M KIT: \$65.00 H/M 2-PT: \$125.00

If you have any questions regarding insurance company billing requirements or need assistance with modifying point-of-sale and invoicing systems and processes to accommodate new pricing structures, please feel free to contact SGC Network at shopcare@safelite.com or watch for updates at www.sgcnetwork.com.

No reproduction, in print, electronic or any form without the expressed written permission of
Key Communications Inc. 540-720-5584.