Possible State Farm Action Elicits Differing Opinions

Reaction to the news item here on Monday that State Farm is considering eliminating the waiving of the deductible for windshield repair has drawn widely varying opinions on how it will affect the industry. But the one thing everyone does seem to agree on it is that the impact, if it happens, will be enormous.

Dave Casey, president, SuperGlass Windshield Repair Inc., Orlando, Fla., sees the State Farm Action as "releasing a stranglehold on the industry" that will mean a more open market with increased volumes. He sees the State Farm change as taking repair out of the hands of networks and third-party administrators. "Now that they're stepping away we're going to be in an open market and the potential in an open market is so great," he states.

Casey points out that the reasons State Farm give for the move in the memo are good, "because they are the right ones. They think policyholders are going to go for repair and that is good."

Asked if he thinks other insurers will follow the move, Casey explains that because State Farm is a mutual company and most insurers aren't they may not follow its lead. "There may be an opportunity here for other insurance companies to say, 'Look what big impersonal State Farm is doing; we'll still take care of your deductible.'"

He also does not see much price change for repair. "I don't think that the cost of repairs will go up. I don't see them raising or plummeting. They won't go down because now with an open market it is going to require some business acumen to start and run a successful repair operation. One-man companies will not be able to rely on the networks to funnel business so that they can exist."

Paul Syfko, general manager, Glass Medic, Westerville, Ohio, sees the situation differently. "Personally I don't think it's a good thing for the repair industry. It will reduce the number of repairs significantly, and the price will drop."

He points out the influence the insurance industry has had on the market segment over the last decade. "Ten years ago, we were doing a million repairs and getting $19.95. Now, there are 3.5 million repairs and the price average is $50."

Like a number of people interviewed for this article, he thinks that this move is "just the tip of the iceberg." He states, "I think it shows what direction they're going in and I don't think it will be good for the glass industry to have insurers out of the market."

Dave Taylor, secretary/treasurer for Cindy Rowe Auto Glass, Harrisburg, Pa., also sees the move as "the first step by an insurer to withdraw from the auto glass road hazard business and one that affects the entire industry, not just repair." He calls this the "unstated issue."

"Just as when the networks came in and companies had to learn how to refocus their business, we're at the same place now," he stated. "The basic dynamic of repair as opposed to replacement will remain. What changes is who pays." To Taylor, companies that do a lot of insurance work will not like the move, while those which have not done as much insurance work will. But he points out, "This is an internal memo not a formal announcement, so this is supposition. But it does give us insight. If the initiative works for State Farm and gets it out of road hazard auto glass coverage, then others will follow," he states.

John Coulter, Precision Auto Glass of Louisiana LLC, does a lot of insurance work.

"I am disappointed that State Farm is adopting this policy as our shop does well over a thousand repairs each month with the company accounting for about 63 percent of that total," he explains. "I think that they will see an increase in windshield replacements from less than reputable shops which are not willing to incur this margin of loss to their revenues."

According to Coulter, his company "has always been a huge proponent of State Farm as an insurance company and have sincerely looked out for their interests as an insurer, i.e., always repairing repairable damage, not replacing it for increased revenue which is as we all know can be very common in parts of our industry. I always thought that we, and, more importantly, State Farm was offering a huge service and benefit to their customer by waiving the deductible for repairs."

Bob Simoni, owner of Dr. Bob's Mobile Repair Service, East Hartford, Conn., which serves a regional area, points out that he doesn't depend on insurance work and thinks the move will hurt State Farm more than it will him. "The way I see it, there's taking away a service from the consumer."

"I don't know where we're going," Taylor states, "but it's not going to be 1990 again. It's a new challenge and those businesses which adapt will be okay."

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