State Farm Official Meets with Industry Representatives

On May 24, National Windshield Repair Association (NWRA) past presidents Dave Taylor and Bill Batley, director of operations Peg Stroka, NWRA board member Jackie Newman, Independent Glass Association (IGA) executive director Marc Anderson and IGA president Dave Zoldowski met with Bob Bischoff, national glass manager of State Farm and two of his associates, Devin Fair and Tom Bergeron, in Minneapolis. According to sources at the meeting, they discussed the insurance company's decision to stop waiving the deductible for windshield repair.

Bischoff opened the meeting with a review of the historical background of the decision to discontinue windshield repair deductible waivers. He explained that State Farm wanted its operating practices to be consistent. Windshield repair is the only service for which the company waives comprehensive deductible. For example, if an insured suffers a repairable parking lot door dent, State Farm does not waive deductible for its repair. Additionally, Bischoff stated that State Farm believes deductibles create a obligation by both the insured and the insurer and, if waived, the insured no longer shares the responsibility.

Bischoff stated that State Farm is not "backing away from repair," rather he said that the company will continue to encourage repair. He noted that many State Farm insureds have no deductible for comprehensive and therefore State Farm will continue to pay for their windshield repairs. Bischoff was unable to quantify the number of repairs under the current program, the number anticipated after State Farm discontinues deductible waiver for repair or the anticipated increase in the number of replacements.

He stated that insureds with deductibles will continue to be provided with windshield repair information. Insureds interested in repair will be given the Offer & Accept shops' information using the same basis of selection as if State Farm were paying the invoice. He anticipates that as many insureds will call their agents directly, many will be given the O&A shop information directly by their agent. When asked if LYNX/State Farm's customer service representatives will continue using the same scripting for windshield repair, Bischoff replied that scripting was currently being reviewed and that changes are possible.

When queried about rumors of a different selection process for cash-paying insureds to be assigned to service providers, he categorically denied any plan to change the current open-selection model. The only difference from the current process would be that insureds with deductibles would have to pay the repairer or auto glass shop directly. When questioned about a referral fee for windshield repair or auto glass replacement when the cost of service exceeds the insured's deductible, Bischoff responded that State Farm has no current plans to charge a referral fee; however, he stated that he did not know at the time what LYNX would do about the referral fee.

Bischoff was asked if State Farm intended to raise the average comprehensive deductible from its current $250 to $500. He stated that the amount of deductible is mandated in a few states, while others require no-deductible coverage be made available and beyond these legislative requirements the amount of comprehensive deductible is purely a matter of insureds' choice. He stated that State Farm is planning to give customers more options in how their policy is assembled. He did agree that currently the average deductible is rising but was unable to project the future effect of rising deductibles on the number of auto glass or windshield repair claims paid by the company.

He responded to a question about how firm the decision to discontinue windshield repair deductible waiver was by stating that the decision process began years ago and that State Farm is committed to the change. When asked what would happen if insureds opposed the program, he stated that the company is always responsive to its customers' concerns and would review any decision if a significant number of insureds became concerned.

He expressed interest in the development of the standard for repair of laminated automobile glass and invited the NWRA and IGA representatives to contact him with any further questions or concerns.

State Farm will roll out the discontinuance of windshield repair deductible in seven states starting December 1, 2005 and plans to complete the roll-out throughout 2006.

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