Posts Tagged fairness

Just Sayin’ Blog – A Matter of Self-Interest or Consumer Choice

Dominos

 

Last June 3, 2013 Dannel Malloy, Governor of the State of Connecticut signed a bill that was passed by Connecticut’s House and Senate the previous month into law. This link to the summary of the act that was first introduced in the Insurance and Real Estate Committee of the Connecticut House states,

“The act requires that a glass claims representative for an insurance company or its third-party claims administrator, in the initial contact with an insured about automotive glass repair services or glass products, tell the insured something substantially similar to: “You have the right to choose a licensed glass shop where the damage to your motor vehicle will be repaired. If you have a preference, please let us know. ” By law, appraisals and estimates for physical damage claims written on behalf of insurers must have a written notice telling the insured that he or she has the right to choose the shop where the damage will be repaired (CGS § 38a-354).”

This law seems to be a reasonable approach to provide and ensure consumer choice to the residents of Connecticut.

As it appears on the State of Connecticut’s General Assembly bill tracking web site the law – Public Act Number 13-67 – states,

 “AN ACT CONCERNING AUTOMOTIVE GLASS WORK.

To require an insurance company doing business in this state, or agent, adjuster or third-party claims administrator for such company to provide additional disclosures to an insured regarding such insured’s right to choose a licensed repair shop or glass shop where such insured’s motor vehicle physical damage or automotive glass work will be performed.”

Again, this language also seems to be a reasonable expectation for residents of the state. Everyone believes that consumer choice is a good thing right?

The signing of the law was reported by number of industry publications (glassBYTEs.com, Autobody News, Automotive Fleet) due to the dramatic effect that it would have when fully enforced on insurance companies claims management programs, as well as automotive glass repair and replacement (AGRR) industry players (Harmon Solutions Group, NCS/Netcost Claim Services, TeleGlass/Strategic Claims Services, Gerber National Glass Services, PGW Lynx Services, Safelite Solutions)  that provide network and/or Third Party Administrator (TPA) services to the insurance industry. AGRR networks and/or TPA’s tend to steer business to either company owned stores and/or to affiliated network repair or glass shops that conform to the pricing or service requirements of the network and/or TPA. That has been a long standing business practice of networks and TPA’s and it’s not hard to understand the financial benefit to these companies to continue doing so. The passing and subsequent enforcement of this law requires a pivot away from the long-standing AGRR industry practice of placing the decision of which company provides the repair or replacement into the hands of the consumer needing service and out of the hands of a network and/or TPA that has always been heavily involved in the decision. This also seems to be a positive for consumer choice. Again, everyone believes that consumer choice is a good thing right?

In order to protect its network and TPA business Safelite Group, Inc. and Safelite Solutions LLC (the Plaintiffs-Appellants) have gone to court against GEORGE JEPSEN, in his official capacity as Attorney General for the State of Connecticut and THOMAS LEONARDI, in his official capacity as the Commissioner of the Connecticut Insurance Department (the Defendants-Apelles) in hopes of overturning the law. The law clearly prohibits the steering of Connecticut consumers to specific repair shops by TPA’s and/or auto damage appraisers so one can understand the self-interest involved. Connecticut’s “Department of Consumer Protection” web page states that:

“Ensuring a Fair Marketplace and Safe Products and Services for Consumers”

The purpose of this government department is pretty obvious by its title. Public Act Number 13-67 protects the interests of consumers in the state and their “right to choose”; and the State of Connecticut unquestionably is within its rights to enact such a law, right?

If the State of Connecticut prevails in its defense of the constitutionality of Public Act Number 13-67 through the appeal process, as Safelite continues to fight to overturn the law, the future landscape of networks and/or TPA’s that provide AGRR services to consumers in the state will forever be changed. And if this law stands it will have an effect on the landscape of the AGRR industry in the entire United States. You can be sure that similar consumer protection bills will be introduced in state assembly’s’ across the country. Is that why Safelite is so strongly fighting this law duly enacted by the State of Connecticut?

If you visit the Safelite web site you will find that the company describes Safelite Solutions LLC as providing:

“….complete claims management solutions for the nation’s leading fleet and insurance companies.

The company currently serves as a third-party administrator of auto glass claims for more than 175 insurance and fleet companies, including 19 of the top 30 property and casualty insurance companies. Safelite® Solutions manages a network of approximately 9,000 affiliate providers and operates two national contact centers in Columbus, Ohio and one in Chandler, Arizona.”

The Connecticut law could serve to undermine a business practice that has existed in the AGRR industry since the late 1970’s. The genesis of call centers (a.k.a. a network or TPA) was when Joe Kellman, former owner of Globe Glass & Mirror, visited an auto glass call center facility in Bedford, England operated by Belron’s Autoglass and brought the idea back to the United States starting the U.S. Auto Glass Network. Since then, the impact, influence and control of consumer auto glass losses by networks and/or TPA’s operating in the AGRR industry has continued to grow each and every day. The networks and/or TPA’s obviously work hard to control and steer auto glass repairs and replacements to either company owned stores or to glass companies that agree to join and follow pricing arrangements that benefit the goals of the network and/or TPA. A business practice worth fighting for right?

The State of Connecticut is interested in protecting consumers in the state, who are in need of auto glass repairs or replacements, from being steered by a network and/or TPA. This law seems like a reasonable next step action in a state where those that are engaged in the AGRR industry are required to be licensed by the state (in my last blog I wrote about “Is it Time for Licensing?” in the AGRR industry). The Department of Consumer Protection oversees the licensing flat glass and automotive glass work.

We will have to wait for the appeal process to work its way through the courts to find out if this law stands, is amended or falls. But whether you believe that the law is a positive development for Connecticut consumers or you believe that the law violates free speech in commerce, the fight will continue as the stakes are too high. If the law passes through the appeal process and stands, it could be the tipping of the first domino and could be the beginning of big changes for the AGRR industry.

So where do you stand on Public Act Number 13-67? Are you on the side of consumer choice or on the side of the networks and/or TPA’s? Perhaps it depends on your own self interest.

Just sayin’.

 

Dominos

 

 

Associated Articles and Reference Material:

Zauderer’s Scope (page 589) https://www.law.upenn.edu/live/files/1566-keighley15upajconstl5392012pdf

http://www.autobodynews.com/news/regional-news/northeastern-news/item/7277-connecticut-governor-signs-anti-steering-bill-into-law.html

http://www.nldhlaw.com/content/uploads/2013/07/UpToSpeed_July2013A.pdf

http://www.glassbytes.com/2014/04/connecticut-officials-file-brief-in-support-of-anti-steering-law-in-appellate-court/

http://www.glassbytes.com/newsConnAutoGlassBillGoestoGov20130523

http://www.glassbytes.com/newsConnecticutSteeringPasses20130606

http://www.glassbytes.com/documents/03192014SafeliteSecondCircuitBrief.pdf

http://www.glassbytes.com/documents/04232014SupplementalIndex.pdf

http://www.glassbytes.com/documents/04232014JepsenBrief.pdf

http://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&bill_num=5072&which_year=2013

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Just Sayin’ Blog – A Matter of Fairness

Recently I was forwarded a letter that Safelite Solutions (“Safelite” “SGC Network”) sent to an auto glass repair and replacement (AGRR) company.  The letter related to work that the company had done for a consumer that happened to be insured with a company for which Safelite manages glass losses. The AGRR company had done a replacement and was required to send the bill for the work that was done for the consumer through Safelite in order to receive payment. The letter that was received started out stating:

“The SGC Network is currently in the process of performing a random fast cure kit Audit.”

The letter went on to state:

“Please fax copies of the work orders/invoices that include the urethane lot stickers. Do not send proof of purchase or receipts. The only acceptable documentation is the urethane lot sticker attached to the invoice or work order. Please forward to ATTN: SGCNetwork at 614-210-9941 within the next three business days.”

Have you seen or received one of these letters? I hadn’t seen one before. What was requested certainly seemed reasonable to me and the company also thought the request was reasonable. The company had the information readily available since the information is required under various sections of the Auto Glass Replacement Safety Standard that is administered by the Auto Glass Safety Council™. What was interesting about the request was that Safelite was taking on the role as an independent 3rd party auditor in asking for the information. Who do you think performs that function when and if Safelite audits its own use of a “fast cure kit”?

Take a minute and look up the word “fairness” on dictionary.com and you’ll find the following:

Noun

“the state, condition, or quality of being fairor free from bias or injustice; 

evenhandedness”

            Adjective

“free from discrimination, dishonesty, etc; just; impartial”

            Adverb

“in a fair way; correctly: act fair, now!”

It’s also interesting to see the word fairness shown via TH!NIKMAP’s Visual Thesaurus®.

 Fairness 2

 

So does it smack of “fairness” that a retail auto glass company that competes for auto glass repairs and replacements in the United States is also given responsibility for performing audits of competing AGRR companies to determine if they are using a “fast cure kit”? It doesn’t seem that Safelite would be the appropriate entity to audit others if you applied the definitions of fairness:

“the state, condition, or quality of being fairor free from bias or 

injustice; evenhandedness”

“free from discrimination, dishonesty, etc; just; impartial”

“in a fair way; correctly: act fair, now!”

They certainly aren’t “free from bias” and it doesn’t seem as though they would have a strong desire to adhere to the idea of “evenhandedness”. I don’t see how they could be “impartial”. And it would seem impossible that the act of their being the auditor would be accomplished “in a fair way”.

To me it seems to defy logic when the corporate mission of any company must be to grow market share and produce increased value to its shareholders for it to be possible for them to be an independent auditor of others in the industry in which they compete.

Safelite’s company web site states:

We must do what’s right, even when no one’s watching

This means living by our values and being accountable. It is about how we treat our staff, our customers and members of our local community. We reinforce this throughout our corporate structure with legal compliances and ethics training, an employee ethics hotline and numerous channels for feedback and concerns.”

Certainly words any company would be proud to adhere. It seem appropriate to ask “who’s watching” those that are watching us? Do you think that there’s a 3rd party auditor that’s auditing the auditor?

I think you can ask the same question relating to the “pre-inspections of auto glass claims” that was discussed in a glassBYTEs article titled Safelite Solutions Accepts Recognition for Pre-Inspection of Auto Glass Claims” in May of last year. Does that practice seem to smack of “fairness” to you?

As most everyone on the planet knows, Super Bowl XLVIII is coming this Sunday, February 2, 2014 between the Denver Broncos and the Seattle Seahawks. The officiating crew this year is led by veteran referee Terry McAulay. What if for the game this year a crew of Denver Bronco fans is allowed to officiate the game instead of the impartial officials that have been selected by the NFL? If that was allowed to happen how many calls do you think would go Denver’s way? Even the most ardent Bronco fan hoping for a win for their team would see that as both blatantly “unfair” and “unjust” to the Seattle Seahawks team.

So as “A Matter of Fairness”, who thinks that how Safelite operates as an auditor and/or inspector is:

“the state, condition, or quality of being fairor free from bias or 

injustice; evenhandedness”

“free from discrimination, dishonesty, etc; just; impartial”

“in a fair way; correctly: act fair, now!”

Just sayin’.

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Just Sayin’ Blog – March Madness (and the AGRR Industry)

It’s my favorite time of year for sports!!

March Madness!!!

The 2012 National Collegiate Athletic Association (NCAA) Men’s Basketball Tournament known as ‘The Big Dance’ offers 68 Division 1 basketball teams (27 teams are automatic qualifiers for the tournament by winning their individual conference tournaments and an additional 37 teams that are selected by getting the nod of the tournament ‘Selection Committee’ based on the teams “body of work” during the 2011 – 2012 basketball season), along with 4 additional teams that get a chance to play enduring an elimination round at the University of Dayton Arena the opportunity to lift the Championship Trophy and be crowned the NCAA Men’s Basketball National Champion. To become the Championship team, they will have to win all 6 games they play in the tournament. The teams that will be playing this year will be announced beginning at 6 p.m. Eastern on CBS television this Sunday, March 11, 2012.

March Madness takes us to and from various arenas around the country ending up in New Orleans from March 30th-April 1st for the Final Four. The teams are ‘seeded’ ranked from 1st to 68th in 4 regional brackets with 16 teams in each bracket (1 plays 16, 2 plays 15, 3 plays 14,…….8 plays 9, I think you get the idea), along with the 4 play-in teams.

 It’s a fairly complicated process that pits the best teams in Men’s NCAA Division 1 Basketball against each other in competition for the title of National Champion. If you’re not fully engrossed in March Madness you can follow this link to learn more (2012 NCAA Men’s Basketball Principles and Procedures).

‘The Big Dance’ is the culmination of an endurance test that starts in the fall of each year.  NCAA Division 1 Men’s Basketball is composed of 346 teams in 32 conferences plus 4 independent schools all starting the season working to get there’. The chances of reaching the tournament are 1 in 5. Those really don’t sound like bad odds. What makes March Madness a great sports event is the opportunity for an ‘underdog’ to reach the Sweet Sixteen, the Elite Eight, The Final Four or even make it to the Championship Game Final.

 It happens. In 1983 the North Carolina State (NC State) Wolfpack, coached by the legendary Jimmy Valvano (nicknamed Jimmy V), won what is considered to be one of the best Championship Final Games in the history of the sport on a last second tip-in by Lorenzo Charles after a miss by Derrick Whittenburg beating the favored University of Houston Cougars. NC State’s team was a ‘Cinderella Story’.

Last year the number 11 seed Virginia Commonwealth University (VCU) Rams made it into the Final Four by beating the number 1 seed Kansas in an Elite Eight game. The Butler University Bulldogs, a number 8 seed, made it into the Championship Game (two years in a row – in 2010 they were a number 5 seed) where the team played the number 3 seed University of Connecticut (UConn) Huskies. UConn was the highest seed making it to the Final Four. What happened to all the number 1 and 2 seeds? They were all obviously beaten by lower seeded teams. UConn ended up beating Butler in the Championship Game 53 – 41.

I think that there are similarities between the March Madness process and the auto glass repair and replacement (AGRR) industry. Perhaps a stretch to compare the two, but it’s my blog so here it goes…..

Imagine if the AGRR industry had a Division 1 Tournament (there are 3 NCAA men’s basketball divisions, but Division 1 is made up of the top colleges). Would the company that you work for be invited to the tournament based on how you rank in the market or markets you serve? If your answer to that question is yes, then what ‘seed’ do you think your company would receive giving you a chance to get to the Championship Game? Does the level of work and the service you provide match up to those you compete with in your markets? Yes? Great! You’re invited to ‘The Big Dance’!!

Another prerequisite for participating in the tournament is one that the NCAA tournament has too. You can only play one team from your company. If you happen to be one of those companies that operate under multiple company names in the same market you can’t expect to get them all into the AGRR tournament as that wouldn’t really be fair, so pick the one that you think can take you all the way to the end and quit trying to manipulate your odds.

Now that you’ve done all that work to make it into the big dance, is your company a highly seeded contender or are you a lowly seeded ‘underdog’? In ‘The Big Dance’ the underdog has a fighting chance. Not a great chance, but look at how the Butler Bulldogs and VCU Rams did in last year’s tournament. It happens.

Oh yeah….I forgot to also mention that the big difference with games played during March Madness versus the regular season is the tournament rule that there is never any home court advantage. Home teams often get more fouls called against the visiting teams by officials who have a tendency to do so to keep the hometown fans off their backs. All games are held on neutral courts so there is no home team advantage. Sadly that rule is suspended in the AGRR tournament to give one team an advantage. Safelite® Auto Glass gets to play all its games on a home court.

When you look at the 4 different brackets of my imaginary AGRR tournament who do you think will be the number 1 seeded company? How will it do versus the number 68 team do you think? Obviously the number 1 seed in the AGRR tourney is Safelite® Auto Glass. One of their star players is a gentleman named Ryan. You see him on television all the time (someone told me that they were going to cut those TV ads way back starting January 2nd…..guess not).

A potential problem for all of you who’ve made it into the AGRR tournament is that Safelite® Auto Glass decided to take the number 1 seed in all four brackets. Remember I mentioned earlier that no company could play under different names, but I didn’t say that there weren’t advantages to being the big guy and they have so many players that they get into all 4 brackets as the number 1 seed. And Safelite® owns most of the basketball courts (markets) and it has cornered the basketball market (insurers, fleets and cash customers, even suppliers) so they get to make most of the rules in the tournament. Now who do you think has better odds to win? The chances for a ‘Cinderella Team’ getting into the Final Four are tough as the odds are Safelite® is going to make it in with all 4 of its teams. You can imagine the odds for my hopeful Cinderella making it into the Championship Game. Sadly non-existent.

It seems to me that it’s a foregone conclusion that Safelite® has achieved the ‘dynasty’ status that the University of California, Los Angeles (UCLA) Bruins achieved from 1964-1975 (except for 1966 when the University of Texas, El Paso – UTEP Miners won and 1974 when the NC State Wolfpack won). The Bruins were coached by the legendary Coach John Wooden. But I’m still holding out hopes that someone, somewhere will be up to the challenge of taking on Safelite®. After all, since that 17-year run where the Bruins won 15 NCAA Division 1 Men’s Basketball Championships….they’ve only won one Championship Game since and that was in 1995.

One of President Ronald Reagan’s favorite jokes was,

Worried that their son was too optimistic, the parents of a little boy took him to a psychiatrist. Trying to dampen the boy’s spirits, the psychiatrist showed him into a room piled high with nothing but horse manure. Yet instead of displaying distaste, the little boy clambered to the top of the pile, dropped to all fours, and began digging.

“What do you think you’re doing?” the psychiatrist asked.

“With all this manure,” the little boy replied, beaming, “there must be a pony in here somewhere.”

So I am optimistic that something will happen to level the playing field and give others a fair chance to realize their dreams of winning an AGRR Championship Game.

Just sayin’.

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