Posts Tagged lynxservices

The Future in the Automotive Aftermarket Industry

For me, listening to keynote speaker Tony Aquila, CEO of Solera Holdings, Inc. at Auto Glass Week in Baltimore was most interesting. He led Solera’s purchase of LYNX Services, GTS and GLAXIS from owners Pittsburgh Glass Works LLC and PPG Industries, Inc. earlier this year. Tony’s accomplishments are considerable, especially considering that he grew up sweeping floors working in his uncle’s body shop and he has a 9th grade education. You have to be incredibly impressed by the guy.

The “Strategic Focus” web page for the company states, “Solera is the world’s leading provider of software and services to the automobile insurance claims processing industry.” (Link to corporate history) Solera will certainly be changing the world of auto glass repair and replacement (AGRR) with innovative software solutions that will simplify the claims handling process surrounding glass repair and replacement. The organization has the potential to affect the way all consumers and influencers ultimately buy AGRR products and services dramatically. Depending upon the vision and direction Solera heads automotive aftermarket parts and service providers, including the auto glass repair and replacement industry (along with the collision repair industry and parts distribution industry) could be in for some big changes. It’s all about taking out market inefficiencies and reducing costs associated with those inefficiencies.

Just look at the AGRR industry. To ensure that service level expectations of the consumer is ultimately met, any software program would need to have access to the real-time inventory level of any supplier or distributor warehouses in the area, the inventory levels of any AGRR shop or technician in the vicinity vying for repairs or replacements, along with the schedules of all technicians available to properly repair or replace the part.

Imagine when an auto glass replacement is required, if it would be possible for the software program to instantly search for the part determining which supplier(s), distributor(s) or AGRR shop(s) has (have) the part in stock; perhaps ranked by cost for the part while finding the best auto glass replacement technician suited to properly install the part; when and where the consumer wants it installed. With that capability you then have to start asking some questions like:

Once the software program has all of the information required to start processing an auto glass replacement, who or what company is directly buying and paying for the part(s) required?

It could be:

  1. The AGRR shop or technician facilitating the replacement or
  2. Maybe the customer’s insurance company or
  3. If it’s a cash job the consumer could pay.

Which of the three above pays for any part required is important to determine the all-in price to be paid for replacement parts, along with the price paid for required installation supplies and labor.

So which organization determines the pricing level for the various scenarios outlined above?

Who is buying and paying for the part and installation supplies required?

Who is paying for the technician to install the part?

Answers to these and many other questions will give you an idea as to where the industry could be heading. There will be changes coming and margins are probably going to change in the AGRR industry in the near future. And probably not for the better.

What is it you’re doing to be prepared for the future?

Just sayin’.

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Courtesy of TomFishburne.com – Marketoonist.com©

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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 – Auto Glass Networks – Part 2

Cartoon courtesy of TomFishburne.com

In a recent blog post titled “Auto Glass Networks – Part 1” I wrote about difficulties that auto glass repair and replacement (AGRR) networks or TPAs face in managing auto glass losses for clients. In order to survive, networks and TPAs must manage a never-ending “effort to create some semblance of uniformity amongst a very large, broad and diverse set of participants” that actually do the auto glass repairs and replacements across the country.

In this blog I’m focusing on how networks attempt to demonstrate better performance for its clients versus what those same clients could achieve by directly managing auto glass losses.

The network does this by reporting on its operational “metrics”. Investopedia defines “metrics” as:

“Parameters or measures of quantitative assessment used for measurement, comparison or to track performance or production. Analysts use metrics to compare the performance of different companies, despite the many variations between firms.”

The reporting of metrics to clients begins with a network measuring:

  1. How many rings or seconds it takes a network to answer a telephone call from someone reporting an auto glass loss;
  2. How many seconds or minutes a policyholder is on hold while reporting the loss; and
  3. How many total minutes a policyholder has to spend on the telephone reporting their claim.

Why are these three metrics important to a network? Most policyholders believe that they are talking directly to their insurance company when they call a network that manages auto glass loss for insurers; generally that’s not the case. Since the network customer service representative (CSR) is acting on behalf of an insurer while talking with a policyholder, the insurer expects that a network is providing the same level of customer service to its policyholders that the insurer would provide. These three metrics are ones that the network has complete control over and are important metrics to measure how responsive it is to the insurance company’s policyholder.

But networks aren’t only tracking the performance metrics of areas under its direct control while handling auto glass losses; each also provides metrics on the performance of the AGRR retailers that actually perform the auto glass repairs or replacements. Why track that performance? It depends of course upon the network, but keeping track of the level of service that the AGRR retailer provides can determine how much work the AGRR retailer may get in the future.

What are some of the metrics on which AGRR retailers are measured or should be measured?

  1. The AGRR retailer that provides repairs or replacements is graded by its own individual customer service index (CSI). In determining CSI there are a number of key components and you’d like to think that a CSI score is the most critical metric that an AGRR retailer has in determining its value to a network. The basics of CSI is clearly spelled out via the RATER Model by tracking these five elements:
    1. RELIABILITY – A company’s ability to perform the promised service dependably and accurately;
    2. ASSURANCE – The knowledge, competence and courtesy of employees and their ability to convey trust and confidence;
    3. TANGIBLES – Physical facilities, equipment and appearances that impress the customer;
    4. EMPATHY – The level of caring, individualized attention, access, communication and understanding that the customer perceives;
    5. RESPONSIVENESS – The willingness displayed to help clients and provide prompt service.

Each network uses either its own questions or metrics for determining CSI or it may use CSI metrics that the client prefers used for its policyholders.  Ultimately these CSI metrics show which AGRR retailers are providing great service and those that aren’t based on what’s being measured. Do you know what your company’s CSI is for each network? If not you should ask.

  1. What is the windshield repair percentage performed by an AGRR retailer? If the network believes that a policyholders broken windshield is repairable, does the AGRR retailer repair it or replace it?

Repair over replacement can obviously save big money and if you’re an AGRR retailer that ends up replacing a windshield that the network feels should have been repaired you’re making them look bad in the eyes of the client as it drives up the average cost of the claim.

If the network has a GAI (guaranteed average invoice) agreement with a customer when an AGRR retailer replaces instead of repairing a windshield, you’re costing the network money so you can anticipate fewer calls for your service or greater oversight of glass losses you must bill through the network. So your repair percentage is a critical metric.

  1. How many warranty claims (problems of any kind while handling a glass loss such as customer call backs for leaks or air noises, scratched glass, improperly installed moldings, any damage done to a vehicle during the repair or replacement, etc.) does an AGRR retailer have on work performed for the policyholder?

Obviously the more warranty claims you have the higher the likelihood a network will not be looking for your company to handle glass losses on its behalf.

  1. Customer service cycle time is also important. How long does it take for the policyholder to have a glass loss repaired or replaced from the first call reporting the loss to the time it takes to be completed and billed by the AGRR retailer?

That’s a pretty straightforward metric relating to service levels and customer care.

  1. What is the percentage of dealer or original equipment manufactured parts (OEM) used in a replacement versus non-OEM parts priced via NAGS® (National Auto Glass Specifications®)? Why is this important?

If an AGRR retailer has a higher percentage of OEM glass versus non-OEM it is costing the network and/or the client a whole lot more money.

Now back to TPAs versus networks. There are certainly other important metrics that networks track and report to current clients and tout to potential clients that use other networks and TPAs. Every network presumably wants its clients customers serviced by the best AGRR retailers that provide the highest level of customer service, but let’s face it, price versus service unquestionably creeps into the decision-making process of what AGRR retailer is referred a glass loss or not by a network.

That can be especially true if the network is using a “buy/sell” or “spread” pricing model for its clients. The network “buys” the glass repair or replacement from an AGRR retailer and then “sells” the repair or replacement to its customer at a higher price or “spread” that covers the networks cost to operate plus its profit. Do you ever get those calls from a network asking, “If you just give me another point or two on the NAGS discount I can keep sending you jobs” with the implied message if you don’t……? Probably you have.

In my last blog titled “Network Participation Agreement – Special Update” I wrote:

From the view of this blog, transparency only serves to benefit consumers in making informed claim decisions, making their policy dollars work to their fullest, and identifying safe auto glass replacement services.

 How much transparency is there in how networks or TPAs report metrics? Well, last Friday glassBYTEs™ reported in a press release titled Lynx Services Amends Contract Services Agreement” that thePittsburgh-based Lynx Services will amend its contract services agreement effective September 12. The most notable addition to the agreement is the availability of online scorecard access for shops. These scorecards will provide auto glass shops with performance records based on a variety of factors called Key Performance Indicators (KPIs).” This is definitely a big step in the right direction that allows AGRR retailers to see metrics (KPI’s) showing their performance. Perhaps other networks and TPAs will follow in a similar fashion? That should certainly be a welcomed change.

As I also suggested in my last blog, as an AGRR retailer you might want, “continue to focus on the customer and provide exceptional value with outstanding transparency.In the long run exception value and outstanding transparency will pay off.

Just sayin’.

 

 Today marks the 11th anniversary of 9/11.

Never forget.

 

 

 

 

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Just Sayin Blog – Be Smart In 2012

There have certainly been a number of events happening since the first of the year that are effecting or may affect the auto glass repair and replacement (AGRR) industry in 2012. Where to start? Well let’s see:

 

1.    First the earth shook on January 2, 2012, when Safelite® Solutions officially took over the responsibilities for administrating Allstate® Insurance auto glass claims from PGW Lynxservices®. By all accounts Safelite® Solutions must be doing a masterful job in this new role administering claims for Allstate® as I’ve heard from a number of you that your auto glass claims from the second largest insurer in the United States are dramatically lower since the administrator change took place. Mild weather could also be a contributing factor. Adding to the pain of lost units, the pricing for those Allstate® replacements are also lower.

 

Have you seen your auto glass claims with Allstate decline since January 2, 2012?

 

2.    On January 6, 2012, glassBYTEs.com™ reported that Grey Mountain Partners Acquires Binswanger. Binswanger is a truly amazing full-service glass company with its roots going back to 1872 with its first location in Richmond, Virginia. It is certainly great news to hear for all of the Binswanger employees that they have a new owner who is interested in working with them to help build the company. I think that a strong Binswanger is healthy for the glass industry in the United States.

 

How about you?

 

3.    Neil Duffy recently announced in his very well written blog View From The Trenches that he’s considering a new career by starting a ‘new third-party glass claims administrator’. It sounds as though he’s thought it out pretty thoroughly by looking at all the pros of this new venture and I for one think he should go for it. I don’t see any cons.

 

What do you think?

 

4.    Then there is that anonymous letter from a ‘Concerned Citizen’ that surfaced yet again last week titled “New Anti-Trust Concerns”. This letter had a postmark from Bloomington, Illinois, and its resurfacing at this time might have some relationship to #1 above.

 

It does seem pretty obvious that the letter was written by someone in the auto glass industry as no one else would really care about the issue. The letter does raise a number of interesting points, but the conclusion of the ‘Concerned Citizen’ is that:

 

‘While the relationship between a TPA and its insurance company clients may not be illegal, the abuse of that position could be unfairly excluding independent competitors.’

 

There are a number AGRR initiatives taking place in various states where attempts are being made to try to restrict the big guy from taking your lunch money day in and day out. If one of them was successful it would certainly be good for independents in the industry.

 

Are there any legislative initiatives happening in your state that will be of any help to you in your business?

 

5.    For those of you who happen to follow @Safelite on Twitter you may have seen them sending out ‘Tweets’ asking for your input. One ‘Tweet’ poses a question to its followers and directs you to a web page survey question asking ‘How likely are you to recommend Safelite?’ Safelite® gives you the opportunity to answer with a ‘Not Likely’ – 0 score to an ‘Extremely Likely’ – 10 score.

 

I’m not sure to whom exactly Safelite® is targeting the question, but you’ve got to provide an email address in order to answer the question which is somewhat problematical. If you’d like to offer your view anonymously I guess you could use a fake email address.

 

I know what my number is in answer to the question. What number would you mark as your answer?

 

6.    And finally there was an article in the Chicago Tribune on January 18, 2012, reporting that the average age of vehicles in the United States has climbed to 10.8 years. The article stated that in 2010 the average age of vehicles was 10.6 years with the average age of vehicles having climbed steadily since 1995 when it was at 8.5 years. Over the past several years low new vehicle sales has certainly been a major factor in the increase in the average age, but with new car sales picking up new car manufacturers are expecting a great year in 2012. That will help to slow the growth in average age and hopefully bring it down. What does average age have to do with the AGRR industry?

 

One byproduct of an aging vehicle fleet is that you see an increasing number of the ‘do nothings’ (consumers that delay replacements) when auto glass breaks. Consumers obviously will be more accepting of a repair over replacement if the vehicle is older. New vehicles typically provide a higher average invoice value since the only replacement glass initially available to consumers will be auto glass manufactured for the vehicle by the Original Equipment Manufactured (OEM) glass company (i.e. Pilkington-NSG, PGW, Saint-Gobain Sekurit, etc.). The cost for non-OEM manufactures to reverse-engineer a replacement part for new vehicles is initially too expensive due to the low volume of parts needed in the aftermarket. The older the age of the vehicle fleet the more opportunities for non-OEM suppliers to sell reverse engineered replacement parts that are typically cheaper than the OEM’s. Ultimately that can mean less profit for the AGRR industry as a whole. New vehicle sales should mean more profit opportunities for those in the AGRR industry.

 

What do you think?

 

 

I hesitate to mention other things going on so far this year that may have an effect on your business like the lack of a severe winter in the East, the predictions for much higher gasoline prices later this year, a sputtering economy, the price changes that have taken place in the State Farm® Insurance Company auto glass program and various people coming and going from here to there. How you’re dealing with the variety of issues that you’ll face in 2012 will determine how you survive the year. Someone I’ve known for a long time in the industry commented to me last week that, ‘2012 is shaping up to be a watershed year for many in the industry. Survive this year and hope that next year will be a better one.’ That outlook makes sense to me. We’ll see if he’s right.

 

In closing, a former Princeton University men’s basketball coach by the name of Pete Carril wrote a book titled “The Smart Take from the Strong”. It’s a great book. Pete Carril was 5’6” tall, he was an All-State Pennsylvania high school basketball player, an Associated Press Little All-American in college and he coached at Princeton for 29 years before going on to the NBA to become an assistant coach for the Sacramento Kings. Coach Carril is also a member of the Naismith Memorial Basketball Hall of Fame. When he was young man his father told him:

 

            ‘The strong take from the weak, but the smart take from the strong.’

 

So be smart in 2012!

 

Just sayin’…….

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