Posts Tagged network participation agreement
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:
- How many rings or seconds it takes a network to answer a telephone call from someone reporting an auto glass loss;
- How many seconds or minutes a policyholder is on hold while reporting the loss; and
- 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?
- 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:
- RELIABILITY – A company’s ability to perform the promised service dependably and accurately;
- ASSURANCE – The knowledge, competence and courtesy of employees and their ability to convey trust and confidence;
- TANGIBLES – Physical facilities, equipment and appearances that impress the customer;
- EMPATHY – The level of caring, individualized attention, access, communication and understanding that the customer perceives;
- 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.
- 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.
- 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.
- 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.
- 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 the “Pittsburgh-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.
Today marks the 11th anniversary of 9/11.
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“Can’t tell the players without a scorecard”… an old school expression but those words seem particularly relevant today, as one looks at recent events surrounding the subject of auto glass networks.
In my recent blog titled “Network Participation Agreement” from August 6, 2012, I discussed the ADDENDUM announced by Safelite® on July 20, 2012 regarding its www.SGCNetwork.com Network Participation Agreement. It stated in the last sentence of Section 1.10 of the ADDENDUM, “Further, Participant shall not offer, directly or indirectly, to any insurance agent or its personnel anything of value in consideration for the referral of work paid for from the proceeds of an automobile insurance policy.”
In that post, I also asked “do you think that Safelite® is also a participant, having signed the Network Participation Agreement and having to follow all of the sections of the agreement? If yes, then Safelite® has to follow the same rules as everyone else. That seems fair right?”
I guess that question entered the spotlight sooner than I could have imagined with the publication of the glassBYTEs.com™ article from August 23, 2012 titled “Safelite Funds Allstate Windshield Repair Marketing Material” written by Casey Neeley.
In that story, an Allstate consultant is quoted as saying, “Safelite approached us about creating marketing material for our agents to distribute and the first run of such materials was funded entirely by Safelite and provided to our agents”.
Now we get to the scorecard part because I have to wonder “which” Safelite it is that is funding promotional materials. Would that be Safelite® Solutions LLC, the self-proclaimed “third party administrator” of glass claims, or Safelite Auto Glass®, the self-proclaimed “largest vehicle glass repair and replacement organization in the U.S.” After all, both those entities are involved – but as noted in the prior blog, it is just not very clear about the role that Safelite® Auto Glass plays in the equation, either with the insurance carrier or its agents. If you follow the link at the end of this sentence, Safelite® refers to all of its organizations as “A Family of Companies” (*referenced from http://scheduling.safelite.com/companies.jsp).
While this distinction, or lack thereof, is not at all apparent from any public information I find on this subject, one thing becomes crystal clear – the auto glass repair and replacement (AGRR) industry could certainly use a whole lot more transparency. In fact, one could make the case that much of the recent legislation efforts have been focused on creating such transparency in auto glass claims transactions, with particular attention, rightly or not, on Safelite® and its “Family of Companies”.
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.
I guess I have to rephrase my original blog question to now ask, “Do you think that Safelite® [Auto Glass] is also a participant, having signed the Network Participation Agreement and having to follow all of the sections of the agreement?”
One can only hope that in the interest of transparency and consumer informedness, the players involved make it quite clear about the roles and participation as pertain to Safelite® Auto Glass, an entity portrayed as separate and distinct from Safelite® Solutions LLC. And there is one organization that could answer that question today.
For the rest of us, the best course of action might be to continue to focus on the customer and provide exceptional value with outstanding transparency.
In the meantime, not a bad idea to keep the scorecard close by to recognize the players on the other team, and act accordingly.
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In my last blog I wrote about Safelite® Auto Glass and its SGC Network, which is one of the networks (or third party administrator -TPA) that operates in the auto glass repair and replacement (AGRR) industry in the United States. Safelite® released a new addendum to its Network Participation Agreement that outlines new guidelines or requirements on AGRR companies that either participate in the SGC Network as sub-contractor’s that Safelite® uses to do repairs and replacements for Safelite® or those AGRR companies that are forced to invoice work they do for certain customers through the Safelite® SGC Network. A reader of that blog suggested that I write about networks in general, so here goes.
While Safelite® is the largest AGRR network it is by no means the only one. All AGRR networks share some similarities, but each is unique in how it operates. Since there is no single AGRR company that covers every square mile of the United States providing services solely through its own AGRR technicians to consumers, every network must attempt to aggregate the services of thousands of disparate AGRR service providers into a single “quasi-retail” service entity. Each of the networks attempt to replicate a full service AGRR company that looks like it is capable of servicing each and every consumer with a single price and service offering that suits the needs of every insurance or fleet company customer it has in its network. That’s where the problems begin.
The first problem a network has to manage is the reality that each of the AGRR companies that participate in its network are not under its control, so a network has to deal with inconsistency of service levels to its customers. That is an issue; a really BIG issue. Currently, a network attempts to counter inconsistencies by stipulating increasingly detailed and specific guidelines in its effort to create some semblance of uniformity amongst a very large, broad and diverse set of participants. How do the networks accomplish that? It takes a great deal of work to try to herd all those cats. Some do it poorly while some are more accomplished at the task.
It’s quite the challenge though, and perhaps never so clearly indicated as by Safelite®’s recent addendum whereby it now seeks to go beyond standards of repair and replacement practices to actually regulate the business conduct of its participants. By venturing into this area it may seem as a case in point that the network may be leaning into “too big to fail” territory, as it tries to corral a wide range of participants into a single product offering. It is likely to be very difficult, if not impossible for a large network to monitor and enforce all of the stipulations on which it seeks agreement from its numerous participants.
It makes me wonder if the newest Safelite® addendum might actually be showing off some of the real challenges that at least one of the largest network entities is experiencing in trying to solve a problem and meet its entire customer needs.
As I mentioned, every AGRR network must attempt to cobble together its own group of AGRR service providers (participant) attempting to provide a service model that it hopes attracts its targeted customer(s).
That’s the networks strategy. Now how about your decisions as an independent AGRR retailer? It’s probably best to make your own assessment of how network participation fits into your overall marketing and sales strategy. You may not be able to avoid networks altogether, as most insurance companies require that billing for the service provided be processed through a network. But remember, in all cases, it is the choice of every AGRR company to decide whether it will or won’t participate in the opportunity to receive repairs or replacements from every AGRR network. As an AGRR retailer, you may prefer to do work for one or more of the networks because the network provides value to you in exchange for the value you provide. Some AGRR retailers choose not to agree to the pricing or service requirements that a network has on participating. That again is the choice of the AGRR retailer. It’s probably not a good strategy if you’re relying on a network for your repairs and replacements, but if you do you should be consistently working on lowering your costs as you can be assured that the network will be looking for you to lower the value you receive for repairs or replacements.
Networks are an established part of the AGRR industry and they aren’t going to go away. Legislative initiatives may be attempted state by state to help regulate or moderate how networks operate, but networks do provide value to the customers that use them. Whether or not the networks that operate today will be in business five years from now will be determined by the value, service and quality that it provides to its customers. Only the strong will survive. More on how networks operate in a future blog posting.
Perhaps the best advice for today’s AGRR retailer is simpler than we all have been thinking: “focus intently on the customer, listen to what they need, and set about to do the right thing.” A very simple and straightforward concept.
Sam Walton is quoted as saying,.
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
Stay focused on your customer and provide value to them and you should do okay.
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On July 20, 2012 Safelite® announced through its www.SGCNetwork.com an ADDENDUM to its Safelite Network Participation Agreement/Safelite® Solutions Network Participation Agreement which effectively lays out the rules between Safelite Solutions LLC (Safelite®) and what they call the “notified party” or “participant” (participant). A participant refers to auto glass repair and replacement (AGRR) companies that repair or replace damaged or broken auto glass for insurance policyholders whose insurance companies or fleet companies use Safelite® to administer auto glass losses. The addendum is fairly straightforward and if you are a “participant” it is binding upon you unless you notify Safelite® within 10 days that you object to the changes in the new addendum. Of course, if you object to the addendum you effectively terminate your participation in the Safelite® network.
As reported in glassBYTEs on July 31, 2012 in an article titled “Safelite Releases Addendum to Network Participation Agreement”, Section 1.10 of the ADDENDUM states:
“1.10 Participant shall comply with each applicable insurance and/or fleet company’s program requirements or marketing guidelines, whether communicated by the company or by Safelite Solutions orally or in writing. Notwithstanding, Participant agrees and acknowledges that unauthorized use of insurance or fleet company trademarks, logos, or other intellectual property is prohibited. Further, Participant shall not offer, directly or indirectly, to any insurance agent or its personnel anything of value in consideration for the referral of work paid for from the proceeds of an automobile insurance policy.”
The section seems reasonable. If a participant wants to do work for either insurance or fleet companies that utilize Safelite® for handling glass losses, the participant shall comply with the “requirements or marketing guidelines, whether communicated by the company or by Safelite Solutions orally or in writing” for those companies that Safelite® provides administrative control over glass losses. How would Safelite® ever prove “requirements or marketing guidelines” that were communicated “orally” to a participant? It’s the last sentence in the addendum that I’m writing about today.
I find it interesting that the last sentence of Section 1.10 appears limited only to “any insurance agent or its personnel” by stating:
“Further, Participant shall not offer, directly or indirectly, to any insurance agent or its personnel anything of value in consideration for the referral of work paid for from the proceeds of an automobile insurance policy.”
My first question is do you think that Safelite® is also a participant, having signed the Network Participation Agreement and having to follow all of the sections of the agreement? If yes, then Safelite® has to follow the same rules as everyone else. That seems fair right?
I was also just wondering why the language of Section 1.10 refers only to “any insurance agent or its personnel”. Does the last sentence mean that you can provide something of value to an employee of a fleet company? Perhaps I’m missing something.
What I don’t understand is why Section 1.10 is limited only to insurance agent(s) and those who work for an insurance agent if what the section is attempting to do is to stop influencing auto glass repairs and replacements for insurance companies. Does Safelite® operate under the same rules that are laid out in Section 1.10?
Section 1.10 of the new addendum just doesn’t seem all that clear. Or maybe it is.
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