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March 19, 2008

Business tougher for independent auto-glass-replacement companies

By DAN HEATH

PLATTSBURGH -- A number of factors are impairing the ability of independent auto-glass-replacement shops to compete with large chains.

Johnson Auto Glass and Trim Shop Vice President Dan Johnson said those factors include rising prices for replacement auto glass, lower reimbursements from insurance companies and efforts to steer insured parties away from independent auto-glass-replacement companies.

"We've seen so many friends whose companies have gone out of business or been sold off," he said.

Johnson said the National Auto Glass Specifications is a list of auto-glass prices published three times a year. It is used as a benchmark to determine how much an insurance company will reimburse an auto-glass-replacement company for the glass it replaces.

That list has been regressive in nature for several years, Johnson said, and National Auto Glass Specifications won't reveal how it arrives at its prices.

He would like to see prices set by the Chicago Auto Glass Group, a non-profit group of glass-shop owners, distributors and manufacturers from across the United States that was organized in 2003. That group's method for arriving at auto-glass prices is detailed on its Web site, Johnson said.

Some large insurance companies, including Allstate and Geico, set their reimbursement rates at only a portion of the National Auto Glass Specifications list prices.

Those prices were again reduced an average of 1.9 percent in January, Johnson said.

Shortly after, auto-glass manufacturers PPG and Pilkington announced a 4-to-5-percent increase in prices for its auto-glass products. That same day, Allstate said it would increase the amount it reduced National Auto Glass Specifications prices from 30 to 33 percent.

GEICO followed with a similar move. It announced Feb. 1 that it would increase its reduction of list prices from 40 to 45 percent.

"It requires you, on a daily basis, to analyze and review every job," Johnson said.

Michael Russo, controller of Thru-Way Autoglass in Syracuse and a member of the Independent Glass Association Board of Directors, said 90 percent of insurance companies use third-party claims administrators for glass-only insurance claims. Those third-party administrators sometimes tell policy holders an independent shop, such as Johnson Auto Glass, won't accept the reimbursement price offered by the insurance company, he said.

"They use pricing as a basis to steer a customer away from that shop."

Russo has also asked the New York State Attorney General's Office to investigate short-charging by insurance companies, similar to its investigation of health-insurance companies.

When consumers purchase auto insurance with full glass coverage, they sometimes aren't made aware of the price caps the company places on glass reimbursements, he said.

The customer has to pay out of pocket for the difference between what the auto-glass replacement shop pays for glass and what the insurance company will reimburse.

Johnson said he doesn't think the insurance companies realize what will happen if they drive many independent auto-glass-replacement companies out of business. If only the big chains are left, they will be able to dictate prices to insurance companies, Johnson said.

As a result of the rising costs and shrinking reimbursements, Johnson's Auto Glass has had to reduce its service area, including ending its mobile service to Massena and Long Lake.

"We can't afford to do it," Johnson said.

dheath@pressrepublican.com

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