Why do we have Networks?

[Brent Deines]

Please choose "all" answers that you agree with. Hopefully this question and the answers you choose will encourage you to think carefully about the problems we have in this industry, and what we might do to solve these problems. Your well thought out posts on this topic are welcome, but I would ask that you not only point out the problems that we are all painfully aware our industry has, but to also offer some possible solutions.

[D2D]

It's difficult to respond here with yes or no answers unless anyone knows the hows and whys of how these came to be.
I'll comment on each one:

Because windshield repair and replacement companies were charging less for cash than for insurance and/or were over billing insurance companies.
I think most repair only companies set prices based on what they think people will pay without any sense of their true operating expenses relative to their business model. In a previous post, I said, if the NWRA would lobby the networks on our behalf for copays relative to our variable business models then it would be where if your set price was 75.00 and the network paid 50.00 then the insured would pay a copay of 25.00. BUT if your "list price" for a repair is 35.00 then that's what the network should pay on your invoice. Over the years it has reached a point where the arbitrary pricing of the networks creates the situation where if the customer doesn't use their insurance then the repair company "dives" their cash price partly for the reason already mentioned along with the feeling of not wanting to go away with nothing.
By not allowing trip charges for dispatchs/referrals where no repair is needed, "we" get to call the network to cancel the dispatch/referral and drive away with nothing. This overlaps with what I've said numerous times with why I let my NWRA membership lapse.




To keep rates lower for their customers, insurance companies hire networks to control costs.
Who hired who? My best guess is, that as a form of outsourcing, someone at PPG, and/or Safelite, both glass manufacturers, very involved with the sale of auto glass products to body shops, where insurance is commonly the form of payment, came up with the idea of forming a claims clearing house system. Then went out and starting selling the idea to the insurance companies that they could lower their cost per claim for processing and eliminate the need for staffing their own claims department and the related expense. The concept is brilliant, wish I'd thought of it! In any case, controlling costs was, no doubt, a major selling point.


Because greedy insurance companies don't care about quality, safety, or customer satisfaction; only money.
Profitability runs to the core of the free enterprise system. That said, there are many examples of dishonest and unscrupulous insurance companies. IMO having networks, as they are, are a cost control measure for the insurance company and a profit making operation for the network. Not that there's anything wrong with that. LOL


Because someone saw an opportunity and "rightfully" convinced the insurance companies it would save them money.
I think I just answered this one.



Because someone saw an opportunity and "wrongfully" convinced the insurance companies it would save them money.
Nothing whatsoever wrong with it.


The windshield repair and replacement industry must take responsibility for the creation of networks.
Can't get my mind around this one. Anymore than I could about what "we" could ever rationally or realistically do about it all now


Insurance companies should pay more for repairs than cash customers
Insurance companies should pay your company your published prices for your services. If those prices are clearly out of line with "industry norms" the insurance companies might be able to devise a strategy to eliminate overcharging without infringing on the insureds right to choose their vendor.


Insurance companies should pay less for repairs than cash customers.
Same as above


Insurance companies should pay the same for repairs as cash customers.
For the most part, with this exception: After it's clear that the customer will not be using insurance and they won't commit to either a cash repair done on the spot or an appointment to come back at a more convenient time, then I tell them, "since I'm here and to save you a little money and my time coming back, I'll discount the price 25%". When a customer calls me for a mobile service appointment, there is no discount on the list price. This is my version of not wanting to go away with nothing.

[Brent Deines]

Actually I think Joe Kellman of Globe Amerada created the first network as we know it. PPG and Safelite got into the game later. This is taxing my memory a bit but I think it was around 1990 and he called it the USA Glass network. I remember they set us up as a preferred service provider at about the same price we were charging for cash repairs, which at that time was around $45, and all the sudden we started receiving claims like nobody's business. Then all of the sudden the referrals would stop, so of course we called to see what happened. We were told the shop up the street had submitted a lower price, so if we wanted more referrals we would need to beat that price. We did it one time and got tons of referrals again for another week or two, then they stopped coming again. Sure enough, the shop up the street had put in a lower price again! We opted out of the USA Glass network at that point, but soon there after they got Allstate to send all of their claims to Sears, and in Eugene all of the State Farm business went to either Speedy or Safelite. About 40% of my business vanished overnight and there was nothing I could do about it.

Long story short we figured out how to get business without insurance referrals, and for awhile without any business from State Farm or Allstate. Eventually others saw how profitable USA Glass was and got in the network game. The rest is is history.

Keep in mind this was 20 years ago and I did not take time to look up the dates that all this happened, but I do believe this is how the networks got started. I do remember a moment or two of panic before finally figuring out that others had the power to change the way I did business, but if they put me out of business it was only because I let them.

D2D, you said something that I think every business person needs to think about. We should be setting our prices based on how much it costs to operate our business and how much profit we need to make to make running our business worthwhile, not on what someone else is willing to pay. It really does not matter what someone is willing to pay if it is not enough to pay your bills and put a little cash in your pocket. This is a very simple concept, but one that is often overlooked by windshield repair business owners.

The question is not how much someone is willing to pay, but how can I get someone to pay me what I need, and the answer to that question is ever changing. My goal is not only to get my customers to pay me the price I need to stay in business, but to "want" to pay me what I need because of the experience I provide them. I find most people look for a low price, but what they really want is a good value. It's my job to help them understand the difference.

[Ricersux]

I concur...great posts!

[Layne]

I perceive it to be the greedy insurance companies that are only concerned with the bottom line. Customer satisfaction and repair quality are way down the list!

[Marc Anthony]

I am new to the forum and I'm trying to use the search function to get an understanding of the insurance claim process. I'd like to understand it in detail. I've started doing insurance based windshield repair, calling the insurance company glass numbers and pre-qualifying claims and having ACT process the claims and get me paid. That's as far as my understanding goes. How do the 'networks' like Safelite and Lynx fit into the picture. There seem to be 4 or 5 of them. What is the complete claims process like start to finish? Can anybody point me to existing articles on this? TIA.