It’s a dirty little truth … something they don’t want you to know for sure.
Chances are you’ve been duped. Or, at the least, you’ve got no idea about the actual, dirty truth that surrounds most of the auto glass industry.
As a business analyst, I’ve always been amazed at the coup Safelite has pulled off on the American public, especially in high windshield damage states like Arizona. What exists today is an unfair, monopolistic, foreign goliath that is choking out local, small businesses (I’ll back this statement later). But more amazing to me than this, it how insurance policy holders (you and me), as well as local agents, have been bamboozled into supporting these unfair practices. The end result has been a very difficult road for local auto glass businesses and, just as significantly, a violation of policyholder rights.
A Little Background on the Auto Glass Industry
First off, let’s get this straight: you should be aware how important your windshield is to you.
Yes, we look through our car windshields every day; and yes, a discussion about this common auto part seems about as intriguing as listening to your aunt talk about how cute her cat is. But the truth is, your windshield is a major component in your personal safety. The windshield isn’t just there to stop your hair from being blown or to keep bugs out of your teeth. The windshield provides a major amount of structural support and strength to your vehicle’s cabin. According to the Auto Glass Safety Council, “in a front end collision the windshield provides up to 45% of the structural integrity of the cabin of the vehicle and in a rollover, up to 60%.” In other words, windshields absorb half the force of collisions (instead of you); they’re an integral part of keeping you safe by keeping the roof from caving in on you, deploying airbags correctly, and keeping you from being ejected. Your windshield matters.
There are a multitude of auto glass manufacturers throughout the world, including Pilkington, PPG, Fuyao, and SGC. Some of these manufacturers provide glass directly to auto assembly plants, as well as to replacement suppliers (original equipment manufacturer, or OEM), others produce glass for replacement purposes only (aftermarket). All windshields in the U.S. are tested to ensure they meet safety standards, regardless of the manufacturer; however there is some debate as to whether OEM manufacturers provide higher quality than aftermarket suppliers.
Because windshields are so important to safety, and because they are also one of the most frequently damaged parts of an automobile, insurance companies are inundated with windshield claims daily. Especially in hot, dry, desert terrain (like Arizona), windshield damage is commonplace and (in order to ensure safety to motorists) unique glass coverage laws have been put in place to further help drivers. These coverage laws, coupled with the damage-prone environment, create a headache for insurance companies.
In order to handle this high volume of glass damage, almost all insurance companies contract with third party administrators to process these claims. When you file a glass claim, you are not speaking with your insurance company; you are more than likely speaking with an outsourced auto glass claims-management processor, something they don’t want you to know. State Farm, for example, utilizes Lynx Services; Farmers, American Family, USAA, Geico, Progressive, Allstate and others contract with the SGC Network to process their glass claims.
“When you file a glass claim, you are not speaking with your insurance company; you are more than likely speaking with an outsourced auto glass claims-management processor, something they don’t want you to know.”
Once a glass claim has been made and approved by the insurance company, an Auto Glass Retailer will order your automobile’s correct replacement windshield (OEM or aftermarket) and replace your glass. Auto Glass retailers consist, primarily, of local glass companies and Safelite, the behemoth of the industry.
The Dirty Little Secret You Probably Didn’t Know
While, conceptually, this is a fairly straightforward industry, movements over the last fifteen years – behind the curtain of the insurance companies and with Safelite in particular – have created a significantly biased and unfair business environment.
The Safelite Corporation is actually owned by Belron, a Company headquartered in Cape Town, South Africa. Belron and Safelite have been very aggressive in growing their domination in the auto glass industry. It is interesting to note that they have divisions at every step in the auto glass replacement process. (1) Safelite/Belron manufactures aftermarket glass; (2) Safelite/Belron provides auto glass service and retail (i.e. the commercials you see regarding mobile replacement), and (3) perhaps most importantly, Safelite/Belron operate SGC, the largest glass claims-management service provider in the country.
If it isn’t immediately clear, here is what happens when a rock is kicked up and cracks your windshield:
When you call your insurance, in most cases you will be forwarded to a glass-claims management service
More than 80% of insurance companies use SGC (Safelite)
Even though, by law, you have a right to use a Glass Replacement/Repair company of your choice, SGC will automatically steer you towards Safelite, their sister company (in the process, they strengthen their market position and image by making it sound as if there is no choice and that your insurance company prefers you use Safelite)
Safelite will replace your vehicle, using aftermarket glass manufactured by … of course, Safelite (even though there are better, OEM options).
Your insurance company pays Safelite, the money goes to South Africa … and local, quality glass companies (that use OEM products) never even had a chance to earn your business. Not only this, local insurance agents don’t know the truth, so most of the time, they promote Safelite as the best option as well.
The entire game smells strongly of a monopoly. And recently there have been a few cases, in a few states, where suits have successfully been brought against Safelite. But largely, this has remained a dirty little secret. It has remained a secret, primarily, because (1) the insurance companies have a convenient agreement with Safelite and don’t really care about local business, (2) Safelite certainly wishes to keep things status quo, (3) the marketing juggernaut created by Safelite continues to convince customers Safelite is their only, quality option, and (4) local competition doesn’t have the funds or wherewithal to fight them in court.
While you may think: “Hey, this is just competition. Good for Safelite; they’ve built a successful business.” Here is where things have really turned nasty, and, quite frankly, unethical.
Because Safelite owns the glass claims-management service company, even when customers call their insurance, stating that they want to replace their windshield with “Local Company A”, the representative on the phone (who is not really the insurance company at all, but actually Safelite) will attempt to dissuade the consumer away from Local Company A back to Safelite for the installation. Although Local Company A may have an A+ BBB rating, may be installing better OEM glass, and may have Installation Technicians with more experience, Safelite will tell the customer “Local Company A is not preferred.” This isn’t a lie, of course. Safelite doesn’t want anyone but Safelite preferred. I have personally listened in on dozens of calls prior to writing this article. The bias, tone and flavor of the conversation was heavily weighted (in every instance) towards getting the customer to switch from the local auto glass company to “preferred” Safelite. Customers are asked repeatedly if they are sure they want to use “Local Company A” and, in many cases, it felt as if the representative on the phone was just shy of saying “You’re making a terrible mistake!”
“…even when customers call their insurance, stating that they want to replace their windshield with “Local Company A”, the representative on the phone (who is not really the insurance company at all, but actually Safelite) will attempt to dissuade the customer away from Local Company A back to Safelite for the installation.”
Why The Consumer is Getting The Short End
While all of this is a daily, uphill battle for local auto glass companies, it ultimately hurts the consumer and policyholder as much as anyone.
Monopolies aren’t good (the reason most governments, including ours, see them as illegal). A monopoly is defined by a “producer” controlling the supply of a good or service to the extent that they prevent or restrict new competition from entering the market. Since almost every glass claim call to an insurance company goes through SGC (Safelite), they control the entire supply chain.
This may not seem like a big deal to you, since your insurance is the one paying the bill anyway … but it is. For one thing, you’re getting less for your dollar.
Let’s start with this: you’re paying for your insurance; you should get something for what you spend. And when you’re paying for glass coverage, you should have the right to a safe, clear windshield.
While the details of the contract between Safelite and the insurance companies are kept private, it is known that Safelite has a favorable arrangement in terms of the price they receive for “repairs.” And because the margins for repairs are more profitable for Safelite, they push “repairing chips” over replacing your windshield. In many cases, repairs are fine. However, in many cases, a consumer has a right to replace their marred windshield – after all, they’ve been paying for this coverage. Safelite, however, steering the consumer their way, pushes towards a repair, staging the conversation to make it feel as if the consumer is committing insurance fraud by asking for a replacement. It’s not insurance fraud; it’s getting what you paid for. Not to mention that safety may be compromised by a repair, rather than a replacement.
In addition to this, you’re getting less from Safelite than you will typically receive from a local glass company.
Competition is a good thing. And the domination of Safelite has forced local glass companies to dig deep in providing you with incentives (to go local). Many local glass companies offer Cash Back, free dinners or gifts, even free auto tint or vacations when you replace your glass with them. Some view this as a scam (something Safelite wants you to believe … they even attempted to have these incentives stopped by law, but failed), however, there is no scam at all. The local glass companies, needing your business, are simply willing to take less of a profit (than Safelite) and give a portion of their profits back to you, the consumer.
“… local glass companies, needing your business, are simply willing to take less of a profit (than Safelite) and give a portion of their profits back to you, the consumer.”
Like any industry, there are good and bad businesses. In some cases, Safelite may be better than a local glass company. But in many cases, you’ll find better customer service, better quality glass, and free incentives by simply going with a reputable local glass company for a windshield replacement.
“ … in many cases, you’ll find better customer service, better quality glass, and free incentives by simply going with a reputable local glass company for a windshield replacement.”
So Where Does This Leave Us?
At the end of the day, this really isn’t the fault of the insurance company. Safelite and SGC have come to the insurance companies with a product (glass claims management) that takes a headache away from them. Insurance companies have bigger fish to fry than dealing with auto glass claims. You can’t blame them for outsourcing.
However, the small nature of the auto glass industry is the very thing that has allowed Safelite’s practices to stay off the radar. Unmonitored, they have been allowed to present themselves as a consumers only option, they have gained control of moving a consumer through the auto glass process to line their pockets at every step, and most disturbingly, they are being allowed to choke out small businesses which, in many cases, are a better option for the end customer.
Amazingly, they have accomplished all of this, while duping most customers and most local insurance agents into believing that they are the “good guys” and that your insurance company doesn’t want you using someone else.
It’s a dirty little truth … something they don’t want you to know for sure.
reprinted with permission by
Al Yessler is the owner of
Alliance Auto Glass
1800 Middle Country Road J
Centereach, NY 11720
Phone: (631) 676-2312