A third-party administrator (TPA) is a business that delivers various administrative services on behalf of an insurance plan. They are very frequently used in health plans and chances are that you might have not even noticed. A TPA in the car insurance world, is an organization that processes auto glass insurance claim jobs on behalf of an insurance company. The TPA connects the insured with a glass auto company and facilitates the glass repair or replacement. This sounds efficient in theory but there are several issues with this model that we’d like to bring to your attention.
Conflict of Interest – Repair Companies Managing Your Insurance Claim
In 1991, Safelite, a leading auto glass repair and replacement services as well as windshield manufacturing company, decided to implement a new marketing strategy under its latest Chairman and CEO Garen K. Staglin: provide claim services for a total of 21 top insurance companies in the U.S. At the time Staglin described the new endeavor as “Our goal is to be a business partner with our insurance companies, a claims processor instead of (only) a window replacer.” The program reduced participating insurance companies’ processing costs from as high as $100 per windshield claim to as little as $25 per claim[1]. But at what cost?
Little competition
The truth is that over the last 30 years, this alliance has impacted local auto glass shops to great lengths. As Auto Glass City from Florida states, “Reputable auto glass shops have spent their livelihoods fighting against TPA relationships set up by insurance companies and the largest auto glass services provider in the country”[2]. What were auto glass shops supposed to do once this new system was set up? Insurance companies introduced their alliance to Safelite by letting auto glass shop owners know, that in order to file an auto glass claim for their policyholders, they had to become part of Safelite’s network first. What did this imply? Signing a contract and accepting far lower prices for services as determined by Safelite.
Several auto glass shops signed on, believing that they had no choice or maybe that this indeed was a good opportunity. You might wonder if this benefited the end consumer? Not really, auto glass shops had to close or subcontract to larger shops (so there were fewer businesses to choose from) or they had to work with lower quality products like aftermarket glass and lower their quality standards to make ends meet. We know that more businesses equals more variety and more choices. A marketplace of thousands of small businesses is the best way to ensure innovation and low prices over the long-term.
What about consumer choice? Your Insurance Company DOES Give You One!
As an insured, you should be able to use the auto glass shop of your choice. Safelite’s network consists of 7,500 glass shops (see snapshot below). However, in practice several shops have complained about unfair practices. In 2001, Affordable Auto Glass of West Springfield, Massachusetts, filed a lawsuit, alleging unfair and deceptive trade practices. It told the court that “Safelite has a practice of redirecting business from non-Safelite motor vehicle glass repair shops by providing insured and prospective customers with false information.”[3]
Unfortunately, in our experience, Safelite has attempted to steer away business from us too. This is what we have observed, once Safelite takes all the information on behalf of the insurance company, they try to funnel the insured to Safelite auto glass by using tactics such as:
- Safelite is the recommended shop of choice (on their website they call Safelite AutoGlass the “preferred provider”).
- Safelite guarantees and warranties where other shops do not, or the insurance company doesn’t think they warranty their work.
- Safelite is an approved vendor of the insurance company.
So, what do we recommend? When trying to get quality work done on your car, do your research, ask your friends and family for recommendations, or your trusted car dealer. And always if possible “go local”. Remember, you as the insured, have the option to choose any glass shop that you want, and your insurance company will pay according to your coverage. For tips on how to select a windshield repair shop, check out our post “Finding a Reliable Auto Glass Company”
Call Us Today
As a leader in windshield repair, we guarantee that our repair to your chipped or cracked windshield will be perfect and permanent! If it can’t be repaired, we will replace it using only high-quality glass and adhesives produced in the U.S. For expert advice, call SuperGlass at (321) 223-4106
[1] http://www.fundinguniverse.com/company-histories/safelite-glass-corp-history/
[2] https://www.autoglasssarasota.com/florida-insurance/what-should-know-before-file-an-auto-glass-claim-fl
[3] https://www.glassbytes.com/2021/05/shop-alleges-unfair-and-deceptive-trade-practices-seeks-injunction/