May 22, 2025
On May 16, The Capitol Forum held a conference call with Gary Hart to discuss auto glass giant Safelite’s business conduct that led to the recently reported Department of Justice investigation. The full transcript, which has been modified slightly for accuracy, can be found below.
KRISTA BROWN: All right. Good morning, everyone. Thank you all for joining this conference call. I’m Krista Brown. I’m a reporter at The Capitol Forum and I’ve been covering Safelite for the past couple of weeks.
Today, I’ll be joined by Gary Hart, the Executive Director of the Independent Glass Association, to discuss the business practices of Safelite and the impact on the industry. Gary is a seasoned executive and technologist with over 30 years of experience driving innovation in the automotive aftermarket, especially in the automotive glass repair and replacement sector. And as I mentioned, he’s currently serving as the Executive Director of the IGA, or Independent Glass Association, leading the industry advocacy and reform. Thank you, Gary, for joining us.
GARY HART: Good morning. Thank you very much, Krista.
KRISTA BROWN: So, just as a few housekeeping items, to submit questions, please type them into the questions pane of the control panel, and we’ll collect them throughout the call and address them during the Q&A session at the end.
But to get things kicked off, I want to ask you, Gary, if you can first just describe IGA’s role in the industry and what recent initiatives you’ve all taken to address the alleged anti-competitive conduct in the industry.
GARY HART: Sure. Thanks, Krista. The Independent Glass Association, this is actually our 30th year anniversary we’ve been in this industry, serving independent glass shops. And what we mean by independent glass shops, those are going to be someone who’s a sole proprietor and the technician, all the way up to a multi‑state operator and/or like a franchise location.
Obviously, someone who we would not represent would be like a Safelite Auto Glass, these big corporations that span all states. Our key mission for independent glass shops is to protect them and to provide information for them to excel and grow within their marketplaces and adapt to changes as year by year goes on. Like, for instance, in the last five years, I think everybody now is well aware of these new things called ADAS features. And it’s one thing that shops had to adapt because OEMs didn’t necessarily prep the industry, if you will.
So, what has happened forever though in our industry—really almost dating back 25 years now, maybe a little bit later, not too far—is these things called third-party administrators. Insurance companies got fed up with handling claims on their own because they looked at auto glass claims as a nuisance within their organization. So, they outsource this to third-party administrators who act on their behalf and are supposed to act on behalf of whatever the arrangement is with regards to how the insurance company wants their auto glass claims program to be handled. And we’ve seen this evolution occur over time where it’s, in our opinion, been less focused on what the insurance company is looking for and more so what the third-party administrator wants to do with that.
What’s unique about what we’re talking about today is, in our industry of all third-party administrators, the Safelite group is the only one that also has a retail, meaning the service provider of auto glass repair and replacement services. The other third-party administrators do not.
And one side note to this is Safelite Group, who is also owned by Belron, which is a publicly traded company over in Europe, they operate pretty much the same way in Europe with regard to, again, being an administrator and then having their repair replacement service called Auto Glass over there handle that.
So, we have stepped into the role, we always have been, of assisting shops in understanding how to work with their calls when they do their first notice of loss claim, and then how to handle and make sure that the customer understands that they have the right to choose and what these various TPAs, just not Safelite Group, but others, may or may not say during the phone call. The advancements in the last five years as far as insurance apps go for reporting claims has introduced a new layer of steering or funneling. And it also has removed control away from the insurance company too, in this case, Safelite Group.
When we talk about the other competitor that’s out there right now, and probably soon not to be a competitor just because of who they’re owned by, and that company’s financial disposition, the app is only—or this process is only available to the Safelite Group. So, you won’t find another TPA with this type of app access that they plug into, let’s say, GEICO or USAA or whomever.
So, we have always been here for independent glass shops. One thing I would like to point out upfront, and I know this has been a topic that I have received in calls in the last few weeks, just regarding this from law firms, is when is the IGA going to launch their lawsuit? And the thing is, we’re not. We’re not in that position. We’re not the ones who have harm in this situation. So, it will come down to the glass shops we represent. And that’s why we’ve had them provide that type of evidence.
So, we did sue Safelite back in 2005. You can go look for Independent Glass Association v. Safelite and just see how that all played out. I wasn’t part of it at the time. That’s not the way I would have handled it, and our current board would have handled it. But definitely, these days, we’re well aware of where the harm is placed, and it’s placed with the glass shops, but it’s also placed with the consumer. We somewhat represent the consumer in an educational standpoint, but we really are here for the glass shops.
KRISTA BROWN: Okay. Yeah. I mean, I think that’s certainly clarifying for me, and you’ve touched on a lot of things that I want to ask about. One of them being that there are competitors. So, I think if you just want to explain who the Safelite Solutions’ competitors are—I know they’re much smaller and are shrinking by the minute. But also, kind of explain why now is an important time to bring this up with State Farm basically transitioning over to Safelite.
GARY HART: Sure. When you look at the Safelite Solutions organization representing over 200 insurance companies in North America—and really, they control the top 30 insurers when it comes to automotive glass policies—their competitors are far and few between.
The second, which used to be a dominating one, is called Link Services, and that’s owned by a company called Celera. Celera operates really in the collision repair space. They have EstiMate software. They have some other software. They acquired the LYNX group away from what was called PPG, and then later became PGW. And that third-party administrator has had a really good program in that they have had a good round-robin system when claims come in, getting those claims dispatched, and also to their accessibility to talk to somebody actually on the phone and not have to go through email or some portal.
Next to them would be a company called Quest X. They’re a regional TPA, mostly up in the Midwest, and they’re going to handle your farm bureaus and those type of regional insurance players. We’re talking where maybe auto glass policies are 10,000 to 15,000 that are underwritten. So, in the scheme of things, not big players. The severity and the loss isn’t really there and the frequency that it would be on the radar of somebody like a Safelite or a LYNX.
After that, there’s another group called Gerber National. Gerber, again, regional, some players. Fun fact about Gerber is they’re in the collision space, but they also own Glass America. But their system is a little bit different in that the way those claims work tend to be based off of collision and then doing what are called R&I or R&R. So, it’s really an in-house type of thing.
The new kid on the block, if you will, is a company that’s owned by Driven Brands. So, if you’ve ever been to like a Meineke or a Mako, that’s owned by Driven Brands. There’s also a car wash division. They got into the glass space about four or five years ago with the acquisition of a large group up in Canada called Uniban. That gave them distribution, third-party administrative capabilities, and retail stores. Here in the U.S., they acquired a group called Auto Glass Now, and then they started buying some regional players.
Through doing that, they have created this brand called Driven Claims. Ironically, most of the people that are running Driven Claims are all ex-Safelite employees. Or a company called JN Phillips that was acquired by Safelite and rolled up out of New England.
So, that’s what we have. We don’t have good direct billing. There are no relationships where shops, if you do direct bill and you send an invoice in, it ends right back up at the TPA. The TPA is applying the rules to it. They’re harassing shops with payments. They’re harassing shops with authorizations. So, that’s really the market. There is no other player other than Safelite Solutions now. And when LYNX just lost State Farm, that was the tipping point. Really, the shops finally said, we’re fed up. We’re done. That’s when we said, okay. We’re going to unveil our complaint. We’re going to unveil all of our evidence.
One key part about our evidence, anybody on this webinar can go to www.iga.org/steering. There, you can actually click on view the report button and see our repository of what we have running for shops’ evidence that they’ve provided, whether it’s on the steering or funneling, the late payments, the short payments, the harassments on authorizations to get certain things done. We have always made that public. Our whole idea has been transparency so that not only could other shops see, but consumers could see as well and lawmakers as we have worked going state by state and on the federal level to educate.
Because a lot of people don’t realize glass claims is your most frequent claim on your automotive policy. Overall things, you’re more likely in your lifetime to have multiple auto glass claims versus maybe ever having a collision claim. So, that’s educating everybody to say, okay, if you’ve never had a glass claim, go do one now. You don’t even have to complete it. Just see how you’re funneled or steered by your insurance company to their provider. And I bet you that name on there is going to be Safelite Auto Glass.
KRISTA BROWN: Yeah. Both in terms of listing the competitors and discussing Safelite transitioning over, I think we’ve made it clear in some of our articles, and you’ve certainly taught me this through our discussions, those competitors are very, very small compared to Safelite. When you say Safelite has the top 30, it’s basically that all of us who might have a car insurance would have Safelite, GEICO, Progressive, now State Farm or soon to be State Farm. All of that is Safelite, correct?
GARY HART: Absolutely. Yeah.
KRISTA BROWN: Okay. So, in terms of some of the actual complaints you guys have heard from or collected from the auto shops, what has that historically looked like? And what are some of the recent changes, potentially more egregious anti-competitive conduct, that you guys have all heard about?
GARY HART: Historically, it’s always been steering. This tactic mostly over the phone in the past where if you’re not—maybe just backing up here real quick. If you’re a glass shop and you go to bill your first job through Safelite Solutions, obviously, they want 1099s. They want all of that happy fun stuff. But they also present you with this thing called a network agreement, which at the end of the day is probably one of the worst legal documents that a shop could sign, probably written by a third grader and not passed by any legal counsel. Because it gives Safelite all the power and the shop has none. The shop can’t charge late fees. The shop can’t disparage. The shop can’t do this. If there’s a charge back, the shop has to agree to it. There’s no process to go through if you’re wronged as a glass shop.
If you decide not to become a network shop, there’s a different set of rules for you. Those different set of rules can come around how quickly you get paid, how quickly they’ll respond to you for an approval, or you get a charge back and how they communicate with you. At the same time though, the network shop’s not really getting that much faster service. They may get some jobs out of it, but historically, that’s the balance.
Now, when these shops call up and you’re not a network shop, it’s always the same song and dance that, well, you’ve picked a glass shop that we don’t know their warranty. But hey, we have a nationwide warranty and it’s lifetime. They really hammer the customer to say, are you sure you made the right choice to go with Gary’s Glass Shop?
If you’re a network shop, the script changes. You’ve got this background system running. One of the things that we’ve known for a while, now publicly, I think, everybody’s starting to see that this computer system Safelite has, which is called SV-2 or SV2, it is actually what is powering all of these things within Safelite, whether it’s how the scripts run, the incentives run, how the retail glass shops run, how they choose parts for invoices.
If you go and look at that whistleblower case for California and Illinois, it sheds a lot of light on just how either the system was manipulated or the system was designed to be manipulated. I’m not saying one way or the other, it just appears that way in reading the testimony and the transcripts from that.
So, glass shops have always had the steering problem. What we’ve recently seen now starts to harm the glass shops even more, and that’s when it comes to payment. Most glass shops in this industry today, when they need to replace the windshield or vehicle glass for you, they actually have to go acquire this glass through the supply chain.
Now, if it’s OE glass, they may or may not have terms with the dealerships that sell that glass. Because glass shops, when they need OEM glass, we don’t buy that at our normal distributors or suppliers. We actually have to go to a Mercedes dealership or a BMW dealership or a Toyota. That’s out of pocket normally. So, when you think in terms of an OEM windshield versus aftermarket cost can be 10 times higher, right now, I buy that windshield. I haven’t even installed it in your vehicle yet. My accounts payable, I’m already behind.
By the time I do your job, submit that invoice, we’re now seeing cases where shops are not getting paid on average, like 72 days. Now, mind you, that shop, the game is Safelite will say one thing on the portal. Oh, XYZ insurance company, we haven’t gotten paid by them. The whole thing is, as the third-party administrator, Safelite is indemnifying that payment. And at the end of the day, the insurance company is also on the hook to indemnify the payment. Mostly, when you’re a glass shop, you receive the assignment of benefits of the insured. So, you’re stepping into the shoes of the insured. So, all the rights that are provided to the insured in the policy extend to the glass shop. This is ridiculous. This whole payment process is now harming glass shops as far as the receivables go.
The other thing has to do with what I opened up with, with ADAS. When they go to calibrate your vehicles, when they remove your glass, those cameras and sensors that are all integrated into the vehicle, they have to be recalibrated per the OEM specifications. And the OEMs are very clear in their technical documentation and the requirements of replacing vehicle glass, especially the windshield, when it comes to this requiring an OEM windshield replacement.
Because the factors of the glass for the transparency and clarity and everything make the cameras and the lasers and all that stuff work. The third-party administrator will go, no, no, no, no. You’re going to first put in this aftermarket glass that may or may not work. And we may or may not reimburse you for that failed job. So, a lot of glass shops, right up front, go, it requires calibration. The OEM says this requires this. Give me authorization. Safelite comes back and says, nope. We’re not going to do it. You have to do it this way.
That’s been something that’s escalated. Because during this process, and we have this documented by many shops that they allege through their evidence, is it’s a stalling tactic. That if the glass shop can’t do the job, all of a sudden, something kicks in, some mechanism, the insured is contacted somehow and all of a sudden that job goes away from the independent glass shop. It is miraculously now over at a Safelite store. And we have seen that now, and especially the last four months of this year, ramp up significantly. We call it the circle of harm now. Because if you’re at the glass shop in the middle and you’re just not sure which direction, you’re about to get obliterated.
KRISTA BROWN: Yeah. You’ve also mentioned some other recent changes such as a tariff surcharge that Safelite Auto Glass can charge, but others can’t. And then also the changes to the actual apps that a claimant would see in removing the independent shop button, which I think we highlighted in one of our stories. But are those two things that have come up since the complaint? When did you all start hearing about that?
GARY HART: Yeah, the tariff’s a seesaw. One supplier actually back in December got onboard with raising their wholesale rates by 5 percent. And then the other two suppliers, the laggards, came on late January, early February and said, well, we’re going to match that.
Once it became clear what this current administration’s plan was with regards to tariffs, it was chicken little. The sky is falling. And everybody went to the extreme. Well, overnight, and sometimes without notice, shops started noticing parts that they just bought 24 hours earlier now had rates up to 30 percent higher.
Now, in our industry, and this is the other complaint we have made now, is against Mitchell International. And Mitchell is the owners of our industry pricing benchmark, which is called NAGS. And NAGS has historically always provided the aftermarket and OEM parts information along with what they come up with their NAGS benchmark price. So, that’s, quote unquote, our list price for an aftermarket.
They also sometimes include the OEM with the OEM list in there, just so you have it. They also wrap in things like labor hours and accessories and things of that nature that you would need to build on it. That is updated three times per year.
And editorially speaking, the way it works is like right now, they’re preparing for September’s launch. We just had our May launch happen on the 12th, this past Monday. That information was procured going back like November through late January. And then they wrap up the benchmark and they do it.
The problem is none of these tariffs and none of these upgrades have been put into the pricing model. None of the changes for like now 26 models are in there. And the truth is, we won’t see that pricing update until January’s update of 2026. So, that puts the industry at a severe disadvantage, unless you’re a company like Safelite, where, because, I guess—again, we’re alleging based off of what we’ve seen presented to us from Safelite employees. Like I know, as you do your own investigative work, there seems to be a lot of ex-Safelite employees with an ax to grind. I don’t know how that speaks to the culture of Safelite. But we’re getting presented with screenshots from technicians devices and whatnot that show that Safelite is charging a tariff fee to their insurance partners. Whereas independent glass shops, (a) haven’t been notified of it. And if they do put in a pricing request, they’re denied right away. And it’s up to them to fight it. So, not only are the independent glass shops paying 30 percent more for their acquisition of their aftermarket glass, but they have no way of recovering that at this point.
KRISTA BROWN: So, essentially, they’re having to pay so much more for parts because the benchmark hasn’t caught up?
GARY HART: Correct.
KRISTA BROWN: But then Safelite can add on this like surcharge and they’re the only ones being approved by the insurance part?
GARY HART: Correct. And I think it’s important to point out how this benchmark works. So, I’ll just pick one of the most popular vehicles on the road for automotive glass replacement is a Ford F-150. And let’s say the NAGS list price for that part right now in the catalog is $650.
Now, when you go to do an insurance job, Safelite solutions present you with what they call an offer and acceptance. It’s, hey, this is what the insurance company is saying that they’re only going to pay. And you look at it and it says 50 percent or 60 percent off of NAGS’ list.
So, now, right off the bat to do insurance job, I have to take this industry benchmark list that nobody knows how Mitchell comes up with it. We used to. Twenty-five years ago, we understood container pricing versus this. There was actually somewhat of a formula. Today, that doesn’t exist with just-in-time distribution.
So, we’re now looking at this going, well, I just had to cut the list price in half. I’m paying 30 percent more for the part. There are some instances with many different vehicle groups where my acquisition price is above the now ONA price that I’m being presented with.
So, of course, if I go back and cry to Safelite and go, hey, I need to charge more, here goes that mysterious circumstance again where I now don’t have the job anymore in my glass shop diary. And it’s now somehow at a Safelite location because they have miraculously taken care of that.
So, the billing process there is—for everybody that’s listening and watching right now—it’s very detrimental to the glass shop, just the pricing scheme, the ONA, and not being able to charge a tariff increase.
KRISTA BROWN: Yeah. I mean, this kind of gets into a comparison that you’ve made–but also I think Matt Stoller, who has written about Safelite actually like a year ago on his blog, BIG–to the PBM industry, where reimbursement rates, like favoritism with insurance partners, that whole analogy is sort of ringing true, especially here. But it also kind of sounds like that would harm the consumers, which I know some of our listeners might be interested in in terms of where prices actually go up, not just to harm the industry, but also the consumer side.
GARY HART: Yeah, and it really is a—you’re on a razor’s edge when this happens. So, as a consumer, if I now, in my marketplace, opt to have my windshield replaced and I’m going to pay out of pocket, as we’ve seen the economy change, consumers have bumped up their deductible, their comprehensive deductible, from $500 to $1,000.
And even with $1,000 now, it’s still amazing how, because of this recalibration and the complexity of the glass and whatnot, you can see average windshield claims being $1,400, $1,500, $1,600. So, paying $1,000 of that’s great, but you’re also not going to get away with paying $400 for a cash job. That’s just not going to exist either, because a good $300 to $400 of that is just the recalibration fees. Never mind the labor, the glass and the supplies that go with it.
So, what’s happening is as these glass shops are being compressed with these unrealistic pricing demands, then on the cash side of the market, they have to adjust differently in one of two ways. The market’s either going to see a dramatic shift in the increase of cash pricing to make up for the decline in insurance pricing, or there’s going to be a race to the bottom on pricing, which then again harms the consumer.
Because the only way you could race to the bottom on pricing in our industry is by cutting corners, by not recalibrating, by not doing proper installations. There’s a whole litany of things that, again, we have evidence to that. So, it’s all part of our allegations in this standpoint.
So, when economists look at this, they’re like, this is just a recipe for disaster. It’s bad, because it’s stifling innovation, it’s harming consumer confidence. And also, in these cases, consumers may be thinking they’re getting one product installed, like quality aftermarket glass, for instance, and they’re actually getting inferior aftermarket glass installed. And maybe not by the best adhesives, maybe not by the best skilled technicians. There’s just a whole litany of things.
So, it is devastating to our industry, what is happening under this model that’s been occurring. And we’ve already seen it. It’s been enough. I mean, I think the most recent was Alabama’s governor signed this PBM law in their state. And it’s something that we truly believe is identical. It’s just instead of pharmaceuticals, it’s with auto glass and auto glass services.
KRISTA BROWN: Yeah. Well, that’s kind of focusing in on what states have done around PBMs. Can you talk a little bit about the regulatory interest, both at the federal level, but then also at the state level?
GARY HART: Yeah. And before we move on, I want to go back to the app thing. I didn’t really cover that because that’s been a dramatic change as well. And that’s another point of harm to consumers is we actually have a couple of these examples that are on our website, IGA.org, that you can go to. You can always send me an email, Gary@IGA.org. And I’ll be happy to provide you with these video and static materials, the recordings of phone calls and whatnot.
They used to, at least somewhere, even if you had to do a death scroll to get to it on your app or on their portal, the insurance portal, they used to mention something about your right to choose and you can have another glass shop. But more recently, we have started to notice that it just says Safelite, and it does not say anywhere you have the right to choose. Even on recorded phone calls now, we have a couple examples.
You could dial the claims phone number yourself. And here, they just say, if you have a glass claim, we’re in partnership with this, press this button. When you press that button on your phone, you’re going right to Safelite, not Safelite Solutions. You’re actually setting up a job with the retail side, not the TPA side.
So, there is that. That’s very harmful when they start removing that. And it takes two to tango in that point, because the insurance company has recorded these prompts on their IVR systems. This is where they have it. This isn’t something that Safelite controls. So, the insurance companies are also playing along in this game somehow. And we don’t understand why, because the law is really written to that point.
So, getting into the legal side of things, our complaint with the Federal Trade Commission and the Department of Justice stems from many allegations that we’ve talked about today. Some additional that we’re following up with the FTC definitely has the CAN-SPAM Act and the Telemarketing Act in there. Because part of this whole thing as well is the consumer, the insured, is never given an opt-in or opt-out circumstance when they’re going through this claims process.
And that’s one of the things that you’ll notice in these videos and our evidence, per our allegations, is, as you go through that flow, you’re miraculously now being contacted by Safelite AutoGlass. And I never gave—as in my example, I do one with my own USAA policy. I never gave any, granted nothing. There was no fine print, nothing that I accept this. And when I do this, it’s just now they’re bombarding me in my email box, they’re bombarding me by text message. So, we’re also going after that aspect of it, because none of us like that junk coming in, especially if we didn’t ask for it. We move onto the state level and state levels are tricky.
KRISTA BROWN: Before we move onto the state level. So, when you first wrote your complaint, that was to the FTC, correct?
GARY HART: Correct, yeah.
KRISTA BROWN: And I actually came to this through complaints that I think your members had written in on public comment to an FTC, but where did the DOJ get involved? How did that all transpire?
GARY HART: The grace of the universe. Well, no, actually they reached out to us, which was surprising. And they reached out to us in lightning time after our FTC complaint, which I don’t think it was coincidence. I really think it was—we had fired off our complaints through just a generic, hey, we have some complaints. Their formal process requires the shop to—there’s a whole thing. But we just opted to just go this like, hey, we’ve got this problem. And we believe the current administration wants to know what’s happening to harm U.S. businesses. And they reached out to us and they said, educate us. Tell us everything. Go through your allegations. And so, that was kind of shocking.
The FTC is just a grind of email back and forth. They need to open up some things. They need to look at it more. And that’s why we’ve decided to keep piling more on top of it because more is better in this instance. That way they may not be able to say, well, we can definitely go down this route, but we could definitely go down this route on this one. Things like CAN-SPAM, telemarketing acts. Those are things that consumers hate it. They’re going to go after it. They don’t want to hear about it anymore.
KRISTA BROWN: Right. Okay. And now onto the state side.
GARY HART: Yeah. So, the state side is a little bit trickier. Historically, the IGA has been involved in working with glass shops in their states to make sure that legislation that is backed by Safelite. In a majority of every time you go and look at it, it’s a Safelite lobbyist who’s backing it. It is initiated by legislators who are contacted by these lobbyists.
And this past February, I believe it was, we got wind of the NCOIL draft, a template that they were working on or they had submitted and approved to become their template that their members—so that means almost every state’s legislative body—would have access to this template that they could now make an auto glass law or strengthen their laws around auto glass that they may already have.
And as we started ripping that apart, we noticed that, well, who was invited to the table to help write this and provide input? Oh, Safelite. Was anybody else from the auto glass industry? No, nobody, zero. And they start bringing up things like there’s the National Insurance Crime Bureau, NICB, and we start digging through their stuff. Oh, look, who’s the biggest supporter? Been there since day one, Safelite.
So, it’s almost they have their own policing mechanism who make allegations to show consumers, oh, these independent glass shops, they fraudulently bill. They make up glass claims and stuff. But It’s all coming from our biggest competitor in the industry.
So, we started going back now to the states that we know that have this interest maybe in a glass bill. We’re like, hey, we have a rebuttal to this NCOIL bill. Here’s a fair one. We want to become involved. But at the same time, we started peeling back the proverbial onion layers and started to notice that, well, wait a minute, Safelite isn’t even registered in a majority of the states to be a licensed adjuster, insurance adjuster, but they’ve been adjusting claims in this state. And most states have a law around this.
It really came to our attention in the state of Maine, where the state of Maine was really transparent in saying, well, they used to be. But they haven’t renewed their license since 2023. And that got us then looking at, okay. How do we go and look at other states?
And lo and behold, states like Arizona. So, we filed a complaint with the Arizona Department of Insurance and Financial Services, ADIF or whatever they’re called. And that turned into a, well, okay, we’re going to investigate it.
And then you’ve got the attorney general’s office that’s like looking at other allegations that we also provided to the FTC and the DOJ complaint. And in that, we’re like, well, okay, who’s going to handle this licensing thing? And almost every time we get an answer back, it’s the Department of Insurance has to pursue that. The Attorney General’s side, only if a crime has been committed or there’s fraud or something to that extent.
So, that is something we’re now continuing to pursue in states is this licensing requirement. Because Safelite’s competitors, if you look them up, they have gone through whatever burdensome process there is to be licensed, but at least they do it and they stay current. Safelite just feels they, I don’t know, for whatever reason, they’re not abiding by the rules.
And then there’s states like Oklahoma where Oklahoma’s like, no, Safelite is an auto glass company. And we’re like, no, there’s this thing called Safelite Solutions and they do fall under your definition of a TPA. They should be part of that same regulation.
And so, in this case, it’s an education process with Oklahoma’s insurance division to show them you’ve got to separate these two companies. Because that’s what Safelite has been leaning into is they just blur Safelite. And most of you on this call, Safelite repair, Safelite replace. You hear that jingle in your head. And so, people just think it’s auto glass. It has nothing to do with third-party administration.
KRISTA BROWN: Yeah, that is an issue for consumers, as you already said, they think that they’re dealing with one and then they’ve given up all their—get a call from the auto glass. We actually just wrote an article this morning, or published an article this morning, about how not just with the licensing issue, but states themselves have laws against steering, where insurance companies can’t—some of them are really explicitly, you just have to allow a consumer to choose. But then some also say you can’t even recommend one. Washington State says, if you own an auto repair shop, you can’t be recommending it without the disclaimer. Others have more explicit lines that I think, at least what I’ve found, is it seems like there’s a gray area there where potentially Safelite is in violation of this state statute. And so, it would be like a dual issue for states. And I wonder, have any of the state AGs you’ve talked to kind of voiced a concern with the steering piece, not just the licensing piece?
GARY HART: So, I’ll use Minnesota. This is our most recent example of actually a case. This was 2016, 2017. State of Minnesota went after that aspect with Safelite and locked horns with Safelite, actually for a brief period of time, might have been up to 12 months. Prevented Safelite Solutions from handling claims in the state of Minnesota. It actually impacted a lot of their business for insurance in Minnesota. And it caused other TPAs to have to take that up or the insurance company actually had to bring that in house for that period of time. But that was one of those things where, while all of the evidence was there, how the case was brought and how certain things occurred, diminished the value of the actual upholding of the law, let’s say, in Minnesota.
So, I urge everybody that’s on this to also go look at that and also go look at the case in Connecticut, where Connecticut imposed a very strict law, to your point, Krista, where you can’t mention anybody else. You just have to take the claim. And then if there is nothing, you can recommend a shop and here’s how the recommendation is supposed to go. They had this all procedurally written up.
But then, of course, you get—and for those of you law firms that are in New York City, I’m not knocking you, but you get these high priced New York City law firms that are charging $1,000 an hour because they get the results. That’s who Safelite hires. And all of a sudden, it’s our business first amendment. We’re allowed to say this. As long as we still say—look, we use the word recommend or you still have the choice. But it’s not necessarily in the first amendment right aspect of it as much as it is in their tactic. And it shows the intent of their language and how they do it.
And then even what we’ve always known, and your investigation also unraveled too, is while the CSRs are trained one way at Safelite Solutions, the reality is their day-to-day relies on meeting metrics internally to get things done. Allegedly. I’m just going to keep throwing allegedly out there so I don’t hear any grief when I’m in a deposition.
But what the whole thing keeps boiling back down to is the AGs offices are all afraid—or I don’t know if they’re afraid today, but they historically have been when we’ve talked to them in the past because of this case in Minnesota and this case in Connecticut.
And in fact, it ruined the AG in Minnesota. I don’t believe they got reelected and it cost the state some money. They had to settle. But it could have been done better. And if more people would have been involved and if it would have been kicked off better there.
The AG in Connecticut just gave up, didn’t want to continue to pursue it. I think they had a great appeal in my opinion. I play a lawyer on TV, meaning I read a lot. And a lot of law is just common sense and going back to statues. And when you look at it, if the AG of Connecticut would have continued to pursue this beyond this first amendment argument, the law would have continued where you could not mention anybody that you had to use a specific rule.
So, now we’re back to the point where we’re re-educated. But we really believe that the true relief is going to come from the federal government and/or class action lawsuits that motivate the AG (a) financially, but (b) where they feel somebody else has already put the skin in the game when it comes to this.
And too, it’s just educating them. And a lot of the AGs are new in the last couple of election cycles. And like most people on this call, don’t know a lot about the auto glass claims industry or the auto glass market to begin with.
KRISTA BROWN: Yeah. So, we actually have a lot of questions coming in and one of them kind of gets to this educational piece. So, I will read the question. Also, feel free to just say you don’t know all the details if any of them you don’t know how to answer. Or if you want to answer directly with the person.
But one of the questions says, I don’t understand what the harm is here. If you’re an IGA member or if your IGA members want to do business with the insurance companies, they need to meet the requirements of the insurance companies for reimbursement. This is exactly the same way the direct repair programs work in the collision industry. It sounds like your members are upset at the realities of the industry and how insurance repair works.
So, how would you respond to that?
GARY HART: First, DRP programs are the bane of any existence and they’re also horrible as well. And don’t get me started on that. I started my career in collision repair with technology there, wrote a lot of the systems that facilitate this today.
In the auto glass industry—and this is why we have a great document we can provide you—this would be fine if—I’m going to use that same Ford F-150 example. So, same vehicle, even the same insurance carrier, five different glass shops, five different states, all have a different offer and acceptance.
So, well, if it was fair, there would be a national offer and acceptance that would have no market differentiation at all. So, let’s just pretend that it’s USAA. I can pick on USAA. I’m USAA insured and a member, have been that since I was sixteen. You go over now to Geico. Geico, that same Ford truck, same glass shop who’s going to repair it. Geico’s totally different offer and acceptance. We’re talking one could be 25 percent off NAGS and the other one could be 50 percent off NAGS. It makes no sense. There’s no consistency at all.
Yet, the one thing that remains consistent between the language that Safelite Solutions uses and the insurance companies is, it’s fair market value or what the market bears. And the reality is for network jobs, that’s not a market. That’s not a marketplace. That’s made up. And especially if you have all of these different rates for the same glass, same vehicle. Any economist will tell you this.
So, it’s not that we’re just pissed off that we have to follow the rules. We’re upset that there are no rules to begin with. There’s tactics being played that are preventing glass shops from fair competition.
So, never mind the pricing. Let’s just talk about the fair competition. But if it does come to the pricing, there is no benchmark. There’s no federal standard, no ANSI standard, that says this is how we’re going to determine what a fair market value or rate is for the job. And most insurance policies—and that’s one of the things I point out in the USAA video I did. USAA comes right out and says, we’re going to pay the glass shop of your choice for the glass claim. There’s no asterisk that says, but after a discount or anything. But then when you go to the next screen, Safelite Solutions comes up and says, well, you know what? We’re going to backtrack on what that is. And we will pay what the insurance company is willing to accept or what their offer is.
And again, it’s not a matter of, are we angry? Of course, we’re angry. I mean, that’s a given., But it’s not because it’s a rule. It’s that the rules are not applied equally. And they’re just, it’s just like a DRP program. It’s all BS. You’re just going to get the shops to lock in on that to get anything done. You know, like actually collision shops are in a worse situation. And any supplement you need to get is a time consuming process.
In our industry, we only have a handful of things that come up. But even then, it’s devastating to wait 10, 14, 21 days to get approval on things while the insured is being harmed because their vehicle’s either in an unsafe condition or sometimes it’s at the shop. And the difference too is, auto glass shops don’t get to charge storage fees for vehicles. We don’t get rental car reimbursements. And these calibrations now on vehicles require a certain environment. They require a certain amount of time. And again, it’s those things that we’re being denied.
And I’ll point one more thing out because somebody brought DRP up is if you go and look at a calibration rate that a collision shop gets for static dynamic or dual, it’s double, if not triple, what glass shops are allowed to charge for under these things. So, again, if the insurance company is saying, well, this is what our fair rate is, why are there two different rates for two different industries doing the same calibration with the same OE tools?
KRISTA BROWN: Some questions I have with how you just answered is one. Like Safelite Auto Glass would also have to store a car. They don’t get reimbursed for certain things that you all have to just assume are expenses. Is that true?
GARY HART: That we know of.
KRISTA BROWN: Right.
GARY HART: So, allegedly they have a separate list of things they can bill for and they do. And allegedly, they have a different pay scale than – so, independent glass shops may have to go off, let’s just say 50 percent off NAGS. But Safelite, because of this neat little thing we understand is in their agreements with the carriers is this thing called a guaranteed average invoice.
So, if I’ve said, hey, USAA, we guarantee all invoices will be $500 no matter what they are. The SV2 system is looking at this on a minute to minute basis going where are we at? So that they can insert their billing in a way that it takes the artificially low prices of the independent and now allows Safelite Auto Glass, allegedly, to artificially make theirs higher and still meet that GAI in the middle.
KRISTA BROWN: And are these allegations just guesses? Or where are these allegations coming from?
GARY HART: I would urge everyone to look at cases in Arizona and Florida where it’s any insurer versus a glass shop, and more specifically in Florida where there are multiple federal cases that started out as short pay. And we’re talking anywhere in the range of five to 20,000 short pay claims that were put out in like a single year by one or more glass shops.
And, of course, the only way that insurance companies can defend themselves with that is to go, well, nope. RICO. You’re an organized crime and we’re going after the glass shop for this. You’re doing this against us. Fraud. You over billed us.
They turn it into a federal case where all of a sudden local lawyers go from one to $200 an hour and federal lawyers go 500 plus dollars an hour. Plus, the churn when you’re in the federal court is the federal court normally is for the plaintiff and never for the defendant in some of these things. And unless you’re a glass shop that has a couple million dollars and a good couple years to churn through the depositions and everything, you just don’t have the wherewithal for it.
But if you peel back the onion layer in a lot of those cases, you’ll see this agreement, or get access to the agreement, where it was the insurance company and Safelite. And in that agreement, it’s all laid out. And I’m sure too, during your investigative reporting, you’ll find one or two individuals that had a hand in writing those agreements as well. I am precluded from citing anything. Although, I can say I’ve had eyes on documents based off of my past participation as expert witness in cases.
KRISTA BROWN: Yeah. I mean, that’s all really clarifying and I think helpful to hear. So, there’s a few other questions. One of them is in terms of the harm to purchasers, do Safelite owned shops charge more than independent shops? How much more? And is this across the board?
GARY HART: So, there’s two parts to that. What they charge is, yes, it is our belief based off of, again, evidence supplied to us by former, current employees that have access to the work orders or invoices on the backside. Plus, the Whistleblower case cited examples as evidence from their SB2 system.
So, what we did is we took those vehicles—those invoices. Because in that case, they alleged that Safelite was charging for a part that actually wasn’t installed. So, that was the allegation that they settled on without saying that they did any wrong. We took that invoice and said, well, wait a minute, let’s go and look at that same period of time, the same date that invoice was done, and go back and historically look at shops that billed for that same vehicle, the same part for the same insurance company. What’s the difference? The difference was Safelite’s invoice was higher in every single one of those cases. It never was as low or matched what the glass shops it had to pay.
The other thing is they have a better acquisition of supply chain parts. So, if you could just imagine somebody like Safelite needs to buy containers upon containers full of glass, every day, they have to buy pallets of urethane. They have all kinds of materials they have to buy. Because of their bulk buying, they’re obviously buying this significantly less than even the best independent multi-state operator can. So, they have the advantage both on the buying side and because they can see what that guaranteed average invoice situation is, they control their destiny allegedly in their own invoicing back to the insurance company.
KRISTA BROWN: And so, if they are overcharging like that, more than they would need to, who is bearing the brunt? Is that the consumer? Is that the insurance company? Is that both?
GARY HART: Yeah, it’s definitely us, the insured. And here’s a good example too is let’s just say for some crazy reason, I’m a glass shop and I’m like, well, competitively to get more work, I want to negotiate with the insurance company. Instead of 50 percent off, I’ll do 55 for all their work. I have no way of doing that.
So, there’s no competitive—how is that even—again, somebody brought up the like, oh, we’re crying about pricing. But I’ll take the opposite side to it and say, we don’t even have a mechanism in place to allow that because that would just throw off everything that Safelite has.
KRISTA BROWN: Yeah. So, how do they have the mechanism to do that? Just because they’re the TPA?
GARY HART: They’re the TPA. They control the whole backside. That whole backside of it is 100 percent them.
KRISTA BROWN: Yeah, okay. So, this is like a million-dollar question that I don’t know if you have the answer to. I would love to know it. Why do insurers send Safelite 70 percent of their TPA business? Does Safelite send some kind of rebate, kickback, or like inducement in a way?
GARY HART: No idea. And in fact, looking at, first of all, looking at—let’s see, I’ve got to protect myself in this. Based off of what we know between the agreements between the two parties, it seems like it’s lopsided at first in that the insurance company is getting the maximum benefit of it.
But when you now really start to take it apart and look at it more of like a pro-con mind map situation, you see that it really is on the behalf of Safelite getting the majority benefit. And then, in fact, when you do read depositions and whatnot of these cases that I mentioned in Florida and Arizona, you’ll see that a lot of times, executives or management of claims for these insurance companies, when they’re questioned, they’re swearing under testimony that they know little to nothing about what NAGS is, what the pricing is, how Safelite does that. And the thing is too, Safelite, in a lot of those cases, fights tooth and nail to not (a) be enjoined in the party for the short payment of the lawsuit, but second to that is not have that agreement even come to the light of day.
So, we still scratch our head. Because we’re like why would an insurance company go along with the USAA process? Given that, if anybody on this call knows just what USAA has gone through with like cyber-attacks and things like that, settling lawsuits, things around their insurance products and banking products, I would think the last thing they’d want is a huge pile of this from one or more attorney generals from states going your app and your portal steer the way your insureds don’t have a choice. Yeah, it’s ridiculous.
And the other thing I also want to point out that just came to mind, going back to we’re whining about the pricing, is everybody’s insurance policy has—you have that capability to have the repair done at a shop of your choice. You pay cash. You can then submit that repair and proof that you paid for it and get reimbursed 100 percent for that.
So, if there truly was a mechanism again in place for insurance companies to go, oh, we’re going to cap that, why did they allow the insurer to do that and get paid 100 percent of the time all the time? So, just wanted to throw that out there as another.
KRISTA BROWN: Yeah, yeah. No, it’s helpful. So, this is a good question that I probably should have asked earlier. This is from someone. On every angle, it sounds very difficult to compete as a small shop. Are small shops making it and have you observed business closures? Or do you expect to? What is the transition between what the environment was before and then State Farm?
GARY HART: Yeah. So, pre-State Farm, we have seen shops have to close in some markets. And again, think about this for a moment. You’re Safelite Solutions and now in Philadelphia, Pennsylvania. You start seeing a lot of claims going to Gary’s Auto Glass for this ten square mile area where there’s no Safelite Store. And all of a sudden, within, I don’t know, a year or two, they either acquire one of your competitors or they just open a Safelite Shop. And now they’re in your neighborhood because they know they can service those claims that they had to give to you previously because they had no presence there. They have this advantage of seeing, by claims, what independent shops are getting work and where. So, they can prepare themselves.
Now, one of our IGA members—and I’d be happy to put anybody in touch with them—who is in North Carolina—Safelite just did this. In the last four months, they put in a store and this shop’s already seen a rapid decline in all insurance claims across the board. They thought it was because they were speaking out and somehow being penalized. But come to find out, they got information from either a current or an ex-employee that said, hey, we just did this, just wanted to let you know.
So, this is a good example of something happening right now. But yes, we have seen independent glass shops like one to three, one to five, person, mom and pop, husband and wife teams, one of those things. They just can’t compete in the marketplace anymore. They just can’t survive on more than 60 day receivables. Nobody can. And you’re carrying that burden. And a lot of these shops have to put their acquisition of glass and supplies on credit cards. And they’re already getting hit with what? 20, 29 percent APR on those things. Any chance of making it is absolutely wiped away.
Plus, they’re stifled by innovation. A lot of these bills that Safelite has crafted have made it impossible for shops to even give away a free service in the course of the claim. Meaning, I know a lot of states have those inspection periods where you have to take your car in and it gets smog checked and everything. Shops will say, hey, we’ll do a 21 point inspection of your vehicle. And that’s free with your glass shop. They’ll advertise it. They’re not even allowed to advertise that anymore. And I get that the whole aspect of that was supposed to be for preventing like gift cards and things of that nature. But even like a free set of wipers now. Interestingly enough, Safelite gives away wipers. They have promotions where they do that. But how can these independent shops not do that? So, it’s a whole—it’s a game.
KRISTA BROWN: Yeah. Okay, well, I would love to ask you more questions, but we have hit our time. So, I think we’ll conclude the call. Thank you all for joining. And thank you, Gary, for kind of answering all our questions.
GARY HART: Absolutely. And anybody, gary@iga.org, be happy to follow-up on any of the questions you have after that. Krista, thank you for your time and everything your organization has been doing on behalf of everybody. Certainly appreciate it.
KRISTA BROWN: Of course.
