Auto glass shops were notified this weekend that Allstate will be moving to Safelite Solutions as its third party claims administrator and members of the industry were quick to share their frustration.
The announcement stated that Safelite Solutions would take over on January 1, 2012.
"It is a huge honor for all of Safelite that Allstate recognizes the value our company can provide them, their agents and policyholders," says Tom Feeney, CEO of Safelite.
"We are both surprised and greatly disappointed with the announcement that Allstate made. We had been privileged to serve them for 11 years with contract extensions during that time. We are very committed to continue to serve with distinction through the balance of the contract term," says Chris Umble of LYNX Services.
"My concern is that it is more or less a restriction of trade and a monopoly," says James Darienzo, owner of Active Auto Glass in Long Island, N.Y. "We all know how they work and use scripts to better position themselves with the consumer. It all comes down to consumer choice, and at this point in time, they are in the driver's seat."
Others think the move is a reflection of what is happening in the industry.
"I think it reflects a sign that all insurance carriers and independent glass retailers should take note of," says Paul Gross, president of Harmon Solutions Group. "It reflects a massive consolidation of business into a single provider that is providing both TPA and retail automotive services."
"I wasn't surprised, but I was shocked at the timing of the whole event. I believe that this is tied at the hip with the commercials about repair and I believe it ties back to the guaranteed average invoice," says Dave Zoldowski, president of Auto One in Brighton, Mich. "Because of what I believe to be this monopolistic hold on the industry no one from a third party administrator standpoint can compete with them. I personally believe the legalities of what they are doing need to be tested. It drives repair regardless of the quality of the repair that is done."
The impact on the industry won't be seen until January, but some are still concerned about the well-being of the industry as a whole.
"Those carriers that have got all of their eggs in one basket or those retailers who are out there operating in the market should take notice of this move. It has a fairly profound impact on the entire industry," adds Gross.
"I can't turn around and say that their business model is wrong because everyone wants to try to be innovative and get one step ahead of their competition. However, this is just going too far at this point," says Darienzo. "It means everything for everyone's business on Long Island."
At press time Allstate Insurance has not responded to requests for comment.
