GEICO Announces — Then Pulls Back — From Pricing Structure
When GEICO announced in July that it formed a partnership with asTech and established an associated “pricing structure” for collision repair shops, it caused great consternation in the auto glass services industry.
GEICO’s initial plan was to set a price for calibration services it pays collision shops based on the pricing structure in its agreement with asTech, a scanning, diagnostics and calibration tool company. According to 2022 National Association of Insurance Commissioners data, GEICO is the second largest car insurance company in the United States.
GEICO notified shops that using asTech technology was strongly recommended, and any deviation may require additional documentation to justify the procedures and pricing. It also informed the shops that its base pricing structure was based on the use of asTech’s technology.
Although the policy did not encompass auto glass shops, the implications for the future were clear. Insurance company pricing that could move from a market-based model to an insurance company paradigm with limitations and strict “recommendations” could send reverberations across a glass services company’s bottom line.
Peter Brown, president of Tiny and Sons in Pembroke, Massachusetts, told glassBYTEs:
“As an independent, if you’re thinking about using the asTech model, which is a great model if you’re just starting out, you have to keep it in the back of your mind that [asTech] has already signed an agreement with one of the biggest insurance companies that you’re doing business with … You have to be sure that you understand the process and that this could be coming down the road. You should be very careful what you sign up for.”
Since the policy received significant backlash from the collision industry, GEICO has backtracked and increased some prices that it will pay for calibration services. However, it is arguable that some or most of the revised pricing structure is based on the asTech model.
Whether this move by GEICO is an ill-conceived, faltering attempt to control its cost structure or is a harbinger of things to come in the glass services industry, it continues to be imperative for those in the auto glass industry to keep both eyes wide open and communicate with each other.
What better place to network and exchange information with the rest of the industry than Auto Glass Week™ 2024? The AGSC looks forward to seeing you there.
Seth Maiman is the director of public affairs for the Auto Glass Safety Council.
Auto Glass Week™ Talks Auto Glass Legislation
Seth Maiman will join a panel of other AGSC experts at Auto Glass Week™ 2024 to share the latest information on “Regulation and Legislation” within the industry. The seminar will cover more trends in auto glass and insurance information as well as federal and state legislation that affects the auto glass industry. The panel will also discuss major changes in the Auto Glass Replacement Safety Standard (AGRSS) and the Repair of Laminated Auto Glass Standard 2 (ROLAGS2). From 1:00 p.m. to 1:30 p.m. on September 19, AGW attendees can learn from Peter Brown, AGSC’s AGRSS Committee chair; Linda Rollinson, the ROLAGS2 chair; and Maiman.
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