NAGS Winter Catalogue, Prices Prompt New Insurer Discounts, Shop Discord

The publication of the most recent editions of the National Auto Glass Specifications (NAGS) Catalog™ and Calculator™ has created a stir in the industry second only to that of the rebalancing last February.

The winter edition of the publications took effect on Monday, January 9, 2006 and well before that day, auto glass shop owners were receiving faxes from third party administrator (TPAs) SGC indicating that the Offer and Acceptance (O&A) programs of different insurers would include discounts up to 30 percent in some areas (see Farmers Insurance Announces Revised Pricing Structure for A, B Markets in 2006 and Farmers Insurance Notifies Minnesota Glass Shop Owners of Pricing Change). State Farm Insurance has not yet issued any sort of announcement regarding discounts.

The reaction of shop owners and other members of the industry to the current turn of events has been no surprise, though some shop owners feel more strongly about the situation than do others.

"I find it interesting that so many of the common numbers have fallen for no reason," said one shop owner in Minnesota who asked not to be identified. "What we relate it to is a loss of $5-$15 per invoice."

He adamantly opined that the problem is not strictly the fault of the NAGS Calculator™, but that the industry as a whole needs to find a way to make the NAGS system work or find a new system.

"I have to use NAGS. It's the only system the insurance companies will recognize; but they only wan to use part of it. They want to use the list price to determine pricing. As far as I'm concerned, there should be no discounting. The real meat of the whole thing should be labor and I believe that's what NAGS wanted the industry to do."

Mike Preston of Clayton, N.C. is less forgiving of the roll the publication, which has heretofore been described the industry as a benchmark or suggested pricing structure, plays in the pricing quagmire the industry is facing.

"The biggest problem I have is that [NAGS pricing] doesn't distinguish between the OEM manufacturers and the aftermarket only manufacturers. I feel that Chinese-made glass should fall into the category of aftermarket only as well. If I go to the parts store and order a distributor cap for my '96 F-150, I expect to pay more for the original Ford part than I would for the store brand. Why shouldn't glass be the same?" Preston said. He also echoed the sentiment that labor and the quality of work should have more of an impact on the compensation shops are paid for the work.

"I also feel that if a quality oriented shop takes longer either to do a job or has to take longer to clean up the mess that another shop made, they should be able to charge accordingly," he added.

So where does one lay the blame? Most shops say the current situation is the fault of the insurance companies.

"As far as the recent NAGS publication, most retailers probably wouldn't even have known about it except for the barrage of 'price adjustments' coming from the TPAs and insurance companies. As usual, we saw an average part list price increase (based on our mix) of around 1.5 to 2 percent; however, each of the major carriers cut the reimbursement an average of 3 to 5 percent," said Jim Horrox with Stockton Autoglass. "Other than the potential benefit of 'smoothing' the exceptional low and high-priced parts, such small publication updates are more of an aggravation than anything else. It's unfortunate, because this publication (list increase) could have been used to offset some of the energy surcharges being assessed throughout the glass supply chain. Instead, the customer segment with the greatest buying power once again took the opportunity to wring a few more dollars out of the average replacement."

Still, Horrox was a little more forgiving to the insurance industry than others have been.

"Can we really blame them?" he asked. "The bottom line is there's still much acceptance of the offer."