by Sara Bennington
In a recent announcement, State Farm declared that it has chosen Duncan Systems (formerly D&D Customs) of Elkhardt, IN, to be its primary network for recreational vehicles (RV) parts. The agreement makes Duncan Systems the distributor of choice for State Farm insureds to use when making RV glass claims. Insureds will call in to LYNX Services From PPG, which will refer them to Duncan Systems. Then the customer's glass shop must purchase the part from State Farm and install the glass for a flat labor rate.
While this deal appears to simplify State Farm's system, it is leaving many RV parts companies disgruntled and dissatisfied, their only piece of the business in the installation. In addition to their concerns about being shut out of RV referrals, some suppliers worry that this is State Farm's first step toward a direct purchase program for all segments of the auto glass industry.
According to Tony Ferrara, national glass manager for State Farm in Bloomington, IL, the recent decision was prompted by customer need. State Farm had long been dealing with the many different specialties in the industry, says Ferrara, "but policyholders were on their own when it came to RV glass claims." He explains that, historically, insurance companies have not been large enough customers in the RV market to warrant extensive service, leaving customers to fend for themselves when pursuing claims.
Enter Duncan Systems, Inc., suppliers and consultants to RV and insurance industries. According to Mike Eberle, director of sales and marketing, the company began building upon its relationship with State Farm early last year. He states Duncan Systems "offers more than most glass companies."
In addition to carrying more than 5,000 aftermarket windshields in stock on a daily basis, making it the largest distributor of RV windshields, the company also deals with other aftermarket products, offers instruction in estimating and claims adjusting, publishes a book of repair prices and offers RV repair and replacement services. State Farm says that it was Duncan Systems who presented it with a proposal for the agreement, and agrees that working with Duncan offered many benefits.
"Duncan Systems had the knowledge, experience and resources to meet the potential volume," states Ferrara.
According to the November/December 1997 issue of the Independent Glass Association (IGA) Beacon newsletter, once LYNX refers a customer to Duncan Systems, it notifies the customer's glass shop and drop-ships the part, paying the shop a flat labor rate plus a minimal material fee. For Duncan Systems, the deal has been extremely beneficial. Due to the agreement, "business has dramatically increased, and we've had other insurance companies contacting us as well," notes Eberle. "We've also opened a regional office in Oregon, and are considering additional sites in Nevada, the southeast and other east coast locations due to our exponential growth."
While the current situation has State Farm and Duncan Systems comfortably in the RV-claims driver's seat, other RV parts companies are feeling left by the wayside. "We've heard a lot of complaints," says Ed Kintz, vice president of Elkhardt, IN-based ParKin Accessories, Inc. "And obviously, we don't like it." ParKin Accessories, Inc. covers the entire range of RV glass accessories, servicing vans and RV glass and windshields, with van side windows comprising the largest portion of the business. He speculates that his company has likely lost some orders to Duncan Systems because of the State Farm deal. "Some sales are probably going there [to State Farm] by default." Kintz maintains that it is too early to speculate as to the effect this agreement will have on other RV parts companies, but he does not anticipate it having a material effect on his company.
DCM Company of Elkhardt, IN is another RV parts company that is displeased with the recent changes involving State Farm. Bob Vogelzang, president of the company, shares a similar position with Kintz. "We don't like it [the agreement]. I'm sure we've lost some orders because of it," he states. When asked if he feels that this is an attempt by State Farm to eliminate the smaller shops from RV glass claims, Vogelzang replies, "I don't know if it's that, but I do feel it's a continuation of them flexing their muscle." What concerns Vogelzang more than losing orders is the potential impact this deal may have on the glass industry. He wonders if State Farm may eventually expand into all facets of the auto glass industry.
Vogelzang is also concerned about the inclusion of van-conversion windows in State Farm's RV component category. "Vans are not RVs," he declares. DCM is also a van-conversion window supplier. Vogelzang states that he was advised that when LYNX was formed, it would never refer auto glass to a particular distributor. "But that's exactly what they're doing now," he complains. In response, Ferrara contends that while State Farm's insureds likely will go through Duncan Systems, they are able to choose the auto glass installer of their choice. "State Farm always gives its customers the right to do that," he emphasizes. However, he does mention that this action leads to competition among companies, as Duncan Systems contacts the chosen retailer and subsequently attempts to negotiate a price. Ferrara also says that State Farm cannot guarantee it will pay an alternate retailer's price, leaving the insured to cover the difference.
All parties feel that it is too early to fully determine the effect this agreement will have on the RV glass parts industry as a whole.
Sara Bennington is a special projects editor for USGlass magazine.
It appears that State Farm is not the only company operating an RV referral system. Rose City RV Referral, owned by Glasparts, Inc. of Portland, OR, has stepped into the ring as an alternative referral source representing glass shop owners.
Rose City RV Referral has established a nationwide database of glass installers willing to participate in a program that the company calls "an attempt to create a more equitable situation for glass installers and motor home owners." Shops participating in the program do so under the following terms: Member shops will install an RV windshield for cost plus 40 percent on the glass, along with freight, crate and labor charges. Labor will be paid based on Glasparts' Calculator times at $25 per hour.
Saying it provides "one-stop shopping" for insurance companies, Rose City RV Referrals acts as coordinator between the billing agencies and participating glass shops, providing quotes, receiving a billing service fee, assisting the billing agency in arranging installation times and locations with the shops, and maintaining contact with all system participants once the job is complete. All participating glass shops are required to purchase their windshields from Glasparts at the Rose City RV Referrals' quoted price.
While this program may not eliminate State Farm's presence in the RV referral market, it does provide glass shop owners and insurance companies with a concrete alternative.
Another pressing concern resulting from the State Farm/Duncan Systems agreement and the insurer's inclusion of van-conversion windows in its RV component category is the definition of a recreational vehicle (RV). Wilbur Bontrager, chairman of the board for Middlebury, IN-based Jayco, and first vice chairman of the board of the Recreational Vehicle Industry Association (RVIA), states that, "A van-conversion vehicle is considered an RV only for [our] purposes of membership in the RVIA." By definition, Bontrager insists that "vans are conversion vehicles, not RVs."
In spite of this definition, State Farm has included these vehicles in the RV category for the new agreement. This is the issue that angers van-conversion window suppliers such as Bob Vogelzang of DCM Company. "State Farm has arbitrarily defined vans as recreational vehicles," he asserts. "But if the RVIA doesn't, why should they?" Due to this inclusion, van owners taking their claims to State Farm are subsequently being referred to the specialized Duncan Systems, rather than to regular auto glass suppliers.
Vogelzang worries that this type of categorizing by insurance companies could lead to more non-traditional RV vehicles being included under this category. As an example, he ponders, "What's to stop State Farm from possibly listing convertibles as RVs in the future?
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