Windshield repairs provide options for fraud
Parts-shifting and billing discrepancies are frequent methods of inflating claims.
If your policyholders live in sunny Florida, is there really any reason for their vehicle’s damaged auto glass to be replaced with a winter package upgrade that includes a heated wiper park area/? Not likely.
“Parts-shifting” is a common form of auto glass fraud – one that Allstate recently took to court in California to the tune of $1.4 million, according to GlassBytes. And while the billing discrepancies on individual repairs are generally small, the cumulative cost to an insurer’s bottom line is not.
This is especially relevant for insurers operating in Kentucky, Florida, Arizona, Massachusetts, New York, or South Carolina, where free glass repair is required by law with the waiver of insurance deductibles. In the eyes of the Department of Transportation, windshields are safety devices: It’s illegal to drive without one, or with a poorly-functioning one. A small chip or crack may prevent the auto from passing its annual inspection. That is because auto glass needs to be strong enough to withstand the high pressure exerted upon its surface in the accidental event of a deployed airbag.
Interestingly, in the eyes of many insurers, auto glass replacement may not even be considered a claim. Thus, this type of repair falls in the sweet spot between high necessity and low culpability. These are conditions where fraud can easily escape detection and very often does.
Related: Windshield repair fraud targeted in Florida Senate proposal
Many opportunities for fraud
Switching out a windshield of one tint with one of a different color is the single most common type of auto glass parts-shifting. Color, after all, is a very common feature in auto glass because most windshields are tinted. Because color is ubiquitous and there are many different shades of color to choose from, it’s all too easy to make a mismatch, whether that’s fraudulently intentional or just plain sloppy work.
Other types of parts-shifting have been less common because until recently, many special features simply were not found on standard vehicles. That is changing since features once reserved for luxury cars are now saturating the rest of production. The sheer number of possible windshield options in the market today will surprise the average driver and seem overwhelming to the typical claims department.
Today’s glass features
Here are 14 common and newly introduced auto glass features that can be combined in any number of ways:
- Acoustic interlayer: Lamination between glass layers reduces incoming noise without increasing glass weight or thickness.
- Shadeband: A band about six inches high running along the top of the windshield, tinted to screen the driver’s eyes from glare.
- Third visor frit: A pattern of black dots painted on the windshield behind the rear view mirror to provide additional glare relief.
- Rain sensor: A device that activates the wipers or changes their speed depending on how much moisture is on the glass.
- Electrochromatic mirror: A rear-view mirror that dims automatically when it senses bright lights.
- Heated wiper park: A feature that prevents the wipers from freezing by heating the area where they rest.
- Heated windshield: Heated windshields have heating elements that run vertically through the entire span of glass.
- Heads up display: A projection of pertinent info (such as vehicle speed) onto the windshield.
- Night vision: A camera that uses infrared technology originally developed for military vehicles to detect objects beyond the reach of the headlights.
- Paint band: A thin ceramic coating painted on the inside of the windshield, following the perimeter of the glass.
- VIN notch: A space left open in the paint band so the vehicle identification number can be easily read from the outside.
- Mirror bracket: The bracket that attaches the rear view mirror to the inside of the windshield.
- Antenna: A thin metallic line in or on the windshield that serves as an antenna, usually in lieu of an external antenna.
- Diversity antenna: A set of two antennae mounted on different locations; the antenna with the best signal reception is the one that is activated.
Add tints to the equation, and the number of choices are multiplied all over again.
For the customer, these options offer choice and luxury. For the insurer, they bring the possibility of greater exposure. Guaranteeing that a windshield is replaced with the appropriate part becomes only more complex with each new option added, and the opportunity for fraudulent claims grows exponentially from there.
Related: Selling crash report data may not be legal
Common examples of auto glass parts-shifting
When StrategicClaim ran analytics on thousands of auto glass claims in a comprehensive study of today’s most common vehicle makes, models, and body styles, it found that parts-shifting formed a discernible pattern across mostly late model vehicles.
Color shifts were the most common (45%), followed by rain sensor shifts (25%), heated wiper shifts (19%) and mirror shifts (17%). However, the greatest exposures by far came from shifts that combined multiple upgrades (75%).
For example, while the price discrepancy between an original equipment manufacturer (OEM) windshield and one with an electrochromatic mirror might be only two or three dollars, it could soar as high as $400 for one with an electrochromatic mirror plus a heated wiper.
Where car make was concerned, the variance between the OEM part originally installed and the replacement part actually used was greatest for BMW, Chrysler, Jeep and the Buick Park Ave.
The conclusion is clear. To control costs, insurers must leverage their data to identify what should happen, track what actually occurs, and be alerted to red flags before they translate into unnecessary costs.
Fred Lizza (FLizza@stclaim.com) is CEO of StrategicClaim, a provider of a SaaS-based claims platform for carriers, agents and policyholders designed to expedite reporting and resolution of auto and homeowners insurance losses. He was previously CEO of Freestyle Solutions, an e-commerce and SAAS order management leader.