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Auto glass claims have long been viewed as nuisance claims by many carriers, but that nuisance has become the plague of the insurance industry. Claim harvesting, litigation, and price gouging are the culprits. The recent surge of auto glass claims has caught the insurance industry off-guard.

While frequency skyrockets with no signs of improving, historic underwriting models no longer apply. However, looking more in-depth at the antidote actually provides clarity about the original cause of the disease. It is common to waive the deductible for glass repairs because the severity is much lower than if the windshield is allowed to completely crack out — which would require a replacement. How then, is it possible that this remedy, which is intended to lower severity, has become a cancer that drives claims off the charts and increases costs to the carrier?

Claim Harvesting

The practice of claim harvesting in the auto glass industry became popular in the gas stations, car washes, and quick lubes of Arizona. Now, an organization based in Arizona is spreading the concept nationwide by sending commissioned sales staff door-to-door. They even canvass parking lots to identify and sometimes create glass damage, so that they can offer the insurance customer a “free” glass repair or replacement service. The practice is lucrative for this organization. With dollar signs in their eyes, they are taking their business model nationwide, targeting zero-deductible markets, and helping to drive the increase in auto glass claim frequency.

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