Massachusetts lawmakers to once again mull labor rate increaseBy on
Four bills are on deck to be introduced in the Massachusetts legislature, which seek to address the lowest body shop labor rate in the U.S. and to oversee future adjustments to the rate as well as insurance appraiser licensing.
“An Act relative to the licensure of appraisers” would increase the number of members on the Auto Damage Appraiser Licensing Board (ADALB) and create term limits for members. The bill will have a Senate companion filed as well.
“An Act to establish minimum reimbursement rate to insurance claimants” would “establish a set of minimum reimbursement rates for labor by insurers to claimants, for first- or third-party auto insurance claims” and would be calculated by identifying the rate at the time of the Insurance Reform Act of 1988 adjusted to the rate of inflation at the time the bill becomes law. The rates would be phased in over two years first at an increase of one-half of the difference between current rates and the newly established rates. The remaining half of the increase would follow at the end of the next twelfth month, including the rate of inflation for the previous twelve-month period.
The bill would also require the rates to be adjusted yearly based on the Consumer Price Index (CPI) for All Urban Consumers Not Seasonally Adjusted, Northeast Region as published by the U.S. Bureau of Labor and Statistics.
Both of the House acts mentioned above were introduced during the last legislative session but didn’t make it to the floor to be voted on.
“We’re looking to build on the momentum of the success from the last session,” Evangelos “Lucky” Papageorg, the executive director of AASP-MA, told Repairer Driven News. “Both bills made it further than any of our bills have made it on our behalf in the past. They were basically right at the goal line in the last legislative session. They just never came out onto the floor for a vote. We still have great bipartisan support in both the House and the Senate. We are confident that the bills will come to a vote in this session”
The Massachusetts labor rate of $40 hasn’t significantly increased since 1988.
“Our membership has done a great job educating their legislators and by reaching out to them and staying in contact with them,” Papageorg said. “With our very successful rally in front of the State House last May, we really called a lot of attention to the issue and it opened up a lot of people’s eyes, particularly to what’s going on. …there’s a serious issue when it comes to labor rate. Small businesses, collision businesses, are falling to the wayside because we can’t entice new, younger technicians into the industry. Into an industry that is becoming more and more exciting every day with new technology and repair techniques and procedures.
“We’ve been very specific in our proposed legislative language. Our bills are all about getting the consumer properly reimbursed so that they don’t have out-of-pocket expenses due to the shortfall of the insurer not paying an adequate labor rate, nor having their appraisers writing improper estimates and failing to negotiate fairly with collision repairers. This has been our message to legislators and the media and they are hearing and understanding us. Our bills are a direct benefit to the consumer. When consumers are fairly reimbursed, then and only then will body shops ultimately benefit. Our key focus is the fact that consumers are being forced to either reach into their pockets, go to shops that are working for a suppressed contractual labor rate. A contractual rate that is much lower than the national average right now and thinking that they, the vehicle owners, are going to be getting what they should be getting in the collision repair process. One has to ask, ‘Are the shops who are accepting the labor reimbursement rate, which insurers are willing to pay, able to keep qualified technicians, maintain equipment and training at the current artificially suppressed rate?’ I think the answer is obvious. It is a resounding ‘NO!'”
A fourth bill, “An Act reforming auto body labor rates,” would create an Auto Body Labor Rate Advisory Board to address issues related to auto body labor rates. The board would also be responsible for creating, implementing and overseeing an annual survey given to relevant auto body shops as determined by the advisory board, which would compile data pertaining to contracted hourly labor rates, posted hourly labor rates, and prevailing hourly labor rates, according to the bill.
The nine-member board would be made up of one member appointed by the commissioner of insurance; one member appointed by the attorney general; one member appointed by the director of the division of insurance standards; three members from the auto insurance industry appointed by the Automobile Insurers Bureau of Massachusetts — one of which would serve as co-chair, and three members from the auto repair industry from different geographic regions of the Commonwealth appointed by the AASP-MA.
After filing a report of its findings with the legislature, the commissioner of insurance would be required to set a minimum hourly labor rate for insurers to pay of not less than $55.
The docket numbers currently associated with the bills are subject to change after they’re officially introduced as bills and sent to committee, according to Papageorg.
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