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Massachusetts lawmakers again consider setting labor rate, protecting right to hire public adjuster

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Massachusetts legislators are again considering a bill that would set a labor rate for collision repair shops, which has for decades been well under the rates of other states and trades.

The rate is currently the lowest in the country at $40.

“It’s not acceptable that insurance companies are still paying the same $40/hour labor rate that they paid decades ago,” wrote Rep. Jim Hawkins, sponsor of the House bill, on Facebook. “In the open market where you would expect stiff competition plumbers and electricians routinely charge over $200/hour. Auto repair shops that do mechanical work routinely charge $125/hour and up. Even bicycle shops charge more than $100/hour.

“And if you subtract the costs of a frame machine, a downdraft spray booth, and the related expense for filters, hazardous waste management, training for new accident avoidance systems and EVs [electric vehicles] that leaves auto body shops competing with Target for recent vocational school graduates hoping to go into the trades. Unless we are suddenly going to start driving better it matters that we protect these local, family-owned businesses.”

H.4412 is a carryover from the last two legislative sessions. Hawkins urged Bay Staters to write their state representatives and ask them to support H1035 (now H4412 for the current legislative session).

The bill was reported favorably to the House Ways and Means Committee on Feb. 20. A hearing hadn’t been held or scheduled as of Tuesday afternoon.

The Labor Rate Study Commission, formed to make recommendations to solve the issue, suggested one of the solutions could be to require insurers to use a minimum rate equal to the rate at the time the Insurance Reform Act passed in 1988, adjusted for inflation. The rate would then be adjusted each year based on the Bureau of Labor Statistics’ Northeast Consumer Price Index, which is the inflation rate for the region that includes Massachusetts.

Alliance of Automotive Service Providers of Massachusetts (AASP-MA) Executive Director Evangelos “Lucky” Papageorg said the bill is important because it would put a mechanism in place that “should avoid the artificial suppression of the rate of reimbursement to the insured here in Massachusetts.”

“It requires a yearly review of many factors which will be evaluated for the purpose of setting a minimum, and I stress minimum, rate of reimbursement to the insured. As costs change during the course of the year between increases, collision shops may have to still charge a difference between what the insurer is willing to pay and the shop’s additional costs of repair. It also allows for an increase in the rate of reimbursement paid by the insurer through the negotiation process when the vehicle is being repaired by a particular shop.”

A hearing held Tuesday on a separate bill, H.4307, addressed an insurance issue in the state — the right to hire a public adjuster in a property and casualty claim.

Seth H. Hochbaum, legal counsel for the Massachusetts Association of Public Adjusters, testified that insurers use an anti-public adjuster endorsement on insurance policies to “condition the availability of coverage on a consumer not utilizing the services of a public adjustment to do exactly what public adjusters are licensed to do, which is namely inspect, evaluate, and adjust property and casualty losses.”

He added that many consumers could be unknowingly losing their right to an independent appraisal.

“Consumers should not be compelled to make the difficult, if not possible, choice to hire a licensed public insurance adjuster to assist them in the daunting and often complex first-party property claims process,” Hochbaum said.

Lawrence Berman, a Massachusetts public adjuster, testified that he believes the idea of an anti-public adjuster endorsement is outrageous.

“It takes away the rights of the consumer to hire who they choose to work on their behalf,” he said. “Without adequate representation, they’re left at the mercy of an insurance company that wants to pay as little as possible and not a fair amount.”

Brian Goodman, an attorney who testified on behalf of the National Association of Insurance Adjusters, compared taking the consumer choice away to going through an IRS audit without being able to hire an accountant, or being sued and not allowed to hire a lawyer.

“Licensed public adjusters are the only professional specifically licensed to do this and they’re regulated by the Commonwealth Insurance Department,” he said. “If certain insurance carriers selling policies in Massachusetts have their way, that’s exactly where we are headed.

“It would almost be like having a health insurance policy, but the health insurance policy would have an endorsement in it that said if you break your leg, you can have anybody set it other than a trained orthopedist. It is nonsensical.”

John Stey, a resident who said his office damage claim should’ve resulted in better coverage, advocated for consumers to have the choice of hiring a public adjuster.

“When I finally signed off on my claim, I realized almost a month even to a year later that I wasn’t compensated for losses that I had at the office,” he said. “I had many out-of-pocket expenses moving forward. I had a loss in my home just a few years back where I did hire a public adjuster. It was a significant loss and that was so helpful to me because I didn’t understand the coverage issues.”

The committee didn’t vote on the bill.


Featured image credit: Gwengoat/iStock

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