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Insurance Group Admits Control of Labor Rates
11/6/2008 11:53:29 AM
The Massachusetts Auto Body Association (MABA) was recently "astonished" to find out that the Massachusetts Automobile Insurers Bureau (AIB) stated in a report that if House Bill 5056 were passed, they would no longer be able to effectively "control the labor rate and other aspects of the repair process."
"As a spokesman, I'm speechless," said MABA spokesman Stephen Regan. "Insurers have finally admitted they use the current system to steer policyholders and pay below market rates to repairers."
The report, entitled "Actuarial Analysis of House Bill 5056," further stated that if the bill were passed, insurers would have to pay an additional $100 million in labor costs to repairers because they would then be required to pay amounts equivalent to the national average.
"As a result of the direct payment and referral shop system, the hourly labor rates for collision repairs in Massachusetts are significantly less than the rates in other states," the report stated. "In the absence of willing referral shops and satisfied claimants, the systematic control on the hourly labor rate and other aspects of the repair process that have limited the cost in Massachusetts will vanish, allowing the labor rate to rise to the levels experienced elsewhere in the country."
"To state if the bill passes, insurers will have to pay in Massachusetts what they pay in other states could actually help convince the Senate to pass the bill," Regan said. "After all, why should their constituents be paid less than their counterparts in other states?"
House Bill 5056 unanimously passed the House of Representatives and is awaiting action in the Senate. It's considered a comprehensive bill that addresses many of the problems plaguing the industry, including steering, market conduct, expedited appraisals, re-inspection requirements, minimum shop equipment requirements, disallowing insurer guarantees and eliminating the use of a so-called referral list, which showcases repairers who have agreements with insurers.
MABA feels that AIB addressing the labor rate issue as a result of the bill is ironic because the bill has no language that addresses that issue. Still, the insurance group believes that the net effect of the language in the bill would result in insurers paying a higher labor rate. They believe that the current statutes and regulations that MABA is seeking to change, which govern the Direct Payment and Referral System, would do away with the mechanism that insurers use to "control" the labor rate and other costs in Massachusetts.
I am the President of the Auto Body Association of Rhode Island and though I am not aware of the details of the introduction of this bill, I am dismayed by the apparent in-fighting as it appears in these comments. I recommend from experience that you present a united front as it is the only way to be successful. Remember that you are fighting an industry that is the best example of unity. It is certainly expected that you will have disagreements, but they should be worked out privately and not advertised for all to see and prey upon. I wish you all continued success.
by: JOHN PETRARCA 11/11/2008
Shops and consumers would be well served to look at the MA Auto Policy. "we will pay for repairs" is just about all a vehilce owner needs to understand.
Waiting for the gov to fix the problem just aint gonna work.
And bill 5056 would be much more effective than the labor rate bill
by: bcoll 11/11/2008
This needs to be widely publicized in the mainstream media; it's obscene that we have to work for basically half the labor rate required to properly run a business because we're controlled by another industry who's essentially making their profits from our effort.
by: topside 11/10/2008
Now come on boys. Can't we all just get along. Insurance Companies are sticking together and we need to too. Once again I submit to all of you. Look up assignment of proceeds. It's a contract that transfers the debt from the insured or claimant DIRECTLY TO THE SHOP! YOU CAN SUE FOR REPAIR AND PROCEEDURE CHARGES THAT ARE NOT PAID IN FULL. They are doing it in Ohio and in NY that I know of. Get paid for labor, parts, and materials used (all your materials used). You didn't go into business to make the insurance companies a profit. You went into business to fix cars AND TO MAKE A PROFIT. It may be a fight in court at first but once you draw that line in the sand and the dust settles they know they have no choice but to pay the bill. Thanks for your time.
by: joebodyman 11/7/2008
I'm already involved as the secretary for AASP/MA, so you're barking up the wrong tree. I was the secretary for MABA, but they did a good job of slandering my name a few years back.
by: cloots 11/7/2008
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