Mississippi State Senator Videt Carmichael, R-Meridian, recently introduced a bill that would prevent shops from charging a labor rate higher than the national average.
Mississippi Code 83-11-501 currently states: No insurer may require as a condition of payment of a claim that repairs to a damaged vehicle, including glass repairs or replacements, must be made by a particular contractor or motor vehicle repair shop; provided, however, the most an insurer shall be required to pay for the repair of the vehicle or repair or replacement of the glass is the lowest amount that such vehicle or glass could be properly and fairly repaired or replaced by a contractor or repair shop within a reasonable geographical or trade area of the insured.
Carmichael’s proposed Senate Bill 2187 would add the following language: In no event shall a motor vehicle repair shop charge labor rates above the average national rate charged for like-kind work, without the express approval of the Commissioner of Insurance.
“They talk about a ‘national average,’ but notice there is no definition in there of what an average is, who establishes it, and whether it includes DRP or non-DRP agreements or shops that have certifications compared to shops that don’t,” says John Mosley, owner of Clinton Body Shop, who is no stranger to taking on insurance companies. “You can say the price of a meal can be no more than the national average, but you’re going to compare everything from a Ruth’s Chris to a Crystal. Everybody’s not capable of the same repair. Everybody has not made a comparable investment into their buinesss and their employess, so it’s totally unrealistic to think they can get that done.”
The collision repairers in Mississippi have of late defied the status quo and challenged insurance companies on a number of issues and raised their rate to a level where they feel they can make a fair and reasonable profit.
“It’s aggravating when you think about it and look at what your local hardware store’s labor rate is for working on a small engine,” Mosley says. “My lawnmower needs a belt or whatever and they charge $70 per hour. At $65 per hour, [body shops] work on $50,000 to $150,000 cars, yet that’s too much for body labor. It just doesn’t make sense – other than the fact that the insurance industry wants to charge higher premiums for these cars but yet keep paying the same or a lower rate.”
Addressing the part of the proposed new language that reads, “…without the express approval of the Commissioner of Insurance,” Mosley says, “Where’s he going to get the info from? Probably from State Farm that has DRP agreements, and they will give whatever their average is around the country. But in every area, their average is based on whatever those DRP agreements are.”
Mosley says he has chosen to not be on any DRP and thus states he has no one feeding him work.
“We’re out here on our own fighting for our business based on our reputation and the quality of our work, and yet I’m going to be compared to somebody who is feeding off the insurance industry.”
Mosley, along with John Morgan Hughes, executive director of the Mississippi Collision Repair Association, has already met with the Lieutenant Governor’s staff to discuss their position on the bill. They are urging Mississippi repairers to contact their local representative or senator to express their opposition to the bill. Information on Mississippi legislators can be found here.
“If they get it done here,” Mosley says, “they’ll try to get it passed all over the country.”