The special commission studying the logistics, benefits and cost of
developing an auto body repair labor rate system in Massachusetts held
its second and final public hearing Nov. 13. The American Insurance
Association (AIA) testified at the hearing that setting labor rates
would be “a major step backwards in the effort to reform the private
passenger auto insurance system” in the state.
The labor rate commission was formed after the July passage of the auto
body labor rate bill, H.B. 1085. The commission must report its
findings by Dec. 31.
John Murphy, AIA Northeast Region vice president, said at the hearing
that the AIA opposes regulating labor rates and equated such efforts
with "government price-fixing."
“Auto insurers can and do negotiate favorable labor rates for repairs,”
Murphy said. “Those efforts have a positive impact on repair costs
which, in turn, have a positive impact on containing overall insurance
costs.”
However, supporters of labor rate regulation, including the Massachusetts chapter of the Alliance of Automotive Service
Providers (AASP-MA/RI) and the Central Massachusetts Auto Rebuilders
Association (CMARA), say that Massachusetts repairers are paid the lowest labor rates in the United
States despite operating in one of the most costly areas in the country.
Murphy claimed a cost-estimate performed by the Automobile Insurance
Bureau of Massachusetts (AIB) found that if insurers were no longer
allowed to negotiate labor rates with repair shops and the state labor
rate was comparable to the national average, repair costs would
increase by $128 to $146 million annually, and those costs would be
passed down to consumers.
The labor rate bill was introduced in January of 2007 by State Rep.
Robert Spellane (D-Worcester). The labor rate commission was also
tasked with looking into the number of existing shops in the state and
the number that have closed since 2000, studying nationwide labor rate
trends and Massachusetts trends through the U.S. Bureau of Labor
Statistics, and developing a rate system that’s in line with the
Massachusetts economy.
For more information, visit www.passthelaborratebill.org or www.aiadc.org. Click HERE to read a previous story about the bill.
