As part of its ongoing legislative effort to ensure that consumers receive proper reimbursement from their automobile insurers for collision repairs, the Alliance of Automotive Service Providers of Massachusetts (AASP/MA) recently welcomed various legislators and association members for a special gathering in the southeastern part of the state to discuss the many benefits of House Bill 1111/Senate Bill 709.
Filed in the House by Representative James Hawkins of Attleboro and in the Senate by Senator Michael O. Moore of Worcester, the bill seeks to set a minimum reimbursement rate for auto body labor paid by insurers to Massachusetts claimants. This would enable the consumer to have a choice in selecting a facility and not be limited to just shops that are willing to work for a substandard rate. The legislation aims to increase the average auto repair consumer reimbursement rate in Massachusetts based on the increase in the consumer price index (CPI) between 1988 and the present. Insurers would be allowed a two-year adjustment period to increase their consumer reimbursement rate to the appropriate amount, which is currently estimated to be approximately $68 an hour versus the current average rate of approximately $40 an hour.
Addressing potential pushback on the bill by insurers, AASP/MA Lobbyist Guy Glodis provided a realistic perspective on the common argument that passage of legislation of this nature would result in elevated insurance premiums.
“The insurance industry is always going to say, ‘We can’t afford it,’” Glodis said. “With that said, record profitability by the insurance industry is publicly disclosed. Warren Buffett has said that the most successful stocks over time have been insurance; they have consistently done well over the last three or four decades. But to flip it, when insurance reform started in 1988, we had one of the highest labor rates in the country. In 2021, we’re the lowest labor rate in the nation. One side has record profitability; on the other end, we have the lowest rate in the country. I think this bill really addresses that issue.”
The need for a fair and reasonable consumer reimbursement rate is critical in today’s collision repair marketplace, AASP/MA states, particularly in light of the escalating equipment, tooling and training demands impacting body shops throughout the Commonwealth. Shops that have made the needed investments in order to perform proper repair procedures on modern vehicles are struggling to remain profitable under the average rates paid by carriers, thus leading them to make the difficult choice to pass these costs on to consumers.
“In order to keep pace with rising costs, shops are needing to start charging the consumer for the shortages that aren’t being paid for by the insurance company. That’s wrong,” said Evangelos “Lucky” Papageorg, executive director of the AASP/MA. “The insurance company is selling an indemnification policy that is supposed to be making the person whole again. The customer shouldn’t be put into the predicament of having to come up with money after they’ve already paid for their insurance policy.”
AASP/MA Legislative Director at-Large Tom Ricci (Body and Paint Center, Hudson) explained that the need for this legislation stemmed from recommendations made several years ago by a special state-sanctioned committee comprised of auto body and insurer representatives that was created to study rate-setting practices in Massachusetts. At the completion of this study in 2008, then-Office of Consumer Affairs and Business Regulation Representative Dan Crane recommended that the Legislature should act if insurers failed to do something to address the current reimbursement rate by the following year. With no action taking place since that time, the need for passage of H.B. 1111/S.B. 709 is stronger than ever.
AASP/MA member Jack Lamborghini (Total Care Auto Repair, Raynham) encouraged the legislators to spend time at association member shops to gain an even greater sense of the major issues affecting consumers and the repair businesses that serve them.
“If there were no insurance, everybody here would be very comfortable competing for and posting their own rate – whatever it happened to be – based on what their cost of doing business was,” he said. “The insurance companies have interjected themselves in the middle of this, and we have big business trying to control small business to the detriment of every consumer and the entire collision repair industry.”
Papageorg remains confident that proper consumer reimbursement will soon be a reality in Massachusetts.
“We have already made tremendous strides during this current legislative session to have our voices heard on behalf of consumers, and we look forward to further promoting this legislation when it is heard in the near future.”
For more information on AASP/MA, visit aaspma.org or call (617) 574-0741.