Insurance Association Disappointed in Court Ruling on Labor Rate Survey - BodyShop Business
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Insurance Association Disappointed in Court Ruling on Labor Rate Survey

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The Property Casualty Insurers Association of America (PCI) expressed its disappointment with a ruling by a Rhode Island Superior Court judge that would require every insurance carrier authorized to sell motor vehicle liability insurance in the state to conduct a labor rate survey and use this information as the sole determinant of the prevailing auto body labor rate.

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The case, Auto Body Association of Rhode Island (ABARI) vs. State of Rhode Island Department of Business Regulation (DBR), stems from the department’s interpretation of Rhode Island law that the labor rate survey is not the sole determinant of the prevailing labor rate; rather, it is only one factor which insurers are to consider in determining such a rate. ABARI appealed DBR’s decision to the Superior Court. PCI intervened and made a filing in the case asking the court affirm DBR’s decision.

“We are very disappointed with the court’s ruling and are considering our appeal options,” said Frank O’Brien, vice president and regional manager for PCI. “The ruling has the potential to mandate a badly flawed scheme for calculating the prevailing rate that could result in inflated rates and higher repair costs. ABARI wants to circumvent the role of competition in setting prices and force insurers to pay whatever amount is reported to them in the Auto Body Labor Rate Survey. We want to make sound decisions about repair claims and take into account the many factors that should be included in determining a fair labor rate. Efforts to make sure repair costs are reasonable benefit all consumers because they help contain the cost of auto insurance.”

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