MABA Supports Cost Containment Repeal - BodyShop Business
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MABA Supports Cost Containment Repeal

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A Massachusetts Auto Body Association (MABA) representative testified at a recent Massachusetts Division of Insurance hearing in support of the proposed repeal of the state’s auto insurance cost containment regulation.

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MABA spokesman Steve Regan said that the regulation’s original intent to control insurance costs has evolved into a tool used by some insurers to pay less than fair market value for labor and services, among other things.

“This regulation was designed to rein in rising insurance premiums through efficiencies and controlling fraud,” Regan said. “Unfortunately, many insurers have used the regulation as justification for mandating certain repair procedures and dictating what a repairer will be paid. It has also been used successfully as a legal defense by insurers against lawsuits by consumers and repairers seeking to be paid what they contend were fair and reasonable charges. This wasn’t the intent, and the repeal will remove a great barrier to repairers and consumers who are trying to regain control of their businesses and be paid appropriately for their claims.”

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Although the regulation is only a requirement for insurers to submit a report on the efforts they have undertaken to control costs and fraud, in practice, some insurers and appraisers have often used it as a stated authorization for mandating the use of aftermarket parts and dictating labor and storage payments, according to MABA.

MABA has been seeking the repeal of this regulation for many years without success. However, with a new governor and insurance commissioner and the advent of deregulation in Massachusetts, MABA is hopeful that more actions like this will be taken soon.

The regulation, part of the 1988 Automobile Insurance Reform Act, required the Automobile Insurers Bureau (AIB) to file an annual report with the Division of Insurance that documented efforts to help reduce insurance costs in the state. The Division believes the regulation is outdated due to recent changes to laws and regulations assisting with the transition toward managed competition in the Massachusetts automobile insurance market.
 
“Massachusetts has begun to disassemble a process that had the state set rates for insurance premiums and mandate certain discounts for policyholders by insurers in order to promote competition,” said Regan. “It’s good to know that the state is also seeking to remove the barriers that repairers have faced, which allowed insurers to control their businesses and their customers. With the repeal of ‘cost containment,’ repairers are now also free to compete for customers and be paid rates and fees that reflect their cost of doing business.”

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For more information on MABA, visit www.massautobody.org.

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