Massachusetts’ Special Commission on Auto Body Labor Rates, which
studied the logistics, benefits and cost of developing an auto body
repair labor rate system, has recommended giving “managed competition”
in the state’s auto insurance industry six more months before any
legislative action is taken to set collision repair labor rates.

“As soon as the data for auto body labor rates through June 30, 2009
becomes available, the General Court should review it to determine what
effect, if any, the implementation of managed competition has had on
the auto body labor rate paid by insurance companies to auto body shops
located in Massachusetts,” the commission recommended in its final
report released Dec. 30.

The commission said the court should determine whether any action,
including legislation, is necessary to ensure that insurers pay a “fair
and reasonable” labor rate to body shops. The commission also
recommended that representatives from the auto body and insurance
industries meet bi-monthly to discuss best practices and other actions
“that will improve the accountability and quality of services that both
industries provide.”

The approach recommended by the commission was supported by the
insurance industry, while collision repairers believed “immediate
relief is needed,” according to the report.

“We feel the nature of the market for labor rates is controlled so
tightly in all aspects by one party – from the initial appraisal to the
final payment, and all actions in between – that no force, except for
the force of law, can be a counterbalance to that control,”
representatives for collision repairers wrote in the commission’s
report.

Repairers also asked that the commission follow guidelines set by the
bill under which the commission was created – H.B. 1085, nicknamed the
labor rate bill – to set labor rates. The bill enables the commission
“to establish a system to validate labor rates that insurers must pay
to repairers, based on a repairer’s qualifications as an A, B or C
shop,” according to the Alliance of Automotive Service Providers of
Massachusetts (AASP-MA) Web site www.passthelaborratebill.org.

AASP-MA is planning meetings throughout the state to explain the
commission’s findings to repairers and discuss strategy for this year’s
legislative session.

Click HERE to access a copy of the commission’s report.