The California Department of Insurance has released proposed changes to state law to a working group of insurer and repairer lobbyists that would clarify how insurers may use labor rate surveys in adjusting claims. The proposed changes would alter the purpose of labor rate surveys and clarify when a survey could be considered in adjusting a claim.
As edited, the definition of an auto body labor rate survey would be “any gathering of information from auto body repair shops regarding what auto body repair labor rate the repair shops charge in a specific geographic area.” The new definition eliminates the original phrase, “to determine and set a specified
prevailing auto body repair rate."
The changes would also make labor rate surveys available on the Department of Insurance’s Web site – now, a public records request form must be filed. The changed law would also mandate that “a labor rate survey may not be considered in adjusting a claim” unless several criteria are met, including a requirement prohibiting DRP rates from being factored into surveys.
CRA lobbyist Richard Steffen, who has participated in working group meetings discussing labor rates, noted the process is “slow, tedious and important.”
“The future of claim disputes can turn on one word," Steffen said. "The CRA believes labor rate surveys should not include DRP or other discounted rates, and that the survey should be representative of the rates of quality shops in a specific market area. Sounds simple, but finding consensus among repairers and insurers is a challenge.”
This month, several CRA members reported that they have received calls from insurers asking about their posted labor rate. The CRA claims adjusters, in preparing estimates, have called shops asking for the labor rate and then stated, “I will be by to take photos of your posted labor rate.”
The association is advising members to keep track of the phone calls from insurers. In a message to members, the CRA noted that California law doesn’t require shops to post retail labor rates, but the association is encouraging shops to do so.
A follow-up meeting to discuss the proposed changes to labor rate survey law is slated for Friday, Oct. 17. To read a full text of the proposed labor rate survey changes, click HERE. To read more about the CRA’s position on the issue, visit www.cra-ca.com.
