The Rhode Island Department of Business Regulation (DBR) and the Property Casualty Insurers Association of America (PCI) have appealed an August Superior Court decision that would require insurance companies to use data collected from labor rate surveys as the lone determinant for collision repair rates. The Rhode Island Supreme Court will decide Oct. 23 whether it will hear the appeal.
On Sept. 18, the DBR instructed insurers required to file surveys to do so by Sept. 26. The bulletin stated “the filings should be made in accordance with Insurance Regulation 108 and do not need to be modified to conform with the Superior Court Decision,” as a stay was made on the judge’s decision until Oct. 23.
The state’s labor rate survey statute requires that insurers with more than 1 percent of the market use a standardized form to survey independent body shop labor rates. DRP shops don’t participate in the surveys. The court case, Auto Body Association of Rhode Island (ABARI) vs. State of Rhode Island Department of Business Regulation, arose from the department’s interpretation of the statute that the labor rate survey is not the sole determinant of the prevailing labor rate; instead, it’s only one factor which insurers are to consider in determining the rate.
ABARI appealed DBR’s decision to the Superior Court, and PCI made a filing in the case asking the court to affirm DBR’s decision. If upheld, the ruling by a Rhode Island Superior Court judge in August 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.
"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," Frank O’Brien, vice president and regional manager for PCI, said in August. "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.”
Click HERE to read a story about the Superior Court decision.
