Mass. Body Shops Call for Passage of Bill to Set Fair Repair Rates

A trade group representing the Massachusetts collision repair industry is hoping the third time is a charm in its efforts to get a state law passed that would establish a “fair and reasonable process” for determining the hourly rates shops can charge for fixing insured vehicles.

The bill, which is expected to be considered in January by the state Legislature’s Joint Committee on Financial Services, calls for establishment of a special commission to set minimum hourly rates for auto body, repair and mechanical work in Massachusetts, where representatives of the collision repair business say they are paid the lowest rates nationwide.

The Auto Body Labor Rate Bill, which was first introduced in 2007, calls for the commission to be staffed by 11 members–including the state undersecretary of the Office of Consumer Affairs and Business Regulation, state lawmakers and representatives of the Massachusetts auto insurance and collision repair industries–and to set wages based on average rates across the nation.

Auto repairsPeter Abdelmaseh, executive director of the Massachusetts chapter of the Alliance of Automotive Service Providers (AASP)—which has lobbied for years for passage of the proposed legislation—said he is confident the bill will be supported this time by lawmakers.

“We believe that the overwhelming majority of legislators agree that the remedies proposed in the bill are a fair and reasonable approach to solving what all agree to be a significant problem,” Abdelmaseh said in an email.

According to Abdelmaseh’s association and other groups that represent collision repair businesses, the hourly amount they are paid has stagnated in recent years because vehicle insurers steer business to only those shops with the lowest hourly rates, including some that use parts that are not up to industry standards.

Auto insurance providers, meanwhile, have countered that the rates should be determined by the market and that establishing minimums would artificially drive up their costs.

A report released in 2008 by a state commission formed to investigate the labor rate issue confirmed that rates have failed to keep pace with increases in wages in similar industries. But the commission, which was staffed by lawmakers and representatives of both the insurer and repairer industries, was unsure what, if anything, should be done to remedy the situation.

According to AASP, the statewide average of $35.75 paid for auto body work is the lowest nationwide, with rates in all other states except Tennessee—where shops earn $39.69 per hour—topping $40. The national average is more than $45, AASP says.

Rates were expected to increase after 2008, when the Bay State ushered in managed competition in the vehicle insurance industry, doing away with a previous system under which state officials played a prominent role in setting auto coverage rates.

But AASP points out that the hourly wage for collision work has climbed by a mere 8 cents since then.

The proposed commission would be funded by $170,000 in fees paid by body shops and would require no taxpayer funding, according to the group.

The Labor Rate Bill calls for the establishment of a three-tiered system of collision shops, with each earning a designation of A, B or C.

The A-level businesses would be subject to on-site inspections and would be required to comply with higher industry standards. Those shops would earn the full hourly rate as determined by the commission.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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