Auto body industry makes last push for fair reimbursement bill
Published: 03/27/2022 10:12:49
Modified: 03/27/2022 10:11:53
BOSTON — Members of the collision repair industry have pointed to the consequences of low reimbursement rates set by insurers and urged lawmakers at a recent hearing to report favorably on the invoice who intends to solve the problem.
“It kind of surprises me that the labor rate is so out of whack,” said Rep. James Hawkins, D-Attleboro, who is also the sponsor of the bill. “It’s a very technical area, and if we’re only paying $40 an hour, with the overhead that’s just skyrocketed recently, that leaves very little room for these shops to pay minimum wage to their workers who do highly technical work. It just doesn’t make a good trade.
Body shops have argued for an increase in the rate at which they are reimbursed by insurance companies, a rate that has stagnated for decades as the cost of doing business has risen exponentially.
“Thirty-five years ago, I was at the door of the State House with my father. I was 12 at the time. We were looking to increase the labor rate at the time,” said Elias Akiki, chairman of Hyde Park-based Akiki Auto Group. “Thirty-five years later, here we are, still looking to increase what we get paid.”
Shop owners, technical instructors and body industry organizations have testified before the Select Commission on Auto Body Labor Rates about their experiences with insurance companies which, according to they manipulate the market and underpay the stores.
Owners have expressed frustration that in an industry where vehicles have become more technologically advanced and require more sophisticated workmanship, labor rates are making it impossible to operate.
Add to that the high cost of living in Massachusetts and homeowners are struggling to make ends meet.
“Larger organizations in other parts of the country are facing similar challenges, and they regularly see rates rising, and even asking for more,” said Aaron Schulenburg, executive director of the Society of Collision Repair Specialists, which represents body shops across the country. “Now think about how this applies to businesses in Massachusetts, which have seen no increases in decades.”
Schulenburg also dismissed suggestions from insurance companies that there are more shops than jobs in Massachusetts.
“The current trends that we observe do not indicate this. We have seen an increase in the number of vehicles registered in Massachusetts and an increase in repair times,” he said.
And even if what the companies claim were the case, a rate increase would still be necessary.
“Rising costs over the past few decades are an indicator that tariffs need to be adjusted to keep pace. The same way insurance companies have adjusted their premiums with the rising cost of business,” Schulenburg said.
The special committee, at the request of business owners, is planning an in-person meeting soon at a vocational school, to speak with registered trainees looking to enter the trade.
Once the testimony is complete, the commission will release a report by the June 30 deadline.
Aryan Rai writes for the Boston University Statehouse Program Gazette.