Bodybuilders continue to protest against labor rates
BOSTON (SHNS) – Representatives and senators from the Joint Committee on Financial Services got a preview on Wednesday of the debate over labor rates paid by insurers to auto body shops which is expected to take place ahead of a new one special commission by the end of this year.
The problem has persisted in Beacon Hill for more than a decade, and a previous special commission conducted its own in-depth study of the matter in 2008. Nonetheless, collision repair shop owners told lawmakers on Wednesday they were being reimbursed. by insurers on average. about $ 40 an hour – which they say is the lowest in the country – and pushed for legislation regulating minimum labor rates.
“In 2010, when I opened my business, insurers were reimbursing consumers a labor rate of $ 40 per hour. Eleven years later, the same insurers are reimbursing consumers the same labor rate of $ 40 per hour, ”Brian Bernard, owner of Total Care Accident Repair in Raynham, told the committee. “Eleven years with a zero percent increase in that rate. During the same period, your insurance premiums have increased by 48%.
Bernard, the Massachusetts Alliance of Automotive Service Providers and others have backed a handful of bills dealing with auto body labor rates, including Representative James Hawkins’ H 1111 which would require insurers to reimburse body shops at a minimum rate equal to the rate at the time the Insurance Reform Act was passed in 1988, adjusted for inflation. Thereafter, the rate would be adjusted according to the consumer price index.
According to the United States Bureau of Labor Statistics, $ 1 in 1988 equals $ 2.36 of purchasing power in 2021.
Hawkins said he ran a body shop before he became a teacher and was “very involved” as a member of the Rhode Island Auto Body Shop Association. Back then, which he said about 25 years ago, the labor rates paid by insurance companies to stores were about the same as they are today.
“I just had my truck serviced at the Chevrolet dealership, it’s $ 125 an hour for labor. I dropped off my RV for maintenance this week and it’s $ 175 an hour. And we only pay body shops $ 40 an hour, ”he said. “And it’s not what the employees get, it’s what the store gets.”
Several people testifying also told lawmakers that the low rates make it difficult to recruit young technicians in the field.
Christopher Stark, executive director of the Massachusetts Insurance Federation, said the problem is one of supply and demand, arguing that as the need for auto repairs has declined, the number of stores has mostly remained stable. .
“Basically it’s an excess of repair shops and fewer physical damage claims,” he said, adding, “In 2003, there were 606,000 damage claims. physical. In 2019, they were only 472,647. This represented a decrease of more than 22% in the number of physical damage claims as cars became safer. In 2000, there were 797 registered repair shops in the Commonwealth. Today, there are 698. That’s only a drop of 5.5%.
Stark also urged lawmakers not to revert to “government pricing” more than a decade after Massachusetts officials deregulated the auto insurance market from a “fixed and established system” to a “managed competition” framework to invite more options for consumers.
“We’ve learned our lesson… Massachusetts, throughout this period of landline and settlement, has consistently been the fifth, seventh, and highest premium in the country,” Stark said. “But after making these reforms and ending this kind of government pricing, we have fallen to 15th and we remain 14th.”
Wednesday’s hearing of the Joint Committee on Financial Services is unlikely to be the last time the subject of auto body repair labor rates will be debated in Beacon Hill this session.
In the fiscal year 2022 budget, the Legislature created a special commission to study auto body tariffs, made up of lawmakers from the two main parties, three people appointed by the Automobile Insurers Bureau, three people appointed by the Alliance of Automotive Service Providers of Massachusetts, a representative of a school or vocational-technical program, and an automobile dealership.
Minority parliamentary leader Bradley Jones named Seekonk representative Steve Howitt a car passionate, as a person appointed to the special commission.
“His interests and years of experience in these fields make him the ideal choice to serve on this special committee which will ensure that auto body prices are fair and reasonable,” Jones said.
The panel is tasked with producing a study which includes “(i) an analysis of labor rates of auto bodies in the Commonwealth, including a comparison of labor rates in neighboring states; (ii) an analysis of the impact of managed competition in the motor insurance market on labor rates; (iii) an assessment of the reasonableness of current labor rates and, if not, an assessment of potential methods of calculating a reasonable labor rate; (iv) the number of auto body shops in the Commonwealth each year from 2008 to present, including the number of shops that closed during this period; and (v) an analysis of the impact of labor rates on body shop labor.
The group is expected to hold at least two public hearings “in geographically diverse areas” of the state and is expected to file a report with its findings and recommendations for possible legislative or regulatory action by December 31.
Representative James Murphy, who, as co-chair of the Financial Services Committee, will co-chair the special commission on labor rates with Senator Brendan Crighton, said he expects the special commission will be operational shortly.
“We’ll have a process in place – that we’ll decide as a committee what that process will be, whether it’s hearings or visits around the Commonwealth or whatever – we’ll look at past commissions to see. how they were presented and what were the conclusions, although we know some of the conclusions anyway, ”he said.