AASP-MA meets lawmakers on inflation-tied auto body labor rate bill

The Alliance of Automotive Providers of Massachusetts recently met with lawmakers to advocate for bills requiring insurers to reimburse labor rates adjusted for inflation.

“We have already made tremendous strides during this current legislative session to possess our voices heard with respect to consumers, and that we look forward to further promoting this legislation when it's heard in the near future,” Executive Director Evangelos “Lucky” Papageorg said, based on the trade group.

House Bill 1111 and the nearly identical Senate Bill 709 would demand insurers cover at least the 1988 auto body repair labor rate, adjusted for the inflation since. The entire year reflects the date of the Insurance Reform Act, legislation meant to cut state auto insurance premiums.

After that initial floor is locked in, the speed could be adjusted annually based on the Bureau at work Statistics’ Northeast Consumer Price Index, which is the inflation rate for that region including Massachusetts.

Both bills were delivered to the Joint Committee on Financial Services on March 29, but no further action continues to be taken.

According to the BLS, $1 within the Northeast region once the bill became law in October 1988 could be worth $2.29 in June 2021 dollars. That means prices in the region rose 129 percent between 1988 and today.

The AASP-MA estimates that the state’s 1988 labor rate of $30 adjusted for inflation could be $68, rather than the average of $40 encountered today.

HB 1111 and SB 709 would increase the Massachusetts rate by half the difference between the current rate and the 1988-adjusted-for-inflation rate four weeks following the bill becomes law. Another half could be added a year later — but “will include the rate of inflation for the previous twelve-month period.”

“If there were no insurance, everybody here would be very comfortable competing for and posting their very own rate – whatever it happened to be – based on what their price of conducting business was,” AASP-MA Jack Lamborghini said, based on the AASP-MA. Massachusetts is experiencing “big business trying to control small company to the detriment of each and every consumer and the entire collision repair industry,” he explained, based on the trade group.

The law matters to consumers too. Anything an insurer will not reimburse might be levied upon the vehicle owner, who is your body shop’s actual customer ultimately bearing responsibility for that bill. Based on the AASP-MA, shops investing to help keep current on modern vehicles “are can not remain profitable underneath the average rates paid by carriers, thus leading these to make the difficult choice to pass these costs on to consumers.”

“In order to keep pace with rising costs, shops are having to start charging the consumer for that shortages that aren't being paid for by the insurance company. That's wrong,” Papageorg said, according to the AASP-MA. “The insurance provider is selling an indemnification policy that's supposed to be making the person whole again. The customer shouldn't be put into the predicament of having to generate money after they've already paid for their insurance policy.”

We couldn’t get regional data for particular expenses, but nationally, all U.S. prices rose typically 126 percent between October 1988 and June 2021.

The national price of automobile insurance rose 255 percent during that time, when compared with just 175 percent for automobile body work and only 56 percent for automobile parts and equipment, according to the BLS.

“The insurance industry is going to state, 'We can't afford it,'” association lobbyist Guy Glodis , said based on the trade group. “With that in mind, record profitability through the insurance market is publicly disclosed. Warren Buffett has said that the most successful stocks with time have been insurance; they've consistently done more than the last three or four decades. But to turnover it, when insurance reform started in 1988, we'd among the highest Labor Rates in the united states. In 2021, we're the lowest Labor Rate in the nation. One for reds has record profitability; conversely, we have the cheapest rate in the country. I believe this bill really addresses that issue.”

CCC estimates the average auto body labor rate on estimates involving some insurance company was $52.27 in 2021.

According to the AASP-MA, the state is much more than a decade overdue in addressing Massachusetts’ auto body labor rates. As the trade group characterized it: