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4 May 2022
New England Automotive Report
May 2022 • Volume 20, No. 5
DEPARTMENTS VICE PRESIDENT'S MESSAGE 6 | Be the Squeaky Wheel by Matt Ciaschini
CONTENTS FEATURE
EXECUTIVE DIRECTOR’S MESSAGE 8 | Devoid of Morals and Business Ethics (Not to Mention Reality) by Evangelos “Lucky” Papageorg LOCAL NEWS 12 | Impasse: ADALB Fails to Approve Regulatory Amendments Yet Again 14 | Strength, Momentum and Power: AASP/MA Gets Repairers Behind Legislation and Optimizing Labor by Alana Quartuccio Bonillo
24 | Tech Shortage Solutions: Shop
Owners Engage with Local Schools and Students by Chasidy Rae Sisk
COVER STORY
AROUND THE INDUSTRY 16 | TGP Senior Vice President Alicia Figurelli Honored Among Women’s Industry Network’s 2022 Most Influential Women LEGAL PERSPECTIVE 34 | Should Insurance Industry Cost Containment Standards Even Exist? by James A Castleman, Esq.
ALSO THIS ISSUE 7 | AASP/MA MEMBER APPLICATION 20 | AASP/MA VENDOR AFFINITY PROGRAM SPONSORS
28 | A Critical Crossroads: Second Labor Rate Special Committee Hearing Draws National Attention by Chasidy Rae Sisk
New England Automotive Report
May 2022 5
VICE PRESIDENT’S MESSAGE
Be the Squeaky Wheel MATTHEW CIASCHINI
As we all know, the insurer’s consumer reimbursement rate in the Commonwealth of Massachusetts is the lowest in the country, but that isn’t the only problem. The other problem is consumer awareness - or the lack thereof - that this low rate affects them and their families’ safety as well as the collision businesses in their community. Recently, I was contacted by a reporter for our local paper, The Daily Hampshire Gazette, about the last Labor Rate Study Commission hearing. The reporter was blown away at the disparity in different states’ Labor Rates and couldn’t wrap his head around how we operate at $40 per hour. We went on to discuss the details of the stagnant Labor Rate and what, if any, plan exists to fix it. I explained to him that House Bill 1111 was written to help repair the inequity and create a system that fairly continues the increase of the reimbursement rate to the consumer in perpetuity. The article came out a week or two later and highlighted a few local collision facilities, including one shop owner in particular who was forced to close his doors after over 30 years of business because he could no longer break even. That is correct…I said break even. Unfortunately, for that shop owner, House Bill 1111 could not come soon enough. After the article came out, I was astounded by the outpouring of questions and support from my local community. I fielded dozens and dozens of phone calls, text messages and emails from former customers. All with the same sentiment: ”I don’t know how you do what you do for $40 per hour.” Even my technicians and technicians’ families had people reach out to them and ask the same question. Many of those
STAFF
AASP/MA EXECUTIVE COMMITTEE
PUBLISHER
President Kevin Gallerani
Thomas Greco | thomas@grecopublishing.com
SALES DIRECTOR Alicia Figurelli | alicia@grecopublishing.com
EDITORIAL/CREATIVE COORDINATOR Alana Quartuccio Bonillo | alana@grecopublishing.com
OFFICE MANAGER Donna Greco | donna@grecopublishing.com
PRODUCTION COORDINATOR Joe Greco | joe@grecopublishing.com
MANAGING EDITOR Chasidy Rae Sisk | chasidy@grecopublishing.com
PUBLISHED BY: Thomas Greco Publishing, Inc. 244 Chestnut Street, Suite 202, Nutley, NJ 07110 Corporate: (973) 667-6922 / FAX: (973) 235-1963 www.grecopublishing.com
PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
MASSACHUSETTS
AASP/MA VICE PRESIDENT MATTHEW CIASCHINI is the co-owner of Full Tilt Auto Body & Collision (Easthampton, Northampton and Hatfield; fulltiltautobody.com) and can be reached at fulltilt.matthew@gmail.com.
Vice President Matthew Ciaschini
Treasurer Dana Snowdale
Secretary Gary Cloutier
AASP/MA STATEWIDE DIRECTORS Director At-Large Adam Ioakim
AASP/MA DIRECTORS
Legislative Director At-Large Tom Ricci
ZONE 1 Mike Penacho Dan Wenzel John Studer
ZONE 2 Ray Belsito Joshua Fuller Brenda Lacaire
Affiliate Director Rick Fleming
Affiliate Director Bill Spellane
ZONE 3 Andrew Potter Brian Stone
AASP/MA ADMINISTRATIVE OFFICE AASP/MA Executive Director Evangelos “Lucky” Papageorg
New England Automotive Report is published monthly by TGP, Inc., 244 Chestnut Street, Suite 202 Nutley, NJ 07110. Distributed free to qualified recipients; $48 to all others. Additional copies of New England Automotive Report are available at $5 per copy. Reproduction of any portions of this publication is specifically prohibited without written permission of the publisher. The opinions and ideas appearing in this magazine are not necessarily representations of TGP Inc. or of AASP/MA. Copyright © 2022 by Thomas Greco Publishing, Inc. Images courtesy of www.istockphoto.com
6 May 2022
people share the same concern: How will these techs be able to stay in an industry that seems to be on the brink of disaster? One call stood out to me. It was from a local gentleman who had never been a customer of mine. He called to ask if we were going out of business. I explained that, at this point, we are scraping by but are in need of additional technicians because we have over a month backlog of work in our schedule, and many vehicles on premise are in need of repair. He asked, “What will I do if I get in an accident and you go out of business because the insurers won’t raise the rates?” I simply told him, “I wish I had the answer.” “Please do what you can to support House Bill 1111 because it is a permanent and sustainable way to save our industry forever,” I told this man whom I had never met. As a 43-year-old with a family-owned shop, telling someone I didn’t have an answer was daunting and scary. I should have 25 years left or more to be in this industry, but that won’t be the case if we don’t make a change - and make it now. Please support House Bill 1111 and House Bill 4242 (to move the ADALB from the Division of Insurance to the Division of Occupational Licensure). While you are supporting the bills and the association, please get this word out to your customers and anyone who will listen. Being the squeaky wheel and spreading the word of the injustices we face can only help our cause.
New England Automotive Report
AASP/MA Administrative Assistant Alana Bonillo
WWW.AASPMA.ORG
Collision Director At-Large Rob DelGallo ZONE 4 Kevin Kyes Jim Marshall Paul Tuscano Affiliate Directors Frank Patterson Jeff White Don Dowling P. O. Box 850210 Braintree, MA 02185 617-574-0741
AASP-MA P.O. BOX 850210 Braintree, MA 02185 Phone: 617-574-0741 Fax: 973-235-1963 Email: admin@aaspma.org
Membership Application 2022-2023
Please complete this form and return to our office via mail, email or fax with your dues payment. Thank You! BUSINESS INFORMATION Massachusetts Shop Registration # __________________
Total number of Staff (Techs, office, Mgrs)________
Company’s Official Name: ________________________________________________________________________________________________ Business Physical Address: _______________________________________________________________________________________________ Business Mailing Address (If Different): ________________________________________________________________________________ Telephone Number: (______)-________-___________ Fax: (______)-________-___________ DUES STRUCTURE. Collision Shop Annual Dues: $495 / 12 Months* PRIMARY BUSINESS CONTACT Name: _______________________________________________________________________________________________________________ Email: _______________________________________________________________________________________________________________
YES � Please list my business as an AASP/MA member in good standing on the AASP/MA website for consumers to consider using for the collision repairs and assistance with the claims process. I understand this is a member benefit (_________ initials Date ___/____/2022) Yes � Please send me information regarding the following MONEY SAVING BENEFITS: � Dental plan � Healthcare plan � Credit card processing � Grant writing/training � Google presence optimization � All five PLEASE ENCLOSE PAYMENT WITH YOUR MEMBERSHIP APPLICATION Check# : _______________ (IF collision shop please note your RS# on the memo line of the check) CC #: ______________________________________________________________________
OR
EXP: ________/___________ CID: _________________
Billing Address: ______________________________________________________________________________________________________________ Name On Card: _____________________________________________ Signature: ____________________________________________________ I hereby make this application for membership with the Alliance of Automotive Service Providers of MA (AASP/MA) for membership dues 2022-2023 as provided for in this contract. *Membership Dues are for a twelve-month period commencing on your anniversary month of membership.
REV 12/21 New England Automotive Report
May 2022 7
EXECUTIVE DIRECTOR’S MESSAGE
EVANGELOS “LUCKY” PAPAGEORG
Devoid of Morals and Business Ethics (Not to Mention Reality)
I do not consider myself to be naive by any measure. Having sat through two Labor Rate Study Commission (LRSC) meetings, which included listening to hours and hours of oral testimony and reading countless pieces of written testimony submitted by both sides of the ongoing feud regarding the labor reimbursement rate, I have come to the conclusion the insurance industry has been morally and ethically corrupted. I knew this, but witnessing it be so brazenly displayed at these LRSC hearings left me dumbfounded at times. Having worked in the collision repair industry for nearly 34 years, I have seen it all. Those of you who have been in the collision repair industry for any length of time know what I mean. Some who have read this first paragraph will find it to be inflammatory. Those same individuals may even be insulted. The facts speak for themselves. Anyone who has presented testimony - written or otherwise - who does not recognize that there is something seriously wrong in the collision repair industry today has turned a blind eye to the facts. They are the same individuals who, when asked to come to the table and discuss a remedy or alternative solutions, refuse to yield; they refuse to negotiate. Instead, they fight to maintain the status quo. They rely on decades-old arguments and fear tactics to retain their stranglehold on an industry they have yet to realize they cannot survive without. I have been told, as we all have in the collision repair industry, that we need to learn to get along. We need to put the consumers’ concerns about escalating insurance premiums to the forefront. In the process of doing so, we started the slow and now everincreasing destruction of an essential industry…an industry that is ultimately responsible for the well-being of motorists on the roads today. Not just those who have been involved in an accident, but also those who share the roads with them as they drive their repaired vehicles. Vehicles, which in far too many instances, appear to have been repaired to be safe and crashworthy, but may not be. Under the guise of protecting consumers from soaring auto insurance premiums (which have risen 252 percent since 1988 compared to a labor reimbursement rate which has increased by $10 - less than 30 percent - while the CPI has risen 127 percent and the minimum wage has risen 270 percent over the same time period), insurers have maintained their profitability on the backs of the collision repair shop owner and their technicians, while risking the safety of all those on the roads today. Year after year, insurers have enjoyed the ability to increase their premiums after a process and “approval” by the Commissioner of Insurance. Their increase is based on their “experience“ of previous losses, then adding in an “educated” guess of what the future may bring, and then they pile on an estimated increase in cost of doing business in the coming year. It would seem to make sense in this described calculation that someone
8 May 2022
New England Automotive Report
would have figured a nominal increase to the labor reimbursement rate to the claimant year to year! The increase in doing business for the insurer undoubtedly means an increase in the salaries of the insurance company employees and executives, because who would work year in and year out for the same rate of reimbursement? The insurers’ increase request would also cover upgrading insurance office spaces, equipment and training. Is it wrong to think that some of the increased premiums would be used to better reimburse those who are responsible for the actual repair of the vehicle? An increase in the reimbursement rate could be used by shops to improve their equipment and better train their employees while paying them appropriately for what they are worth to keep them in the trade. But for some reason, the “trickle down” effect never gets that far. What is really amazing and defies all reason (as well as morality and business ethics) is that insurers, after showing recordbreaking profits, are once again seeking premium increases across the country. I guess those massive profits just aren't enough! Wouldn’t it be better if the millions of dollars insurance executives make, the billions of dollars in advertising spent in trying to convince policyholders to switch to a different carrier along with the millions spent in political contributions, were spent lowering the insurance premiums to the policyholder, while better protecting them in the collision repair process? Restoring the consumers’ right to freely choose the repairer they want to go to based on service, quality of repair, turnaround time and not based purely on the lowest price - a number artificially set by contracts which an overwhelming number of collision repairers despise having to participate in? Those who are still under these contractual agreements feel it is futile to remove themselves. Whether they are on or off “the list,” they are forced to accept the average of $40 per hour as a “prevailing” rate. Further, if they remove themselves, they take the chance of having work steered away from them; however, this mindset is changing as well. There is hope: As consumers become savvier, they do not side with their insurer as often as they once did. They question and understand that with the rising costs of every aspect of their lives, it makes no sense that the labor reimbursement rates has been stagnant for nearly 34 years and that they need to change. More and more consumers want to be able to choose where to get their vehicle repaired. More and more are actually willing to pay to subsidize the repair and then pursue the insurer for the shortfall. Everyday, more consumers are getting reimbursed properly. More insurers are realizing that treating their insureds and their collision repair shops better, by reimbursing or paying a higher negotiated rate, may be money better spent than on advertising. So many shops have been reporting how much easier it has been to explain to customers why there is an additional charge per continued on pg. 30
New England Automotive Report
May 2022 9
10 May 2022
New England Automotive Report
New England Automotive Report
May 2022 11
[LOCAL] NEWS
Impasse: ADALB Fails to Approve Regulatory Amendments Yet Again
When the last meeting of the Auto Damage Appraiser Licensing Board (ADALB) concluded in January, it seemed likely the meeting on March 15 would include a final vote on the proposed amendments to 212 CMR 2.00, which have been rehashed at length during each meeting since early 2021; however, concerns raised by the insurance representatives on the Board prevented a final vote yet again. The meeting began favorably with unanimous votes in response to the first two agenda items which involved reinstatement of an appraiser’s expired license and establishing a timeframe when a lapsed license requires review by the Board; however, when the ADALB resumed its review of 212 CMR 2.00, the congenial relationship between insurance and collision representatives evaporated almost immediately. Only two sections of the regulations remained to be approved by the ADALB before sending the proposed amendments to the Division of Insurance (DOI) for review: 2.04(1)(e) and 2.04(2), and although the latter elicited little controversy, discussion on the former quickly grew contentious as the Board debated whether the revisions contradicted 211 CMR 133. “Is it really in keeping with 211 CMR 133?” Board member Samantha Tracy (Arbella Insurance) shared her primary concern. “This language puts the onus on the insurer to return the parts, regardless of who’s at fault for them not fitting, and I think that
12 May 2022
New England Automotive Report
might be a contradiction.” Board members Rick Starbard (Rick’s Auto Collision; Revere) and Bill Johnson (Pleasant Street Auto; South Hadley/Belchertown) pointed out that the regulation indicated this situation only applies “if both parties agree that a specified part is unfit and must be replaced” and suggested adding verbiage to create a caveat to remove the responsibility from the insurer in the event that it’s the repair shop’s fault that the part doesn’t fit. “It’s vitally important that the responsibility language stays in there,” Starbard stressed. “We shouldn’t be legislating common sense, but because the language in 211 is being interpreted without common sense, we need to provide clarity by leaving in language that states who is responsible. That is the most important clarification in this whole regulation.” Despite Starbard’s motion to approve the verbiage and allow the DOI to review it, Attorney Michael Powers and the insurance representatives vehemently declined his suggestion, insisting that approval by the ADALB would only result in a rejection by the DOI. A vote revealed a decisive split between the insurers and collision representatives, and while Chairman Michael Donovan deviated from what appears to be his most common tendency of voting in line with the insurers, his decision to abstain from the vote led to the same result: more delays. continued on pg. 38
New England Automotive Report
May 2022 13
[LOCAL] NEWS
by Alana Quartuccio Bonillo
Strength, Momentum and Power: AASP/MA Gets Repairers Behind Legislation and Optimizing Labor Whoever coined the term “strength in numbers” must have had AASP/MA in mind. On March 30, AASP/MA closed out the first quarter of the year with such a well-attended General Membership meeting that additional seats were brought into an already jam-packed room at the DoubleTree Hotel in Westborough. It was a night for education and dedication as collision repairers gathered to receive information and resources to help better the industry as a whole, as well as learning how to improve functionality and profitability on their own shop floors by way of the featured presentation “Optimizing Your Labor,” given by Lee V. Rush of Sherwin-Williams Automotive Finishes, event sponsor. “Three people won’t move the State House, but 30 to 40 people reaching out to members of the State House can really make a difference,” suggested AASP/MA Lobbyist Guy Glodis, who also reminded them to “be polite and be professional, and it will fall on good ears.” His remarks opened the meeting as he and AASP/MA Executive Director Lucky Papageorg updated a room filled with eager and hopeful shop owners on the push behind making change at the legislative level for proper labor reimbursement and to move the ADALB away from the clutches of the Division of Insurance to the Division of Occupational Licensure. To help drive home the message that collision repairers will no longer stand for a $40 per hour labor reimbursement rate, AASP/MA armed everyone in attendance with a stack of postcards to be shared with their technicians, customers or anyone in the industry, with the recommendation that they mail them to their local legislators. “Take a bunch of them tonight, fill them out, have your technicians fill them out, send two this week and more the following,” advised Papageorg. “Talk to your customers about how the Labor Rate is not high enough to be able to do the job. I know many of you balance bill. Tell consumers they can help themselves to avoid paying a balance to a shop if the minimum is raised to something fair and equitable. This bill will keep the rate from becoming stagnant.” Papageorg also relayed updates on the most recent Labor Rate Study Commission hearings, the planned launch of a local TV show to educate the public about auto body repair and the association’s plans
to stir things up at the Capitol with a rally planned for mid-May. He also walked repairers through a series of templates created to effectively write complaints to the ADALB. As for the legislation behind moving the ADALB, Papagoerg stressed, “That move has to happen. When we ask you to call about HB 4242, please follow through.” Once the association’s business portion of the program was complete, it was time to dive into Rush’s presentation, designed to get shop owners to reconsider the traditional way of doing things and opt for methods that better align with the issues of today. There was not a shop owner in the house who didn’t agree when Rush reminded them of the struggles the industry faces due to the inability to find qualified skilled technicians. “This is a real issue. That is why you have to focus on optimizing your labor,” he encouraged, asking them to “open your mind to some opportunities,” including technology that can help with organization and communication, as well as improving processes on the shop floor. In an industry where many skilled technicians are from the Baby Boomer generation and on their way to retirement, if not already there - something Rush said was accelerated even further by the pandemic the only solution to making things better is to “focus on the best use of skilled labor.” Improving touch time by just one hour per technician can amount to $8,500, leading to an additional $40,000 per month. Rush pointed to tons of examples of how skilled technicians are not being used effectively. Every time a skilled technician is not touching metal, his or her efficiency is at level zero. Anything that interferes with production is what Rush called “a waste;” therefore, shops should be looking at improving a technician’s efficiency by improving the repair process overall. This can lie in everything from making sure blueprinting is complete, restructuring bays, setting up the repair plan and the parts near the vehicle to making sure the technician isn’t distracted by “de-skilled duties” that can be done by other staff members so the technician’s time is solely dedicated to working on the vehicle. “It doesn’t make sense having a brain surgeon prep for surgery,” Rush used the analogy to drive home his point.
continued on pg. 30
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14 May 2022
New England Automotive Report
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May 2022 15
AROUND THE INDUSTRY
TGP Senior Vice President Alicia Figurelli Honored Among Women’s Industry Network’s 2022 Most Influential Women Thomas Greco Publishing is proud to announce that Senior Vice President Alicia Figurelli was selected as a recipient of the Women’s Industry Network’s (WIN) 2022 Most Influential Women (MIW). The MIW awards honor the women whose career achievements have enhanced the collision repair industry. “Alicia has been dedicated to this industry for the past two decades, and she always goes above and beyond her duties,” shared Thomas Greco, president of Thomas Greco Publishing. “She is selfless, generous and determined, all characteristics she applies to her involvement in everything she does. We are proud of her and excited to see her efforts recognized by a national organization like WIN.” “I respect all the amazing work WIN does to promote and elevate women in the industry, and to be considered worthy of such an honor, to be recognized in the company of so many exceptional women, is simply amazing,” Figurelli expressed. Thomas Greco Publishing represents a variety of automotive repair trade associations including the Alliance of Automotive Service Providers of New Jersey (AASP/NJ), the Alliance of Automotive Service Providers of Massachusetts (AASP/MA), the Alliance of Automotive
Service Providers of Minnesota (AASP-MN), the Washington Metropolitan Auto Body Association (WMABA) and the Auto Body Association of Texas (ABAT). In addition to Figurelli, this year’s honorees include Allison Boever (Repairify), Shirin Hezar (Caliber Collision), Jennifer Hubbard (CCC), Samantha Kita (Gerber), Debbie Menz (Axalta) and Micki Woods (Micki Woods Marketing Genius for Body Shops). “These seven sensational ladies have made a huge impact on the collision repair industry through their dedication to excellence, commitment to their communities and investment in the future through their willingness to mentor other women,” says Rachel Hinson, MIW committee chair. “Your exemplary journeys show young ladies that anything is possible when you put in the work. We can’t wait to celebrate you at the Conference!” Since the MIW awards were established in 1999, over 100 inspiring women have been recognized for their visionary leadership and commitment to excellence. WIN will celebrate the achievements of this year’s seven MIWs during its 2022 Annual Conference, scheduled for May 2-4, 2022 in Greenville, SC and online. For more information about WIN or the Most Influential Women award, visit womensindustrynetwork.com. To learn more about Greco Publishing, visit grecopublishing.com. PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
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18 May 2022
New England Automotive Report
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Here’s to 235 years of combined service excellence This year, as Albert Kemperle Inc. celebrates its 80th anniversary, BASF also celebrates its 155th anniversary. We are proud of our decades of partnership with BASF and years of serving the auto paint and body industry together. Kemperle’s founders would be proud of this relationship and the growth their company has experienced because of it. Today, as we look forward to many more decades of service to our customers, we find ourselves filled with gratitude. The creativity, hard work, and sense of responsibility of the people working for our two companies have made us what we are today. Thank you for your many years of loyalty.
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May 2022 23
[FEATURE]
Tech Shortage Solutions: Shop Owners Engage with Local Schools and Students Collision repair industry professionals around the country struggle to find and retain qualified help, but with the average technician age now exceeding 50 years old, it’s obvious that a lack of young people entering the industry is driving the tech shortage. Last month, New England Automotive Report featured insights from three local collision repair instructors whose various experiences yielded a cohesive message: “Schools and industry have to work hand in hand,” according to Kenneth Stukonis (Assabet Valley High School; Marlborough). “Engagement from local shops is great because they help us and our administration understand which tools and equipment to buy and what things we need to teach so we can grow,” agreed Tim Arruda (Upper Cape Tech; Bourne). So, how are shops getting involved with local collision school programs and students? Four Massachusetts repairers discuss their efforts to support the future generation of collision professionals: Andrew Potter (North Amherst Motors Inc.; North Amherst), Gary Cloutier (Cloot’s Auto Body; Westfield), Jim Marshall (Marshall’s Auto Body Experts; Billerica) and Rick Starbard (Rick’s Auto Collision, Inc.; Revere). New England Automotive Report: How are you involved with local collision schools and students? Why did you decide to get involved? Andrew Potter: As a second generation shop owner, I grew up in this industry, and for as long as I can remember, my father sat on the advisory boards of a couple local schools. That involvement was handed off to me as I took over. Supporting future repairers has always been very important to us. I currently serve as chair of the Franklin County Technical School (Turners Fall) advisory board and participate on the boards for two other schools. Gary Cloutier: I sit on the advisory boards for several local schools, including Westfield Technical Academy. I also donate tools and supplies periodically. I feel like anyone in any trade should be involved with their local association and their local schools. Whether you’re a plumber, welder or bodyman, belonging to a group of industry professionals keeps you informed about what’s going on in your industry. And participating on local advisory boards is a great way to give back and try to steer kids into this profession. You’ve got to keep your hands on what’s going on to help the younger people coming up through the ranks so they’ll have a better environment to work in than we had. Jim Marshall: I sit on the advisory board for Shawsheen Valley Tech (Billerica) in the auto body sector. Over 20 years ago, I decided to give back by creating a scholarship in memory of my father, Malcolm Marshall, through which we’ve awarded over $25,000 to graduating students to help them buy tools or further their education. I’ve also hired students and helped place them in other shops for the last two decades. Rick Starbard: I attended Lynn Vocational Technical Institute as a kid in high school, and I’m now involved with the school as an industry 24 May 2022
New England Automotive Report
professional. Once I started my business, I always stayed engaged with the school by employing students through the school's co-op program and served on the collision program's advisory board. I have also served on the board of the school's alumni association for over 30 years, raising money for scholarships and tool awards. Through the years, my old principal encouraged me to come back to teach, which I did until I needed to get back to the business on a full time basis. NEAR: How do the current number of enrolled students compare to past numbers? Why aren’t more students interested in a collision repair career? AP: It really depends on the school. Franklin County Tech still has a waiting list, while other schools’ enrollment dwindles. One of our local schools has zero kids enrolled in their auto body class, so it’s only a matter of time before the school examines its budget and cuts that class. Instructors make all the difference in the world, without a doubt. Schools with passionate, aligned instructors who can relate to the students seem to be able to attract and retain students better. It’s also important to realize that collision isn’t just an industry for men anymore; at Franklin Tech, almost 50 percent of their collision students are women. GC: There are definitely fewer students going into the auto body shop at our local vo-tech than there were years ago. Enrollment is down, and the reason all comes down to a simple question: “What can they earn in this trade?” There’s no money in becoming a technician because the insurance companies have been squashing us for the past 20 years, so we can’t start them at a decent rate. JM: The size of the graduating class has dwindled from 16 students in the past to just three to five students currently. Schools have threatened to close the auto body shop because with the low enrollment numbers, it just doesn’t make sense to keep it open. To make matters worse, 50 percent of the students that graduate from the auto body program don’t even stay in the field after graduation because they find out they can earn more money in other trades or careers with little to no experience. The low Labor Rate is killing the industry for talented young hires. RS: The collision program at Lynn Vo-Tech is still at capacity; tech schools in general are in high demand as there is now more of a focus for kids to go to tech schools versus going into college; however, even though auto collision may be at capacity, not all of those students chose the program as their first choice, and many kids ultimately decide not to enter the trade upon graduation. NEAR: Why do you feel it’s important to increase industry engagement with schools and students? AP: They’re our future - not just the future of the collision repair industry but OUR future. They’re our next plumber, electrician or chef. They’re our kids. So, it’s a given that we need to support them. If you care about the future, you care about the vo-tech schools because they’re
by Chasidy Rae Sisk
teaching trades that cannot be outsourced or done remotely. These are service industries that will always be here, even when they change over time. GC: Teachers are trying to train students to work on cars, but they’re limited on how much time they get to spend with these kids which inhibits their ability to whet their appetite a little more so they want to stick it out and delve into an industry career. By getting involved with the schools and hosting students in our shops, industry professionals can support those efforts. JM: The school’s curriculum teaches safety, academics and surface vehicle knowledge, but when students visit the shop, they get a better feel of what they can expect to learn in the field. We never hire a student to clean the shop as their main role; that can be defeating, and we feel it’s important to let them experience all the shop’s departments to find the best fit for them and the shop. RS: I have been saying for years that experienced technicians with $30K in tools are not just going to fall out of the sky and wind up at your shop. Most good shops are doing all that they can to try to retain good help. The only way to get good technicians is to build them yourself, and the best way to do that is to form and maintain relationships with collision training programs in your areas. NEAR: How often do you invite students to your shop? What can you share about your interactions with students in the shop and at the school? AP: In ninth grade, students take exploratory where they go through the different programs, and during their three weeks of exploration into auto body, we offer a tour of our facility (virtually during the pandemic) and even a day or two of job shadowing, so they can see what a day in the shops is like to help them decide whether that’s the program they want to study. It blows me away that these kids are making career decisions when they’re 14 years old, so we want to help them make better choices. We’ve typically had one or two co-op students each semester, and being a resource when they have questions has worked out really well. Today’s students are similar to students from 20 years ago: Some are very passionate and enthusiastic, while others are distracted and disruptive because they don’t care. They’re a heck of a lot more technologically savvy and always have their phones in their hands, but there’s a way to look at that positively and embrace that skill - can they use their phone to do research or look up repair procedures? The biggest change has been the pandemic making less opportunity for hands-on work in the schools, but students are still very interested in this trade because what we do is really cool. Many of these kids know more about the technology in modern cars than the people who’ve been in the industry for many years! GC: One of my current employees came from a local vo-tech and has been here for a few years now. He was a great find; I wish I could find three more just like him! Other students may not last a day. Some take to it like a duck to water, but others just don’t have the work ethic. These kids don’t know a lot, so it’s easy to lose patience with them. Shops have to be prepared to shape, mold and train them.
JM: Marshall's Auto Body Experts have hosted many schools and students, not just our local one. We have the newest equipment to repair today's high technology vehicles, which their schools may have not acquired yet. For the last 10 years, I’ve also attended career night for the eighth grade students and their parents to demonstrate the many career options they can pursue with a collision education: They can choose to appraise damage, repair vehicles, become a painter, work for a paint company, join the insurance industry or restore vehicles. These young, talented kids have great computer skills which would be invaluable as automotive technology rapidly increases, but we can’t entice them into this field where they could be very helpful and successful. RS: Working with the students at the school for the 14 years that I taught were some of the best years of my life. I still stay in contact with many of them and have had some of them work for me for many years. With COVID putting an end to school visits for the past two years, my interactions have only been with students that I have hired. That is beginning to change now. NEAR: According to instructors, the industry’s problem extends beyond merely attracting new blood; collision repair shops also struggle to retain young technicians after hiring them. What retention challenges have you experienced, and what strategies have you implemented to correct them? AP: Although some schools still have great enrollment numbers, a lot of these students don’t remain in our industry as they become adults. Some never actually go to work in a shop, and many who do quickly move onto something different after a few years. It’s difficult to foster an environment where people want to work together, but we’ve built a great rapport with our team. Still, we’re also losing long-term employees as many people are leaving this industry for other trades or unskilled jobs because they don’t see a clear career path in collision. Of course, the stagnant Labor Rate doesn’t help either, and when reimbursement rates remain so low, it’s difficult to dedicate time to train and develop that person when there’s an emphasis on safely and properly repairing the vehicle as quickly as possible. Improving work culture is also an important component to retaining workers. A lot of people in this industry are disillusioned. During a recent AASP/MA meeting, I learned that only one in four technicians are satisfied with their career choice. If 75 percent of our techs are unhappy with their career, how are they going to be good role models for these young technicians? Are they encouraging them to enter the industry…or are they telling them to run? GC: I lay the blame squarely at the feet of the insurance industry for suppressing rates. They’re squeezing the life out of us, and when we’re only collecting $40 an hour, how can we afford to pay recently graduated technicians the $25 or more that they’re expecting?! Parents don’t want their kids working in an environment where they’re surrounded by cancer-causing fumes for an employer that cannot afford to offer medical benefits or a 401K. When my stepson washed cars for me, I told him, “Don’t even think of going into this trade because it’s a dead-end job.” Honestly, if I could do this all over again, I wouldn’t! JM: We considered offering signing bonuses but feared that might weaken the value perception of current employees who did not receive
continued on pg. 41 New England Automotive Report
May 2022 25
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May 2022 27
4/13/22 1:50 PM
[COVER] STORY
A CRITICAL CROSSROADS:
Second Labor Rate Special Committee Hearing Draws National Attention “The collision repair industry in Massachusetts continues to suffer from failure to thrive in comparison to repairers across the nation, and we are at a critical crossroad of being able to survive,” Molly Brodeur (Al Brodeur’s Auto Body; Marlborough) warned during the first hearing of the Labor Rate Special Commission (LRSC) back in January. (Read the recap at bit.ly/Fail2Thrive.) Established pursuant to Chapter 24, Section 130 of the Acts of 2021, the LRSC was created to review issues related to auto body rates and the auto body industry in an effort to determine whether legislative action is needed to protect consumers and ensure an adequate reimbursement rate to the claimant in an environment where those rates have remained nearly stagnant for the past 30 years. When the LRSC held its second meeting on March 22 - less than two months later! - nearly 40 individuals signed up to give testimony, including Donald Dowling (Marblehead Collision; Marblehead) who shared a dismal update. “The last time I spoke in front of this panel, I owned Marblehead Collision and Swampscott Collision, but today, I come to you as the owner only of Marblehead Collision. Although we had plenty of work, I had to sell my Swampscott location because staffing issues in this industry continue to affect us all. I’m losing techs and office staff…not to other body shops, but to other fields that can afford to pay more. “At the last hearing, I said legislation for this crisis is clearly needed and that I know my shops cannot last in this environment. Well, I was right. One of my shops could not last. Hopefully, something is done soon so I can stay in business and provide for the remaining families I employ,” Dowling continued, pleading, “We can’t wait anymore. Please help us!” In recent months, similar appeals have been heard from Massachusetts body shops as they fight for fair and equitable consumer reimbursement rates, and several national industry leaders answered the call, appearing on the Zoom hearing to provide testimony. Since each person’s testimony was limited to three minutes, several repairers signed up to cede their time to Aaron Schulenburg, executive director of the Society of Collision Repair Specialists (SCRS), Sam Valenzuela of National AutoBody Research (NABR) and AASP/NJ President Jerry McNee. “Nationally, Massachusetts is recognized for the very low rate, and while collision repairers across the country face challenges with 28 May 2022
New England Automotive Report
appropriate reimbursement rates, it’s not as much as those in your state,” Schulenburg emphasized, offering a “national perspective on just how damaging it can be to small businesses to uphold a structure that’s effectively kept some of the country’s lowest collision repair rates stagnant for decades, a system that has really failed to allow small businesses to distinctly differentiate themselves and prices based on their different capabilities, sizes, investments and specialized skill sets.” Noting that no business in America, including the insurance industry, has been immune to rising costs, Schulenburg recounted a February earnings call where Allstate CEO Tom Wilson shared how their company has successfully made the case for rate increases by describing it as “less a political issue than it is a reality issue of looking at the numbers and what is the justifiable and supportable rate increase.” “It’s simple: Costs rise, so they adjust rates. And it’s not hard to look at the numbers in the collision repair space and justify the need for rate increases,” Schulenburg insisted. “Virtually every cost went up this past year, and the only place that shops can account for those rising costs is through their Labor Rate. Rates must evolve for our industry and our businesses to remain sustainable.” Valenzuela began by explaining how NABR collects data from shops around the country before diving into repair records collected from body shops in the Commonwealth. “Our data shows that the open free marketplace in Massachusetts actually accepts and pays higher rates than the rates insurers use to settle claims with their customers for that customer’s loss to their vehicle. When we examine the open marketplace, we look at Labor Rates that customers will pay because that’s the best indicator of what the free market accepts. We typically see a range of prices for everything other than commodities like a barrel of oil - and collision repairs aren’t a commodity; it’s actually skilled labor.” Of the 3,600 records NABR has acquired from Massachusetts shops, approximately 2,400 were covered through insurance claims, while vehicle owners paid the full cost of the repair without insurer assistance on the remaining 1,200 repairs. The most common rate paid among the insurance claims was $40 an hour, and 94 percent of the time those rates were $42 or lower. “For customer-paid repairs, we found $50 an hour was the most common rate paid - that’s $10 an hour, or 25 percent, higher than
by Chasidy Rae Sisk
what insurers are commonly paying,” Valenzuela noted, reiterating that there’s a range of rates paid. “Of those 1,200 repairs, customers paid $50 or more 87 percent of the time, with customers paying as high as $95 an hour for common vehicles or as high as $125 for a luxury or specialty vehicle. From our perspective, this clearly shows that the free market in Massachusetts absolutely would accept these higher rates that are necessary for shops to have a sustainably profitable business.” Noting that Massachusetts is “typically tied into California when things happen, whether it be emissions or pollution,” Representative Steve Howitt (R-Bristol) asked about Labor Rates in California. In Southern California, paid rates run slightly higher than the national average, but in Northern California, “rates are much higher,” Valenzuela said. “We commonly see rates in the triple digits, so depending on which part of the state you’re in, we see double or triple the common rate in Massachusetts.” McNee forcefully objected to the “rates being forced upon or dictated to repair shops from insurance companies that report profits in the billions! People have mentioned billing the consumer co-pays, but car insurance isn’t an HMO. I don’t believe anybody’s policy states ‘we’re going to under-indemnify the claim and force the consumer to pick up the tab.’” “It surprises me that the Labor Rate for body shops is so far out of whack,” admitted Representative Jim Hawkins (D-Attleboro), sponsor of House Bill 1111, an act to establish a minimum reimbursement for insurance claims. He went on to detail the significantly higher rates he’s paid for servicing his truck ($125), his camper ($175) and his snowblower ($110). “[Collision repair] is a much more technical business; they’re dealing with hazardous waste, increasingly expensive cars, electric vehicles, advancing technology, different specialty alloys, ADAS… Paying body shops just $40 an hour makes no sense to me. “At the same time, another legislative initiative focuses on promoting the trades for young people,” Hawkins added. “But taking shops’ significant overhead costs into consideration, the current consumer reimbursement rate leaves barely enough money to pay minimum wage to their workers who are performing very difficult, technical work - and that just doesn’t make for a good trade; it’s not a good career opportunity.” Shop owners and collision instructors agreed with Hawkins’s assessment that the suppressed Labor Rate in Massachusetts serves as a deterrent to students interested in the trade. “Students are naturally drawn to this industry,” confirmed collision instructor Gabe Coutinho (Upper Cape Tech; Bourne). “They’re fascinated by cars, but ‘cool’ only gets you so far. These young people are focused on money, and if the money is not there, they can apply their skill set elsewhere. Why would anyone choose a career where their specific skills are not compensated equally to many other dynamic industries with similar skills? If this continues, there won’t be any future technicians.” “In the last 10 years, I’ve seen the enrollment in the schools’ auto body departments drop to the point that some schools are threatening to close that shop down if the numbers don’t change,” reported Jim Marshall (Marshall’s Auto Body Experts; Billerica), who sits on the advisory board for Shawsheen Valley Technical High School in Billerica. “Classes have shrunk from a dozen to only two or three students. Although young, talented kids today have great computer skills, we can’t entice them into this field where they could be very
helpful and do a great job - largely due to how the consumers are being compensated for their vehicles.” “I looked into going to school to become an auto body technician, but who in their right mind is going to accrue $20,000 of debt to be paid $20 an hour with no hope in sight of an increase?” asked Sarah Mazzaferro, an appraiser at Custom Auto Body (East Longmeadow), acknowledging, “I work a second job because the business owner cannot afford to pay me what I’m worth, but I believe in this business so much. That’s how these rates affect us. How is a business supposed to continue to provide jobs and economic growth within a community when they are essentially having to fight tooth and nail for any dollar they earn from the insurance companies?” As Attorney Michael Powers expressed concern about whether a Labor Rate increase would result in subsequent wage increases to technicians, AASP/MA Executive Director Lucky Papageorg took exception to the suggestion: “Mr. Powers and the other insurance industry representatives continue to bring up this issue, but they’re obviously not hearing the underlying message that many body shop representatives have already testified to…If an increase comes to the collision repair shop, there’s no way it won’t be passed on to the technicians because those technicians are our lifeblood. This isn’t about lining the pockets of the shop owner; it’s about being able to pay for the training, equipment and - most importantly - being able to pay those technicians based on their knowledge and expertise. It’s insulting that this keeps coming up.” Ipswich-based economist Frederic B. Jennings Jr., Ph.D. (EconoLogistics) also provided testimony, reminding the commission that “It’s important to understand that the Labor Rate needs to cover all shop expenses and costs, not just their labor costs. “There’s been a lot of mystification expressed about these low Labor Rates, and the economics behind this story serves as an important illustration of the economic problem of monopsony power abuse, [which is where] a buyer puts a price squeeze on the suppliers to that buyers by reducing prices paid to the suppliers. It masquerades as efficiency, but this is not a story about efficiency; it’s a story about harm to suppliers and consumers.” As the LRSC’s second hearing drew to a close, Representative James Murphy (D-Weymouth) suggested that scheduling a tour of a local collision school would be beneficial to the commission as it begins compiling its findings for the report due on July 1, 2022. Kenneth Stukonis, collision instructor at Assabet Valley High School (Marlborough) and the appointed vo-tech school representative for the LRSC, offered to host the proposed tour. The LRSC is still accepting written testimony from those who were unable to attend the hearings, and AASP/MA urges Massachusetts body shops to share their concerns by emailing danielle.littmann@mahouse.gov. Repairers can also get involved by contacting local legislators to explain how important this issue is to your business and express support for House Bill 1111, an act to establish a minimum reimbursement for insurance claims which, if passed, will guarantee consumers won’t be limited to the amount an insurer is willing to pay for their vehicle’s repair. A recording of the entire second LRSC hearing is available at bit.ly/LRSC0322. PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
MASSACHUSETTS
New England Automotive Report
May 2022 29
EXECUTIVE DIRECTOR’S MESSAGE
[LOCAL] NEWS
continued from pg. 8
continued from pg. 14
hour and to get paid. Those shops who elect to charge their posted rates are reporting they are still booked weeks or even months into the future. They are able to treat their current employees better and to entice others to return to work in the collision repair industry. These will be the shops that ultimately thrive in the future. This is contrary to what some insurers try to make collision repair shops believe, that charging a co-pay to cover the true cost will force you out of business. Please do not believe the propaganda. Knowing that I cast some aspersions and made negative comments earlier. I want to tell those who firmly believe that all is right within the collision repair world and feel that it is right that collision repairers are forced to work on vehicles in 2022 at rates that are reflective of the mid-1990s, that I am sorry. I am sorry that you cannot speak truthfully and honestly and would rather hide behind figures which can be contrived, twisted and interpreted to paint a less-than-honest picture. I am sorry that you continue to rely on the decades-old tactic of scaring our legislators into believing they will not be re-elected if they take the steps to correct this issue legislatively. I am sorry you will not come to the table and offer solutions, instead preferring to staunchly state that you will oppose any correction to the status quo. The facts speak for themselves…. The void between ethics, morality and reality is wide and deep.
Having the blueprinting done, ensuring parts are correctly fitted and using the technology available to help schedule production can streamline the process, improve productivity and increase profitability. “Starting a repair and guess-timating halfway through it is the biggest fallacy in this industry,” Rush acknowledged. In an industry where recent statistics show collision repair ranked lowest as an area of interest for careers among young people, Rush pointed out,“If it turns out to be true, and young kids aren’t coming in, we have to optimize our skilled technicians.” At the conclusion of the night, AASP/MA Vice President Matt Ciaschini stood before the crowded room to express gratitude to “all for making this the biggest event we’ve had in years. It means a lot that it meant so much to everyone. We need to keep doing this. This is what it is all about. Everything we talked about tonight was about getting everyone involved, and we need everyone to be involved.” Papageorg echoed the sentiment and encouraged all to go forth and help spread the word to better the industry. “We are an association but we are also an alliance. We are not competitors; we are all aimed at a singular goal - to make the industry the best it can possibly be. That is our driving force. Be a proud member of the alliance. If you hear anyone tell you we don’t do anything, have them come to these meetings. We are doing a lot and trying to accomplish things, and we need you to be the voice and carry out the message.”
PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
MASSACHUSETTS
AASP/MA EXECUTIVE DIRECTOR EVANGELOS “LUCKY” PAPAGEORG can be reached at (617) 574-0741 or lucky@aaspma.org.
30 May 2022
New England Automotive Report
PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
MASSACHUSETTS
New England Automotive Report
May 2022 31
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New England Automotive Report
May 2022 33 6/28/21 9:50 AM
[LEGAL] PERSPECTIVE by James A. Castleman, Esq.
Should Insurance Industry Cost Containment Standards Even Exist? Since the 1970s, the insurance industry in Massachusetts has been required to adhere to certain “cost containment” standards, i.e. standards that insurers need to meet to supposedly keep claims costs low. Notably, it was not the insurance industry itself that developed these standards. Rather, it was the Massachusetts legislature and the Division of Insurance (DOI) that imposed them. The incentive for developing these standards was the fact that in the 1970s, Massachusetts had among the highest – if not THE highest – auto insurance premiums in the country at the time, and the insured public was not happy about those premiums. One of the major reasons that premiums were so high was that Massachusetts also had among the highest auto claims costs in the country. The idea was that, if claims costs could be reduced, then insurance premiums could be reduced as well. (Of course, if Massachusetts drivers had learned to drive better, and if Massachusetts roads had been maintained better, that might have had a much bigger impact on claims costs.) In response, the legislature enacted statutes that required the DOI to develop standards that the insurance industry would need to meet to keep claims costs low. These statutes also required the organization responsible for administering the state plan for insuring high risk drivers (Commonwealth Automobile Reinsurers, or CAR) to make sure that their individual participating insurers would have plans in place to keep claims costs low. The insurance industry initially was quite resistant to being forced to adopt specific standards. Insurers did not want the government telling them how to run their businesses or to set rules about how they should make individual choices regarding how much to pay for claims or individual elements of those claims. After all, they were the ones in the auto insurance business, and most of them had been for many decades. They did not want regulators micromanaging their claims payment decisions. Nevertheless, the DOI hit hard with cost containment standards. At the time, the DOI set uniform premiums that Massachusetts insurers charged for private passenger auto insurance – all auto insurers in the state were required to charge the exact same premium for all mandatory auto insurance coverages. In order to set those premiums, the DOI held lengthy premium rate setting hearings every year in which the state insurance industry needed to try to establish what they needed to get as a fair premium for various auto coverages. When the cost containment legislation was passed, the DOI developed regulations that required the insurance industry to separately show every year what they were doing to contain costs as part of the annual premium rate setting hearings. The regulations mandated that insurers address various aspects 34 May 2022
New England Automotive Report
of claims costs, including costs of personal injury claims and individual insurer claims administration costs, as well as making sure that insurers were doing enough to detect claims fraud. For the collision repair industry, the part of the regulations that became most important were those that dealt with individual aspects of auto damage claim payments. As part of the rate setting hearings, the insurance industry needed to show that they had plans in place to make sure that they were not paying too much for body shop Labor Rates, for too many labor hours, for parts prices, for towing, for storage and for total losses. Initially, insurers attempted to show that they had adequate plans in place, while balancing that against their understanding that they were reliant on the auto repair business and that insurers needed to pay enough to keep quality repair shops in business; however, for the first several years, the DOI would not accept that insurers were doing enough to keep the individual elements of claims cost low, and the DOI punished the insurance industry by reducing the amounts that they would allow the insurers to charge for premiums. As a result, insurers found themselves trying to get body shops to accept lower Labor Rates, to reduce repair hours and to accept discounts on parts prices. The insurers expected the collision repair industry to resist, so that they could go back to the DOI and say that they had tried…but had been unsuccessful. What actually happened was the collision repair industry essentially caved to the insurers’ demands. And the result was that claims costs were reduced – at least temporarily – and that insurers had to go back the next year and tell the DOI that their plans had been effective. An unintended result was that the collision repair industry found itself sinking into a deeper and deeper hole, where many quality collision repair shops had to make difficult decisions about how to repair cars, how to pay their help and how to stay in business. In addition to the annual premium rate setting hearings, CAR set its own performance standards that required individual insurers to demonstrate that they had plans in effect that met the same standards that were set by the DOI. If they could not, then the individual insurers were punished by assessment of penalties. Notably, CAR was established to regulate only the “assigned risk pool” of high risk drivers and to spread the risk among all auto insurers writing business in Massachusetts. But statutes require that insurers treat their assigned high risk drivers in a non-discriminatory basis, i.e. the same as they treat the rest of their insureds. The result is that CAR rules regarding claims standards for high risk drivers are applied to ALL drivers – whether they personally pose a high risk or continued on pg. 38
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[LEGAL] PERSPECTIVE continued from pg. 34 not – and that the CAR cost containment performance standards therefore apply to ALL auto claims, not just claims for high risk drivers. In the 2000s, the DOI abandoned the setting of uniform premium rates in favor of a system of “managed competition,” allowing insurers to compete and charge individually set rates, subject to some restrictions. As a result, the DOI also abandoned the annual rate setting hearings and the requirement for insurers to demonstrate their cost containment efforts every year. The collision repair industry breathed a sigh of relief, believing that they would no longer be subject to what they perceived to be arbitrary limits on what they could charge for their services; however, that sigh of relief was short lived since CAR did not abandon their performance standards, meaning that Massachusetts auto insurers still must establish that they have the same cost containment plans in place. But, does cost containment really serve a purpose, and should it exist? In my opinion, cost containment standards as implemented by the DOI and CAR are shortsighted and even dangerous, for multiple reasons: Does it really make sense to force insurers to abide by claims costs standards set by third parties (i.e. the DOI or CAR)? At what cost are those reductions made? If the insurance industry is truly supposed to be competitive, then why should any third party care how much individual insurers pay for individual claims costs? Isn’t it really the essence of competition to allow each company to make its own decisions about how to run its own business? Insurers are big businesses, run by educated and experienced personnel who know how insurance works. Shouldn’t insurers be able to make individual decisions about how to best settle their claims? As most members of the collision repair industry in Massachusetts know, the effect of the insurance industry cost containment standards on body shops has meant hard decisions about how to best repair vehicles and still be able to make a living. It has meant holding down wages for employees, which in turn has meant a shortage of qualified techs in the industry. It has meant the proliferation of unqualified repair shops and of shops willing to cut corners in order to make a buck. It has meant that many of the best and most qualified shops may not be able to compete for business on a level playing field. By the same token, cost containment standards may have had a negative effect on qualified insurance appraisers too, since the appraisers are under tremendous pressure from their supervisors to comply with the standards. Even when an appraiser knows that a particular procedure or the use of a particular part may be the best way to effectuate repairs, or that more time will be needed to make a particular repair, they are under pressure to tell shops “that’s all I can pay for.” Then what happens? Ill feelings arise between the repair shop and the appraiser. The appraiser finds himself or herself having to come back to the shop for multiple supplement requests. Repairs are taking longer, leaving claimants upset about how long repairs are taking, causing insurers to pay for excess substitute transportation costs, leaving appraisers unhappy about their jobs and dreading having to face repair shops multiple times. Repair shops and insurance appraisers are playing games as they try to find ways 38 May 2022
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for shops to get paid what they need, while leaving the insurance appraisers with appraisals that will pass muster with their bosses. For no good reason, costs have been arbitrarily shifted to some element of the repair that does not fit into the ambit of the specific cost containment standards set by CAR. Worse, some shops are accepting what is initially offered and taking shortcuts on how they perform repairs. That, of course, results in more unsafe vehicles traveling on Massachusetts roads with perhaps more resulting accidents and more injuries being suffered in those accidents. These are the true results of cost containment standards. Conclusion It appears to me that cost containment standards were improperly and unnecessarily forced upon the Massachusetts auto insurance industry, and the result has been disastrous. It is time for Massachusetts regulators to abandon insurer cost containment standards altogether, so insurers can spend more time concentrating on the business of insurance, so repair shops can spend more time concentrating on the business of repair, so repair shops can properly repair vehicles the way they know they are supposed to be repaired without jumping through hoops, so repair shops and insurance appraisers do not have to play games in negotiating what goes into the cost of a repair, and so that the insured public can be better assured that they are going to get better, quicker and safer repairs to their damaged vehicles. PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
MASSACHUSETTS
Attorney James Castleman is a managing member of Paster, Rice & Castleman, LLC in Quincy, MA. He can be reached at (617) 472-3424 or at jcastleman@prclawoffice.com.
[LOCAL] NEWS continued from pg. 12 “I really want to reach a consensus which we’re obviously not going to reach today,” Donovan said. “We’ll give it a try in the next meeting.” Moving on to the long-awaited complaint review, ADALB was presented with 20 complaints to discuss. One had been withdrawn, four were dismissed, and the remaining 15 were tabled for the next meeting, scheduled for May 17. AASP/MA members are strongly encouraged to listen to the recording of the March 15 meeting in the Members Only section of aaspma.org for a glimpse into the inner workings of the ADALB. The original proposed revisions can be found on the March meeting agenda, available at bit.ly/ADALB0322. More detailed coverage of this meeting appears in the April issue of the Damage Report members only newsletter. PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
MASSACHUSETTS
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[FEATURE] continued from pg. 25 such an incentive. Instead, we challenged existing employees to speak to family and friends about finding people to join our team, and we offered a $1,500 bonus to both the employee and the new hire, to be paid out in three quarters. Our three new young team members are now in their fourth month! RS: As long as this industry cannot be competitive with wages and benefits, we will continue to struggle to attract and retain qualified technicians. For what a technician needs to know, continue to learn and invest in tools, I can't think of one profession that is nearly as undercompensated as the collision industry. NEAR: The million-dollar question…How do we fix it? How do we solve the tech shortage dilemma? AP: Career development is vital. Shops are often so focused on throughput that we don’t make time to focus on our people’s development. We need to demonstrate that there are many avenues within this industry and within our organizations. Can we create a track for somebody who doesn’t want to continue to be a painter? Maybe they can learn to be a repair planner instead. Creating new openings and opportunities is hard, but it’ll benefit us in the long run. GC: The most effective way to attract and retain more techs is simple: Pay them. There needs to be a major overhaul of this entire system, but we’ve been doing it this way for so long that most people are afraid to upset the apple cart. We allow insurance companies to dictate the repair, even though they’ve never fixed a car in their entire life. We need to shake things up because the way we’ve been doing it isn’t working. Things are on the verge of collapse, and who will fix vehicles when the current technicians age out? JM: We created a training program within the shop where we partner a student or new hire side by side with a seasoned technician. We measure their e fficiency and knowledge growth on a regular basis, plus we provide them with a free tool box if they stay in the program for two years. RS: Shops will continue to struggle to attract and retain employees until reimbursement rates paid by insurers grow drastically, allowing auto body employees to receive the same salaries and benefits enjoyed by their counterparts in other trades. It is bad enough that the collision industry can't compete for entry-level help with companies such as Amazon which require no specialized training for entry level positions or the investment in tools that those entering the collision industry must invest in. I think that the day will come that the insurance industry will finally reap what it has sown, and repair professionals will finally be driving the bus. I just hope that I am around long enough to witness it. Engaging with students may seem like a daunting - and exhausting - task, especially in a business environment where it can be difficult just to process the existing workload. Fortunately, organizations like the Collision Repair Education Foundation offer ways for collision professionals to support local schools with minimal effort. Discover how you can get involved at collisioneducationfoundation.org.
PROTECTING CONSUMERS AND THE COLLISION INDUSTRY
MASSACHUSETTS
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