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
