[LOCAL] NEWS
LRSC’s Report Offers Possible Solutions Despite Insurer Impliability In a demonstration of speed and progress that is typically uncharacteristic for the government, the Labor Rate Special Commission (LRSC) issued a report detailing possible solutions within days of its final meeting. Offering six potential recommended solutions, the “Report of the Special Commission on Auto Body Labor Rates” indicated strong support for legislative action to regulate reimbursement rates with five options including governmental intervention. 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. Following the LRSC’s inaugural meeting on December 15, 2021, the commission held two public hearings. The first, held January 25, featured testimony from over 30 individuals, as well as 90 written testimonies. The second hearing, held March 22, included verbal testimony from nearly 40 industry professionals in addition to 10 submitted in writing. At the suggestion of LRSC Co-Chair Representative James Murphy (D-Weymouth), a fourth and final meeting was held April 4, which involved a tour at Assabet Valley Regional Technical High School in Marlborough to benefit the commision as it compiled its findings. During this meeting, Murphy repeatedly reminded participants that the commission was charged with studying the issue of auto body Labor Rates and coming up with possible solutions to address that issue. He also solicited members to submit possible solutions to be included within the final report. Throughout the hearing process, several members of the commission expressed concerns that nothing would come of the LRSC’s findings. “A commission happened in 2008, and there were no solutions offered by the insurance industry, so the Labor Rates remain stagnant,” lamented Jack Lamborghini (Total Care Accident Repair; Raynham). “I hope that the insurance industry would offer a realistic solution to what the Labor Rate is relative to real numbers. “I’m very fearful, honestly, that once again, nothing gets done,” he continued. “Or that a solution that’s offered up by the insurance industry is going to be so inadequate that we’re going to have a real problem going forward.” In response, Murphy encouraged LRSC members to share 16 June 2022
New England Automotive Report
their thoughts on possible solutions for inclusion in the report and expressed a hope that “together as a group, this commission can move forward in a positive direction [and] come up with some solutions that will allow cars to be properly fixed, allow the industry to survive and allow the insurance companies to do what they do.” Within a mere seven business days, the LRSC’s final report had been drafted to include several possible solutions, and the 13-member commission voted 10-3 in favor of the report, with the LRSC’s three insurance industry representatives being the sole dissenters who provided unfavorable recommendations. The previous commission’s findings – and the insurance industry’s resistance – were referenced early in the 2022 LRSC’s report in reference to the history of auto body Labor Rates: “Since the Report of the Special Commission on Auto Body Labor Rates released in 2008, the Labor Rate paid by insurance companies has remained nearly the same, although the 2008 report’s recommendations stated that the Labor Rate had not kept pace with increases in similar industries. While the auto body industry’s conclusion suggested the need for immediate relief, the insurance industry’s conclusion stated that the industry and market needed time to adjust to new guidelines and standards. The Labor Rate paid by insurance companies in 2008 remains the standard today.” Referring to verbal and written testimony provided during the commission’s four-month process, the report indicated that although “managed competition for the insurance industry ended in 2008 through changes in the Code of Massachusetts Regulations” which allowed for the negotiation of auto body Labor Rates, “the auto body Labor Rate has not increased significantly, and auto body shops across Massachusetts have stated that without an increase in the Labor Rate or the power to negotiate the Labor Rate with appraisers, auto shops will begin to close due to shop owners not being able to afford to run a business or retain employees.” Indicating that the collision repair industry is losing technicians to other trades that can afford to offer higher wages, the LRSC’s report specifically noted that the average collision repair salary in Massachusetts is only $47,400, compared to the mean wage for all industries of $72,940. The “Report of the Special Commission on Auto Body Labor Rates” went on to recognize that the auto body Labor Rate “has not increased significantly since 1988” and “must be addressed.” The LRSC offered six recommendations and potential solutions, including proposals from AASP/MA and the Massachusetts State
