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AASP/MA VENDOR AFFINITY PROGRAM SPONSORS
AASP/MA Holds Strong on Beacon Hill
“Combined, both of our bills have received almost 100 sponsors – that’s nearly 50 percent of the Legislature.”
If you care about your customers and the survival of your business, then the above words by AASP/MA Lobbyist Guy Glodis should get your attention. As of early June, AASP/MA had already reached a record-breaking number of lawmakers standing in support of its efforts to reshape the insurance and regulatory landscapes in Massachusetts.
“The foundation of AASP/MA’s bills has more to do with consumer protection than they do the collision industry itself,” Glodis says. “ It’s really about the best way to help consumers in Massachusetts, and it’s an important message for the State House to hear.
“Being part of Beacon Hill since the mid-’90s, I can say there is really an air of reform there right now, which bodes well for AASP/MA’s legislative agenda,” he adds. “I think it’s long overdue that we take a look at insurance, which hasn’t taken place in any significant form since the late 1980s. As a group, AASP/MA is really motivated and organized and will not take a backseat to the insurance lobby. The association has really revamped its legislative efforts and is really moving ahead full throttle in this session.”
Filed by Representative Tackey Chan of Quincy, House Bill 327 aims to move the Auto Damage Appraiser Licensing Board (ADALB) from the Division of Insurance to the Division of Professional Licensure. It also seeks to expand the size of the ADALB to include two consumer advocates, one appointed from the Attorney General’s Office and the other from a consumer advocacy group, and replace the current Board chairman, appointed by the Massachusetts Commissioner of Insurance, with one appointed by the Commissioner of the Division of Professional Licensure. Additionally, it will set term limits for all ADALB members.
As AASP/MA Executive Director Evangelos “Lucky” Papageorg sees it, passage of the bill would go a long way in ensuring that the ADALB finally has the proper oversight and muscle needed to truly serve and protect the motoring public by enforcement of regulations on all licensed auto damage appraisers.
“The ultimate goal of the move is to have the Board be placed somewhere where the understanding of the importance of a professional license is truly realized. It’s not an issue of protecting someone’s financial gains or losses; it’s about protecting the consumer. An appraiser should be doing their job according to the regulations, just like anyone who holds a professional license in electrical, plumbing or even hairdressing. If they’re
doing something that violates the regulations that govern their license, they take the chance of reprimand, suspension, fines and other penalties. That is exactly what we need in the collision repair industry for all appraisers. This is not a witch-hunting expedition for licensed appraisers who work for insurance companies. Anyone who is not living up to their obligations as a licensed auto damage appraiser should be potentially reprimanded and punished for not doing so.”
A licensed appraiser himself, he is quick to voice frustration over the current Board’s lack of action and response to multiple complaints against appraisers currently on file.
“Licenses should mean something. I just wrote out a check for my license renewal. Quite honestly, it galled me. I’m throwing this money into the pot, but If I don’t have to live up to the regulations that govern my license, then that license is meaningless.”
Of course, writing a proper estimate means noting everything that needs to be done to properly repair a damaged vehicle. In 2021, that means utilizing the appropriate equipment, tools and procedures to handle the complex nature of current automotive technology. Unfortunately, many Commonwealth insureds are not receiving the proper reimbursement from their carriers. This is where House Bill 1111/Senate Bill 709 comes in. Filed in the House by Representative James Hawkins of Attleboro, the bill seeks to set a minimum reimbursement rate for auto body labor paid by insurers to Massachusetts claimants. This would enable the consumer to have a choice in selecting a facility and not be limited to just shops that are willing to work for a substandard rate.
“The rate of reimbursement that insurance companies have suppressed and artificially created is truly at the heart of the issue and is to the detriment of the vehicle owner,” Papageorg says. “If the insurance industry can continue to mandate and insist that it sets the rate for a retail business, it goes beyond what independent business is all about. Business should be competitive, and any collision facility out there should be able to draw consumers to it based on quality, turnaround time and the cost of repair. It shouldn’t be based upon a contractual arrangement to have work sent to you and then bowing down to how the insurance company that sent you that work wants to see it done without accepting the liability for their imposed limitations.”
On May 17, Papageorg addressed members of the Joint Committee on Financial Services during an informal virtual hearing on House Bill 1111/Senate Bill 709 and several other pieces of legislation currently filed at the State House. He explained to
continued on pg. 30
Committee members that AASP/MA currently represents more than 3,000 shop owners, employees and other industry-related professionals in Massachusetts, stressing that the association’s mission statement is to ensure a safe and professional repair experience for vehicle owners.
“AASP/MA is a pro-consumer association representing all collision repair and mechanical repair shops here in Massachusetts regardless of insurance affiliation. Our mission is to continuously strive to advocate for consumers, educate repairers and create unity as the voice for repairers in Massachusetts.”
In addition, Papageorg invited Committee members to reach out to AASP/MA if they have any questions in regard to the pending legislation and/or to arrange an in-person meeting at a member facility in their area if they want to learn more about the issues affecting the industry and the public it serves.
With nearly 100 Massachusetts legislators already pledging their support to AASP/MA in this session, the next step in the process will be getting both bills heard in a timely manner during what is already a heavy and hectic time for state politics. At press time, it appeared that in-person committee hearings could resume by September, while some bills could be heard virtually in the interim.
While sunshine and a growing return to regular life may tempt some AASP/MA members to go easy on working with their area representatives, now is not the time to slow down.
“We can’t rest on our early success,” Glodis insists. “We have to continue to push our consumer-reform agenda and make the legislators truly know why these bills are important to the public’s well-being. The Legislature very rarely acts; it tends to react. The AASP/MA membership needs to keep in mind that almost 50 percent of the Legislature has only been there for two terms. That’s a staggering amount of new people coming in, and a lot of them don’t know about the issues that affect the auto industry and collision repair consumers. It’s incumbent upon us to get the message out there but also to pound the drums. Reform doesn’t come by chance; it comes by advocacy, organization and keeping the membership motivated to force change up on Beacon Hill.”
For more information on AASP/MA’s legislation, please visit aaspma.org or contact AASP/MA Evangelos “Lucky” Papageorg at lucky@aaspma.org or (617) 574-0741.
Left to right: AASP/MA Kevin Gallerani, AASP/MA Treasurer Dana
BEST CHEVROLET_NEAR0320.qxp_Layout 1 2/12/20 12:02 PM Page 1Snowdale, AASP/MA Executive Director Evangelos “Lucky” Papageorg,
Representative Tackey Chan, Representative Brian Murphy and AASP/MA Lobbyist Guy Glodis at a fundraiser for Representative Chan on June 11
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Notice of Loss: A Legal Requirement or an Insurer Steering Opportunity?
If an insured vehicle is in an accident or if it otherwise incurs an insurance-covered loss, then that vehicle’s insurer must be notified of the incident. As required by the standard Massachusetts Automobile Insurance Policy, “We, or our agent, must be notified promptly of the accident or loss by you or someone on your behalf.” Under certain insurance coverages, if the insured fails to notify their insurer “promptly” of an accident or loss, then the insurer may not be required to pay the claim. And under the standard policy, “If you are filing a claim for damage to your auto, you or someone on your behalf must file a proof of loss within 91 days after the accident.”
Insurers are well aware of the notice of loss requirement and have become creative in using that requirement to attempt to exercise control over the collision repair industry in Massachusetts. In what may be viewed as a disturbing trend by the majority of members of the repair industry, insurers have been using the required notice of loss as an opportunity to increasingly and ever more boldly attempt to steer claimants to their preferred repair shops.
How did this happen, and what can be done about it?
A History of Insurer Referrals in Massachusetts
At one time, the ability of insurers to steer their insureds to particular repair facilities was almost nonexistent in Massachusetts. When the statute establishing the Auto Damage Appraiser Licensing Board (ADALB) was enacted in 1981, it included (and still includes) a mandate that “no appraiser or insurer shall request or suggest that repairs be made in a specified repair shop.” [Emphasis added.] This was strengthened by follow-up regulations issued by the ADALB that state that “no staff or independent appraiser, insurer, representative
of insurer or employer of an independent appraiser shall refer the claimant to or away from any specific repair shop or require that
repairs be made by a specific repair shop or individual.” [Emphasis added.]
The language of the governing statute and the ADALB regulation was initially interpreted to prohibit any and all referrals by insurers of their insureds to any one or more collision repair shops. That reading of the law was narrowed in 1987, however, when Allstate Insurance Co. challenged it in a lawsuit and got the Massachusetts Supreme Judicial Court to rule that “an insurer, on the request of a customer, may provide that customer with a list of repair shops or individuals which it believes can do quality repair work as long as the communication
makes it clear that the choice of the repair shop or individual
belongs to the customer.” [Emphasis added.] Notably, the wording of the statute and ADALB regulation was not struck down. Rather, the Court found that the language did not prohibit an insurer from providing a list of repair shops if the insured customer requested it and if the insurer makes it clear that the choice of shop remained with the customer.
The prohibition against referrals was then significantly narrowed with the adoption of the “Direct Payment” system of auto damage claim settlement, enacted by statute in 1988 and effective as of 1989, which allowed Massachusetts insurers to file Direct Payment Plans for approval by the Commissioner of Insurance. The system also provided that “notwithstanding any other law […] the Commissioner may require any plan filed […] to provide […] that the insured will be given a list of at least five registered repair shops, geographically convenient for the insured, from which the insured may at his or her option select a shop.” It also stated that “no insurer or appraiser shall require that
repairs to any motor vehicle be made at any specific repair shop, or
list of repair shops.” [Emphasis added.] The Commissioner then issued regulations that incorporated these terms. Further, the statute and the subsequent governing regulations essentially allowed any registered Massachusetts motor vehicle repair shop to be able to be on an insurer’s list of referral shops so long as the repair shop agreed to the terms of the insurer’s referral shop contract.
The Direct Payment system of auto damage claim settlement became the standard in Massachusetts, but there still continued to be
limitations on insurers being able to steer claimants to particular
repair shops. In fact, the Commissioner required that the claimant be provided with a list of all registered repair shops in their county, with at least five referral repair shops just being highlighted or asterisked. Additionally, the requirement stated that the list not be provided until a damage appraisal had been prepared by the insurer and delivered to the insured. A notice had to be given to the claimant informing them that they still had the right to use whatever registered repair shop they wanted to choose.
The biggest blow to the Massachusetts anti-referral laws came in 2011. While some insurers had apparently been engaging in similar conduct surreptitiously before then, that was when the Commissioner of Insurance approved a Direct Payment Plan submitted by Metropolitan Property and Casualty Insurance Company (MetLife) that, on its face, proposed to allow claims handlers to steer insureds to particular repair shops when taking the claimant’s first notice of loss over the phone. Notably, the approval of MetLife’s plan was made
without a hearing and despite the plan apparently violating multiple
provisions of governing statutes and regulations. Directly within its plan submission, MetLife stated its intended practice of providing “warm transfers” of claimants to individual repair shops:
MetLife Auto & Home will be introducing customers interested in the Platinum Auto Service Program to the shops directly in an effort to streamline the process. There is no better time to make this introduction than when the customer is on the phone reporting their
auto claim. Therefore, our claims department will be contacting you, when the customer is on the phone and agreeable to this service, to provide you with an introduction and to facilitate the scheduling process [...] MetLife Auto & Home associates will conference your shop into a call with the customer to schedule a repair date and time which will be convenient for the customer and your shop. The repair should be scheduled for the first available opportunity in your shop that meets the customer’s needs. [Emphasis added.]
While public records show that the Division of Insurance originally balked at this procedure, the Commissioner approved MetLife’s plan in the end despite what appears to me to be a direct violation of the governing statutes and regulations.
Since that time, many insurers have developed their own specialized direct referral shop programs. In my opinion, the insurers and the Commissioner of Insurance have blindly continued to ignore the requirements of the law. The result has been what appears to be an
continued on pg. 36
extensive system of direct steering of claimants to individual contracted referral repair shops and stripping from the vast majority of collision repair shops the right to even try to compete for work.
What Can Be Done about This Practice by Insurers?
With the Commissioner of Insurance having approved Direct Payment plans that incorporate terms that seem to allow insurers to directly steer claimants to individual repair shops, the challenge of counteracting such steering is huge. There is no one good solution, but there are some suggestions that come to mind for those members of the collision repair industry that object to insurer direct referral programs. Among them are:
• Individual shops should educate their customers in advance about
these customers’ absolute right to choose their own repair shop to
repair their car. That is clearly the law, and you can and should let others know. Let them know that if their insurer suggests a repair shop, then they absolutely do not have to use that shop. Also, let them know why you think that your shop is a better choice for them. Do you have a list of customers that you can target? Can you send them mailings or emails? Do you advertise in your local paper or in radio or TV advertising? Do you participate in any online blogs? Do you belong to local fraternal organizations to which you can get the word out either through individual word of mouth or targeted meeting presentations? • Encourage your trade association to get the word out, and assist that association in doing so. If you are a member of AASP/MA (or another trade association), object to direct referral programs and want the association to try to do something about it, let that association’s directors know your position and encourage them to get the word out. (Of course, if you like the insurer programs, then you have the right to lobby your association for your position as well.) AASP/MA can provide written materials for distribution, provide speakers for meetings of organizations that you belong to, publicize information on its website, provide radio and TV publicity and take multiple other actions to try to educate the public as to their rights. Of course, you need to let AASP/MA know and help the association by providing the financial and personal support that it needs to do these things. • If you are contacted by a customer before they file their notice of loss,
consider contacting their insurer on their behalf to give the notice of
loss. The insurance policy requires that the notice of loss be given by the insured or by someone on their behalf. • Get involved in the political process. You have the right to contact your state senators and representatives, and your employees have that right as well – and then you have the right to vote for those individuals who you believe best represent your interests. Politicians are not (at least not always) in the pockets of the insurance industry, and they listen to their individual constituents more than most people realize. But they don’t know what your issues are and how you feel about them unless you tell them. (NOTE: The Commissioner of Insurance is a political appointee, selected by and responsive to the Governor, and also is often responsive to pressure from state senators and representatives. The Commissioner is the individual responsible for enforcing the laws regarding the insurance industry in Massachusetts.) • Get involved in the legislative process. AASP/MA has a lobbyist and has developed many bills over the years that address various issues that affect the collision repair industry. There is never a guarantee that any such bill will pass – and, arguably, current law already would protect the industry if the law would only be enforced – but it may make sense to develop legislation that addresses this issue further.
• Consider filing lawsuits or having your customers file lawsuits
when and if appropriate. If an insurer steers a customer to a repair shop, and particularly if that shop then performs inferior repairs, consider bringing suit for the damages that result and include the insurer as a defendant in that suit. This may be a long shot, but if enough insurers get sued for their actions, just maybe they will reconsider what they are doing.
Conclusion
Yes, insureds are required to file a notice of loss with an insurer if they are in an accident or if they have a covered loss. But under the laws that exist in Massachusetts, it would appear that insurers are not supposed to use that event to steer their insureds to particular repair shops. Yet they do, and they do so with the apparent approval of the Commissioner of Insurance. To me, this appears to be wrong and in violation of current law. But until someone – or many people – do something about it, things are not going to change.
Consider the suggestions for seeking change set out in this article. Be creative in thinking of other avenues that may also be followed in an attempt to rectify the situation. There are no guarantees, but nothing is going to change if nothing is done to try to change it.
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process offered by Aurora, processing fees could be significantly discounted or even eliminated, allowing you to retain more of your hard-earned money – all through your membership in AASP/MA.
All three of these programs offer no-obligation comparison quotes. AASP/MA has already done all the research; you will see how much you can save for yourself. These savings benefits are all available for you to realize as a member of AASP/MA.
An often unseen but provided benefit to every single member of AASP/MA is the hard-working and dedicated staff that works tirelessly for your benefit. The AASP/MA Board of Directors gives a tremendous amount of their time and energy to benefit you, your customers and your business. They do this while running their businesses so that you can concentrate on running your business. They spend countless hours working together as a Board and on many committees. They do this as volunteers! As a matter of fact, it costs each Board of Director money to volunteer – either through additional contributions over and above their yearly dues to our Political Action Committee (PAC) account or by contributing to our Lobbying and Legal Fund, etc. – along with giving AASP/MA their time and energy.
If you are an AASP/MA member, thank you! If you have been sitting on the sidelines waiting for something to get done so that you can reap the benefit, it is high time you joined and added to our ability to create even more benefits for you, your customers, your technicians and your business. You need to help benefit your industry, which is truly a great one!
Being a part of the success is a benefit in and of itself! JOIN NOW!
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AASP/MA EXECUTIVE DIRECTOR EVANGELOS “LUCKY” PAPAGEORG
can be reached at (617) 574-0741 or lucky@aaspma.org.
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