EXECUTIVE DIRECTOR’S

The Big Lie Has Got to Stop!

by CHARLES BRYANT

State Farm Insurance Company just agreed to pay $9,400 in order to avoid obeying a Texas judge’s ruling that it must disclose its Labor Rate survey data and other information related to its estimating process, according to a Repairer Driven News article (bit.ly/NJA0222). Are you kidding me? What a joke! Just how long is this industry going to put up with this nonsense? If State Farm or any insurer is going to limit what they will pay as the Labor Rate for collision repairs based on a survey, then they should be more than willing to openly share the results of the survey that they claim to be relying on. Even a Texas judge agrees that if State Farm is going to limit what they are willing to pay for collision repairs based on a survey, then they should release the results of said survey. Yet, State Farm is willing to pay thousands of dollars to keep the results of their survey a secret. They argue that the result of their survey is proprietary and protected. Well, if that is the case, it should not be used to control another industry without full disclosure. Obviously, when insurers are paying collision shops less than bicycle shops are getting paid to repair bicycles, something is not right!

The fact that State Farm is so secretive about the results of their survey that they are willing to pay thousands of dollars to keep them secret tells us there is a good reason why they don’t want the results revealed. Plus, this is not the first time State Farm has used the court to try and make sure their survey results do not get released to the public. Back in February 2020, a Texas judge ruled against a motion that State Farm made for a protective order regarding discovery, according to Repairer Driven News (bit.ly/NJA0222B). Well, let’s not act like this is something new for an insurer to try and control the Labor Rates. Way back in 1987, the New York Department of Insurance informed the Assistant Counsel to the Governor that the way insurers reach an agreed price with collision shops is actually referred to as “The Big Lie.” In the letter to the Governor’s office, it was explained that proposed legislation was intended to eliminate what has become known as “The Big Lie,” what they believe represents the prevailing way claims are settled in New York because insurers were not paying adequate Labor Rates, preventing auto body shops from earning a profit in a legitimate manner. The letter further acknowledged that insurance appraisers were inflating the repair estimate by allowing for additional labor hours that did not exist in order to get the shops to accept their estimate and, at the same time, artificially suppress the Labor Rates. The letter also acknowledged that it was blatantly clear that the Labor Rate that was being paid to collision shops was grossly inadequate and that it barely covered the direct salary cost of a competent auto repair professional. The idea of the legislation was to eliminate the practice of insurers throwing a couple of extra hours that did not exist into the estimate in order to get the shops to agree to the grossly inadequate Labor Rate. So, you see, this is not something new. Collision shops have been working for inadequate Labor Rates for many years because of unscrupulous practices by insurers who have been getting rich off the backs of collision shop owners who suffer because of the ridiculously low Labor Rates that insurers have enjoyed for so long. The problem is their games will no longer work! Collision shops are fixing expensive vehicles that require the technicians to be properly trained and for the shops to purchase the equipment required to return these vehicles back to the consumer in safe operating condition. These vehicles with advanced features like automatic braking, lane change sensors and such require the proper training and equipment that cannot be purchased at Labor Rates that are less than bicycle shops get paid to repair bicycles. The point is, if insurers don’t cut the nonsense and start paying shops a reasonable amount to repair these modern vehicles safely and properly, people are going to die because unsafe vehicles will be on the roads when involved in a collision. If anyone would like to discuss any portion of this article, they are welcome to call me on the AASP/NJ Hotline at (732) 922-8909.