Massachusetts Shops Ask Legislators to Support a Mechanism to End the Labor Rate Madness

by Chasidy Rae Sisk

Recent testimony by auto body professionals and advocates before Massachusetts legislators left listeners feeling like they’d fallen through the looking glass…When the state with the second highest cost of living and the highest average salary in the nation also has the lowest labor reimbursement rate, there’s no wonder shop owners feel like “we’re all mad here.” 

For decades, Commonwealth repair shops have been working at a stagnant reimbursement rate of approximately $40 an hour, yet the industry has remained anything but stagnant. The need to address this insanity took center stage during the Joint Committee on Financial Services hearing on October 3 where support was voiced for four bills related to establishing fair labor rates in the state (House Bill 950, House Bill 1095, House Bill 1118 and Senate Bill 688)

“Our industry has gone from bodymen banging out dents and painting cars to a group of highly skilled technicians working on vehicles that carry computers processing more code than rocket ships, while the painting and refinishing process has required our technicians to become chemists,” AASP/MA Executive Director Lucky Papageorg detailed the complexity of repairing today’s vehicles. “Sadly, the labor rate of reimbursement has not kept pace with the changes in technology, training and equipment required to perform proper repairs.”

AASP/MA members and other industry leaders joined Papageorg in sharing their thoughts on this important matter.

“I pay the same money for tools, welders, training and all my expenses as shops in every other state, yet I’m supposed to be able to repair cars for $43 an hour,” lamented Jeff White (North Andover Auto Body; North Andover). “It’s just not possible to budget for the same training as shops that are getting $60 or $75 an hour, so I had to raise my rates to invest in the proper education to make sure I’m putting out a safe product and that my customers and their families are protected after I repair their vehicles. Why can’t we be on an average playing field with all the other shops?”

Andrew Bedard (Bedard Bros Auto Body; Cheshire) indicated that the low reimbursement rate has led to the closure of eight body shops this year in his county alone “because they can’t continue doing business for only $40 an hour. Currently, the body shops that are still open are almost refusing insurance work because we can get paid $70 an hour customer pay, so we take customer-pay work before any insurance work, and we’re all booked until February.”

Bedard also blamed the low reimbursement rate for the lack of talent available in the Massachusetts market. “We’re so close to New York where insurers pay $55-$65 an hour that I lose all my body techs that come out of trade schools in our area. As a beginning tech over there, they’re making more than some of the A-techs in our area. I’m even losing techs to Target because they’ll pay $23 an hour, and I can’t pay that to a kid straight out of high school with no knowledge because I won’t be able to make any money at $40 an hour.”

Papageorg agreed with both points Bedard made. “Thousands of potential employees do not even consider entering this profession, and businesses are closing down yearly not because of a lack of work but because of the lack of employees to do that work and the lack of a fair return on their investment. The collision industry is on the brink of collapse.”

“The problem is insurers set reimbursement rates that are far below market rates,” explained Brian Bernard (Total Care Accident Repair; Raynham). “It’s a fallacy that insurers are helping consumers by keeping rates down. Insurers’ profits rise when they squeeze collision repairers like me, [but] insurance companies think everything is just fine the way it is and there’s no plans for them to fix the problem. That’s why I ask for legislators’ support to help create the mechanism to end this madness.”

Testimony from Christopher Stark (Massachusetts Insurance Federation) confirmed Bernard’s assertion that insurers believe things are just fine: “I’m pleased to report that over the last year, auto labor rates have moved upward [and] are seven to 15 percent higher than they were at this point last year,” he insisted, arguing that one of the reasons labor rates are lower in Massachusetts is the “continuing oversupply of repair shops in the market” and that “mandating a minimum labor rate will increase drivers’ premiums [and] result in more total losses.”

Stark also spoke in support of House Bill 1005 which would abolish the Auto Damage Appraisers Licensing Board (ADALB) and return that authority to the Commissioner of Insurance. “The ADALB has been used like the Sword of Damocles hanging over the head of every appraiser in our state that if they do one thing wrong, there’s a chance they’ll have to come before the ADLAB to have a hearing…Just one company submitted over 100 frivolous claims to the ADALB over the last year,” he claimed (though he failed to note that the ADALB only voted to move forward on 15 of those 100 claims).

When Chairman Paul Feeney questioned the nature of those “frivolous” claims, Stark defined them as being relative to very small amounts and also expressed disagreement with the concept of manufacturer procedures and “whether or not it’s absolutely necessary for the repair of the car and to return it to its pre-loss condition.”

“As a trained repairer, I feel it is necessary to follow the safety requirements of the manufacturer. Please raise your hand if you would allow your children in a vehicle where a safety operation was not performed, even though it’s required by the manufacturer,” rebutted Don Dowling (Marblehead Collision; Marblehead), who acknowledged that he had submitted 158 complaints which amounted to roughly $40,000. 

Papageorg spoke out against House Bill 1005, claiming the auto damage appraisers license is a professional license that has nothing to do with the business of insurance and “giving that power to the Commissioner of Insurance does not make any sense or follow any logic.”

“The Division of Insurance is there to oversee the business of insurance, not collision repair,” Papageorg added. “They are there to cover the costs associated with collision repair for their policyholders; they are not there to determine what those costs are. For far too long, the legislature has kicked this issue down the street. The facts speak for themselves. Massachusetts is the lowest in the country regarding labor reimbursement rates, while being in the top 16 most expensive in the country for insurance premiums collected; it is time for the legislature to address this anomaly.”

Want more? Check out the November 2023 issue of New England Automotive Report!