BOSTON — Labor rates at Massachusetts body shops have stagnated for years, according to a new report, which calls on Beacon Hill to increase the amount private insurers pay for repairs to help prop up the industry. troubled industry.
The report released by the Legislative Assembly Commission on Auto Body Labor Rates lays out a series of options that would ultimately increase body shop labor rates and urges lawmakers to consider several recommendations.
The 13-member panel, which included lawmakers, collision repair shop owners, auto dealers and insurance industry representatives, was created by the Legislative Assembly in 2021 to study the impact of insurance deregulation in the collision industry and whether the rates paid by insurers should be increased.
The panel adopted the report by a 10-3 vote, with all three insurance industry representatives voting “no” to its recommendations.
A majority of the commission concluded that bodywork rates need to be increased, but suggested there are several different options for getting there — including passing bills currently pending before the state legislature.
One recommendation, offered by a representative of the Alliance of Automotive Service Providers of Massachusetts, called for a tiered approach to raising rates that would require approval of pending legislation.
He suggested a $33 increase in the minimum reimbursement rate and annual adjustments based on the Consumer Price Index, among other changes.
The report cites federal labor data showing the average collision repair salary in Massachusetts is $47,400, while the annual salary for all industries is $72,940.
Likewise, the average labor rate paid by insurance companies is $40 per hour, which is lower in New Hampshire, New York, and other neighboring states.
The Alliance of Automotive Service Providers of Massachusetts released a scathing statement with the report criticizing insurers for opposing the changes and “not offering viable alternatives or solutions.”
“It’s obvious that as far as they’re concerned, they’re quite happy with a system that artificially removes the labor rate reimbursement amount in a way that can best increase their profits while keeping costs down. generals as low as possible,” the band wrote. . “Unfortunately, those who operate collision repair shops do not have the luxury of cutting out other cost factors in their business to ensure large profit margins.”
Legislation proposed by the Massachusetts State Automobile Dealers Association, which was also among the recommendations, would allow the state Division of Insurance to set minimum labor rates for body shops.
In 2008, the state’s insurance division overturned regulations that had set labor rates for body shops since the late 1980s after determining there was sufficient competition in the market. car insurance. This decision essentially allowed auto insurance companies to set their own labor rates.
But the commission’s report noted that these rates have remained largely unchanged over the past 14 years and have not kept pace with increases in similar industries.
The report found that the number of body shops operating in Massachusetts has decreased by 6.5% since 2018, when there were about 1,800 shops statewide. In 2020, there were 1,686 auto shops.
Meanwhile, vocational schools have seen declining enrollment in auto body repair programs as students choose other trades, the report’s authors noted.
“There has been ongoing concern about the body industry’s workforce, particularly for collision repair technicians,” the report’s authors wrote. “This sentiment was echoed by body shop owners, dealerships and vocational school representatives.”
Panelist Evangelos “Lucky” Papageorg, executive director of the Massachusetts Alliance of Automotive Service Providers, said the recommendations, if implemented, will institute a “reimbursement rate that reflects expertise, investment and responsibility associated with collision repairs performed in Massachusetts”.
The panel’s report was sent to the House Ways and Means Committee for review.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group newspapers and websites. Email him at email@example.com.