The Legislature's Commission on Auto Body Repair Shops issued a new report suggesting labor rates at various auto body shops in Massachusetts have not seen significant movement in years, according to The Salem News. To help the auto body industry's growth, the report calls on Beacon Hill to increase how much private insurers pay for repairs.

According to the article, the report cites federal labor data showing that the average collision repair salary in Massachusetts is $47,400 while the annual wage for all industries is $72,940. The report also shows the average labor rate paid through insurance companies is $40 per hour, which lags behind New Hampshire, New York, and other neighboring states.

The Legislature created a 13-member panel that includes lawmakers, auto body repair shop owners, car dealers and insurance industry representatives in 2021 to study the effect of insurance deregulation in the auto body industry. The panel voted 10-3 in favor of the new report.

While the majority of the commission concluded that the auto body rates need to be increased, they suggested there are several different options to getting there. The article states a representative of the Alliance of Automotive Service Providers of Massachusetts recommended a tiered approach to increasing the rates. This option, which suggests an increase of $33 in the minimum reimbursement rate and yearly adjustments based on the consumer price index, would require approval of pending legislation.

The Alliance of Automotive Service Providers of Massachusetts issued a statement to coincide with the report, according to the article. In the statement, the alliance criticizes insurers for opposing the changes.

“It is evident that, as far as they are concerned, they are quite content with a system that artificially suppresses the labor rate reimbursement amount in a manner that can best boost their profits while keeping overhead costs as low as possible,” the group wrote. “Unfortunately, those who operate auto body repair facilities do not have that luxury of suppressing other cost factors in their businesses in order to ensure large profit margins.”

According to The Salem News, The Massachusetts State Automobile Dealers Association proposed authorizing the state's Division of Insurance to establish minimum auto body labor rates. In 2008, the state Division of Insurance rolled back regulations that had set labor rates for auto body shops since the late 1980s after determining that there was sufficient competition in the auto insurance market, allowing auto insurance companies to set their own labor rates.

The commission’s report noted those rates have remained largely unchanged in the past 14 years and have not kept pace with increases in similar industries. According to the report, the number of auto body shops operating in Massachusetts has declined by 6.5 percent since 2018. At that time, there were around 1,800 auto body shops statewide. As of 2020, there were 1,686 auto shops across the state.

According to the report, students are choosing other means of work rather than auto body repair, causing a decrease in enrollment in vocational schools.

“There has been a continuous concern about the auto body industry’s workforce, especially for collision repair technicians,” the report’s authors wrote. “This sentiment has been repeated by auto body shop owners, dealerships, and vocational school representatives.”

The Salem News interviewed panelist Evangelos “Lucky” Papageorg, the executive director of the Massachusetts Alliance of Automotive Service Providers, who said the recommendations, if implemented, will institute a “reimbursement rate which reflects the expertise, investment and liability associated with collision repairs performed in Massachusetts.”

The panel’s report has been sent to the House Ways and Means Committee for consideration.

Read the full article here.