Bill S.2643

FILED ON: 2/6/2024

SENATE . . . . . . . . . . . . . . No. 2643

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Third General Court
(2023-2024)

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An Act reforming auto body labor rates.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

The purpose of this bill is to establish a set of minimum reimbursement rates for labor by insurers to claimants, for first- or third-party auto insurance claims in the Commonwealth. The newly calculated minimum reimbursement rate to the claimant will be determined by identifying the rate at the time of the Insurance Reform Act of 1988 adjusted to the rate of inflation to the time and promulgation of this bill becoming law.

The newly established minimum reimbursement rates will be phased in over a two-year correction period, which will begin within 30 days of the promulgation of this law with an increase of one-half of the difference between current rates and the newly established rates. The remaining half of the increase will follow at the end of the next twelfth month. This second increase will include the rate of inflation for the previous twelve-month period.

At the end of the two-year correction period, the minimum reimbursement rates to claimants will be adjusted yearly based upon the CPI for All Urban Consumers (CPI-U) Not Seasonally Adjusted, Northeast Region as published by the US Bureau of Labor and Statistics.

Under no circumstances shall the reimbursement rate to the claimant be less than the aforementioned calculated amount. A negotiation above the minimum reimbursement rates set, for the benefit of the consumer, will be determined based on a set of criteria. The criteria for the negotiations shall be predicated upon, but not limited to the type of vehicle (standard, high-end, heavy-duty, commercial, and/or body composition materials) labor type (body, refinish, structural, frame, aluminum, mechanical or other), expertise, level of training, certifications, equipment and geographic area of the chosen registered repair shop. No insurer shall refuse to negotiate on the basis of their ability to obtain a price that they can secure from another licensed repair facility conveniently located to the claimant.

Further, insurers are prohibited, other than by the means outlined in current laws and regulations, from suggesting, insisting, or overtly steering a claimant to use any specific registered repair facility to repair their damaged vehicle.

The promulgation of this law setting a minimum reimbursement rate to the claimant shall not invalidate any of the requirements as set forth in the governing statutes including but not limited to the: MGL Chapter 26 Section 8G, Code of Massachusetts Regulations; 211 CMR 123, 211 CMR 133 or 212 CMR 2.0.

SECTION 1. Chapter 100A of the General Laws is hereby amended by adding the following two sections:-

Section 15. There shall be, within the division of insurance, an auto body labor rate advisory board to address any issues related to auto body labor rates. The advisory board shall consist of: 1 member appointed by the commissioner of insurance; 1 member appointed by the attorney general; 1 member appointed by the director of the division of insurance standards; 3 members from the auto insurance industry appointed by the Automobile Insurers Bureau of Massachusetts, 1 of whom shall be chosen by the three members to serve as co-chair; 3 members from the auto repair industry from different geographic regions of the Commonwealth appointed by the Alliance of Automotive Service Providers of Massachusetts, Inc., 1 of whom shall be chosen by the three members to serve as co-chair; 1 member appointed by the Massachusetts State Automobile Dealers Association, Inc.; and 4 members appointed by the co-chairs, 1 of whom shall be from vocational-technical schools, 2 of whom shall be from a consumer advocacy group and 1 of whom shall be an economist with expertise on the insurance industry.

The advisory board shall meet not less than 2 times per year. The advisory board shall be responsible for creating, implementing and overseeing an annual survey given to relevant auto body shops as determined by the advisory board. The survey should compile data pertaining to contracted hourly labor rates, posted hourly labor rates and prevailing hourly labor rates and any additional information the advisory board deems relevant. The advisory board shall collect industry data including, but not limited to: (i) labor rates in neighboring states; (ii) auto body shop costs; (iii) total labor costs; (iv) inflation data; (v) work force data; (vi) vocational school trends; (vii) insurance premiums; and (viii) any additional information as requested by the advisory board. The results of the survey and the data collected shall be reviewed and analyzed by the advisory board annually and the board shall make a recommendation for a fair and equitable labor rate.

Annually, not later than December 31, the advisory board shall file a report of its findings, conclusions and any recommendations with the clerk of the senate and house of representatives, the joint committee on financial services, the senate and house committees on ways and means and the division of insurance.

Section 16. Not more than 30 days after receiving the annual report from the auto body labor rate advisory board under section 15, the commissioner of insurance shall set a minimum hourly labor rate that insurers shall pay on insured claims for repairs made by registered motor vehicle repair shops; provided, however, that the minimum hourly labor rate shall not be less than $55. The minimum hourly labor rate shall go into effect 30 days after it is set by the commissioner.

Further, the report filed on April 13, 2022 by the special commission to study auto body labor rates established in section 130 of chapter 24 of the acts of 2021, which described potential recommendations and solutions for the auto body labor rate in the Commonwealth, identified this legislation as a possible solution.