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Tuesday, 29 March 2016 04:47

CAA Call to Action for All Shops: Support New Labor Rate Regulations

The California Department of Insurance (CA DOI) recently proposed regulations that would clarify and require insurers that conduct auto body labor rate surveys to perform them in a fair, reasonable and accurate manner. These regulations will also clarify and strengthen existing anti-steering laws, according to the CA DOI.

The purpose of these proposed regulations is three-fold--to guarantee that auto body labor rate surveys are fair and equitable; save consumers money who are forced to pay unnecessary out-of-pocket costs and prohibit insurers from making disparaging and discrediting statements against repair shops.

Public hearings on these regulations are scheduled for April 21, 2016 (Auto Body Repair Labor Rate Surveys) and April 22, 2016 (Anti-Steering in Auto Body Repairs) at 10:00 am at the Employment Development Department, 722 Capitol Mall, 1st Floor Auditorium in Sacramento.

These regulations are good for consumers and auto body shops in California, but CAA Lobbyist/Attorney Jack Molodanof is a little skeptical, based on past experiences.

"Unfortunately, we believe that some insurers may try to circumvent the public regulatory process and introduce legislation that would stop these new regulations from moving forward and taking effect," said Molodanof. "That is why we're urging CAA members to contact (call, write and speak directly) to their legislator (Assembly member and Senator) and request that they oppose any legislative effort that would stop these regulations from moving forward."

Deputy Commissioner Geoff Margolis from CA DOI elaborated on the new proposed regulations.

“California Insurance Commissioner Dave Jones has noticed new regulations that address inconsistent, unreliable, and inaccurate labor rate surveys that are used by insurers to settle insurance claims," he said. "The proposed regulations establish clear guidance and standards when conducting auto body labor rate surveys, including requiring current and reliable data. It is expected that the regulations will result in fairer and more equitable insurance claims.

“The Commissioner has launched this regulatory effort in response to the hundreds of complaints the Department of Insurance has received from consumers and auto body repair shops concerning instances where consumers were forced to pay out-of-pocket costs, or shops were deprived of their reasonably charged rates due to outdated and unreliable surveys," Margolis explained. "Some of these complaints have resulted in enforcement actions which the department has filed against several insurance companies."

The proposed anti-steering regulations are also much-needed, according to Margolis.

“Commissioner Jones has also devised regulations that address the problem of insurance companies who communicate deceptive and untruthful information in order to improperly steer policyholders to an insurer-chosen repair shop after an automobile collision," he said. "These proposed regulations also provide guidelines for reasonable time frames for insurers to inspect damaged vehicles and for what constitutes unreasonable distances in cases where an insurer requires the claimant to travel to obtain a repair estimate or have a vehicle repaired.

The proposed regulations are intended to address the issue of inconsistent, unreliable and inaccurate auto body labor rate surveys used by insurers to settle or adjust claims.

The proposed regulations will clarify the standards that govern the procedures for conducting and reporting labor rate surveys and shall do the following:

  • Standardization: Standardize auto body labor rate surveys to effectuate fair and equitable claim settlements or adjustments of labor rates
  • Up-to-Date: Surveys conducted shall contain current labor rates. 
  • Sample Size: Insurers shall be required to send a survey questionnaire to all Bureau of Automotive (BAR) licensed auto body repair shops in the specified geographical area. 
  • Auto Body Repair Facilities: Labor Rate Surveys shall use only labor rates of auto body shops licensed with BAR. 
  • Equipment & Insurance: Only labor rates reported by auto body shops that meet specified equipment, insurance and other specified requirements may be used in the Labor Rate Survey. 
  • No DRP’s Rates: Labor Rate Surveys shall not use any discounted rate or DRP rates in survey to determine prevailing auto body rate. 
  • Geographical Areas: Labor Rate Surveys must follow specified geographical areas as outlined in the regulations. 
  • Standard Questionnaire: Insures must use a specified Standardized Labor Rate Survey Questionnaire as outlined in the regulations. 
  • Direct Responses from Shops: Only direct responses from the shop based on the Standard Questionnaire will be acceptable. Labor rate surveys cannot rely on estimates, third-party estimating software systems or subrogation reimbursements. 
  • Surveys Public Information: The Labor Rate Survey shall be submitted by insurers and reported to the Dept of Insurance. Results made public.

For more information and to access documents concerning these proceedings go to: Click on “Insurers” then “Legal Information” then “Proposed Regulations” then “ Search for Proposed Regulations.” When “Proposed Regulations” screen appears, you may choose to find documents by conducting a search for “REG-2012-00002” or by browsing for them by name as “Auto Body Repair Labor rate Surveys” and “REG-201500015” or browse by name “Anti-Steering in Auto Body Repairs”.

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