Attendees enjoyed dinner and networking opportunities from 6pm to 7pm before CAA Glendale / Foothill Chapter President Hillel Shamam introduced Molodanof.
The CAA lobbyist began by explaining the new labor rate survey regulations that took effect on March 1, 2017. In order for insurers to meet the new standardized requirements, labor rate surveys must be current and have to be completed annually. After that time, it becomes non-compliant, unless it includes a Consumer Price Index (CPI), which allows for a year extension.
The surveys must include all auto body shops in the geographical area that are registered with the Bureau of Automotive Repair (BAR). The geographical area is determined through "geo-coding", a "very accurate" formula that uses the longitude and latitude of a location to determine the six closest auto body shops.
The survey must be completed directly by the auto body shop owner and/or manager. The survey also requires every shop to be registered with BAR, have the specified equipment criteria, workers’ compensation insurance, and Garage Keeper’s Liability Insurance.
"You cannot use Direct Repair Program (DRP) rates or negotiated rates," Molodanof stressed. "This has been a big stumbling block because insurance companies want to use the DRP rates; the new standardized regulations require retail labor rates."
"There are over 200 insurance companies in the state, and only about 12-15 use labor rate surveys," said Molodanof. "[Even without a survey], the insurers can negotiate in good faith or pay your retail rate, that's fine, but once they start saying 'this is all we're paying' they better have prepared and filed a survey that complies with the new requirements."
The CAA lobbyist urged auto body shop owners to submit a formal complaint to California Insurance Commissioner Dave Jones if they come across an insurance company that is refusing to negotiate rates in good faith and does not have a standardized labor rate survey filed with the department.
"Dave Jones, in my opinion, is one of the best CICs we've had in this state," said Molodanof. "He understands the auto body industry and is very strong for advocate for consumers. You can have a pretty intelligent conversation with him about labor rates surveys, steering, aftermarket crash markets, while a lot of our elected officials have no clue what you're talking about."
The California Department of Insurance (CDI) complaint forms were handed out at the meeting and are also available on the CDI website and CAA website.
"If an insurance company or adjuster comes in and says they've completed a standardized survey, ask about geo-coding and how your shop compares to the six closest shops (core area)," said Molodanof. "You'll know right away if the survey is geo-coding compliant or not."
Although performing labor rate surveys are voluntary, there is, however, a huge incentive for insurance companies to conduct a standardized labor rate survey.
"If the insurance company completes the survey and complies with all of the requirements, they get a rebuttable presumption … which means they can adjust your labor rate [they want to pay you]," Molodanof explained.
"If you get a survey from an insurance company, you should fill it out," he added. "If you don't fill it out, it's going to be used against you."
According to Molodanof, the new standardized labor rate survey form is "very straightforward and simple."
"The labor rate survey regulations are the most comprehensive in the entire country," he added. "It will benefit consumers, insurance companies and shops."
After answering multiple questions from the attendees, Molodanof moved on to anti-steering.
The main updates were as follows and only pertain to policyholders (summarized by CAA Glendale/Foothill President Hillel Shamam):
• Insurance companies have six business days for an original inspection and an additional six business days for supplements/re-inspections, provided the vehicle is made available for inspection.
• Insurance companies can get an additional three business days for photos.
• Insurance companies waive their rights to inspection if they don’t comply within the time periods noted above.
• Insurance companies cannot require customers to have their vehicle inspected at their DRP vendors once their policyholder has chosen a facility.
• Insurance companies cannot make deceptive comments about shops not in their program such as “their service or repair quality is poor” or “an inspection will occur at a later date.”
Next, Molodanof discussed a new law concerning battery replacement that will go into effect on April 1.
In order to compensate for the battery plant contamination clean-up in Los Angeles that cost the state $180 million, Governor Jerry Brown has enacted a law affecting those who sell acid batteries to consumers.
"As a repair shop, when you replace a damaged or nonfunctional battery, you're going to need to charge an additional $1 per battery fee and it must be itemized on your invoice," said Molodanof. "It's an obligation; even if you don't collect, you're still responsible for the fee."
The last new law he covered concerned bandit tow trucks, which have become a problem in Southern California, especially Los Angeles.
"Bandit tow truck drivers pick up cars and take off with them, and then the customer doesn't know where the car is," Molodanof explained. "By the time they find out, they end up having to pay $2000 to $2500 to the storage facility."
In order to combat this, the previous law stated that auto body shops receiving vehicles from tow trucks had to make note of the driver's name, license, and registration. However, a lot of tow truck drivers did not feel comfortable handing over their licenses due to identity fraud, etc. This left auto body shops in a tough spot, because if the tow truck driver pulls something sketchy, and their information isn't on file, the shop owner could go to jail for up to six months.
"A law was passed this year allowing auto body shops to accept alternative IDs, such as an employee motor club ID card, in place of a driver's license," said Molodanof.
The last law passed this year that the CAA lobbyist discussed concerned windshields and adhesives.
"[When replacing a windshield], estimates on the POS systems have to disclose to the customer that the vehicle cannot be operated for a certain amount of time while the adhesives dry," said Molodanof. "The ‘cure time’ information also has to be included on the final invoice that goes to the customer.”
He explained that the law came about due to a complaint that the BAR received from a senator in Northern California whose constituent had a windshield issue.
Industry leader Charlie Robertson and CAA Los Angeles President Anthony Guinn also spoke on March 2 to inform attendees of the CAA Los Angeles March 14 meeting, which featured a presentation on Modernized Collision Repair Business Solutions.
For more information on CAA, visit www.calautobody.com.