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Tuesday, 26 August 2008 17:12

Labor Rate Surveys By Third-Party Vendors Opposed by Calif. Collision Repair Associations

Representatives of collision repair associations and insurers told the Department of Insurance (Aug. 26) that labor rate survey data should not be handled by third-party vendors. The department had floated the idea that CCC/Mitchell might be candidates for collecting labor rate data. The responses were provided at a meeting of insures, repairers and department officials.   

Collision Repair Association of California (CRA) lobbyist Richard Steffen said the CRA board is firmly opposed to the use of insurer labor rate surveys to set rates. He indicated that the department should draft rules to specify that surveys should be limited to internal use by insurers and that no survey should contain DRP rates. All repair groups (CRA, CAA and the New Motor Car Dealers Association) agree that insurer surveys should not carry the weight of a rebuttable presumption that the survey rate is accurate.

The repair associations were also concerned that third-party vendors would be given confidential information (customer personal information, wholesale pricing, etc.) that might be in violation of federal privacy laws covering the sharing of information by insurers. Insurers simply stated that their memberships could not agree on the use of third-party vendors.

    Deputy Commissioner Tony Cignerale stated that the department had met recently with an insurer and a vendor to explore the data sharing concept. He said that existing data—390,000 repair transactions—shown the department was skewed in favor of insurers in that the estimates were from insurance appraisals as opposed to the shop estimates. He said a better balance of invoice data had to be achieved for a third-party vendor concept to work fairly. At the end of the meeting Cignerale suggested that a voluntary pilot program could be set up in a specific geographic area where invoice charges without customer personal information would be collected by an unspecified third-party in an attempt to determine if fair labor rates could be arrived at through data collection.

    Without making a strong commitment to the pilot program idea, Cignerale said it could be conducted during time in which the Department will promulgate regulations affecting steering and labor rates. The repair associations indicated a willingness to discuss the matter further.

    The department-led meeting was part of an ongoing workshop involving lobbyists representing repairers and insurers. The group has been gathering regularly since October 2007.  The CRA’s Steffen provided the following overview: “Repairers and insurers came to the negotiating table united in their effort to reduce disputes that occur over the repair of damaged vehicles. We looked to department officials to lead these talks and, to date, they’ve done a great job in having the key issues of steering, capping and labor rate surveys discussed in full. Regardless, what counts for CRA members is ‘action.’ We want the Insurance Commissioner to enforce the law and if rulemaking will help, then we are behind the effort, provided it is fair and reasonable. “

    The working group is slated to have on more meeting on October 2, 2008 in Sacramento to review draft proposals that will be issued by the department within the next few weeks. After representatives provide their input, Cignerale and Bill Gausewitz , the commissioner’s counsel, will present Insurance Commissioner Steve Poizner with their recommendations for action which may include introduction of regulations to clarify steering and labor rate survey behavior. The issue of capping will not be pursued if the Governor signs SB 1371 into law. The rulemaking process which will include public hearings could take six months to one year to complete.

    Steffen noted, “Government moves at glacial speed in the eyes of our members who have repair work taken from them by aggressive insurer steering tactics. We anxiously await the release of the department’s proposed plan of action.”

    Steffen also commented that the department was skeptical about the collection of labor rates voluntarily submitted to the Bureau of Automotive Repair (BAR) by repairers. Cignerale has stated that a repairer who claims an insurer is unreasonable when it refuses to pay a door rate may be on weak ground if documents reveal the door rate is rarely collected.  In fact, Cignerale said the repairer could be charged with “fraud.” {jcomments on}

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