2021-09-15 00:00:00 - Joint Committee on Financial Services
2021-09-15 00:00:00 - Joint Committee on Financial Services
SHOW NON-ESSENTIAL DIALOGUE
representative James Murphy The House chair of the joint committee financial services here5 with my colleague senator Brendan. Crighton also with my co chair in the house represented Bruce Ayers we have a number of items on the committee today and um in order to get to everybody who would ask that you keep your testimony to three minutes or actually broadcasting from the state house here and I see most of you on the screen in front of me.25 So is move along, we have a number of people that have signed up and I have a list here but we also30 have a number of people that were trying to access to sign in sheet. So I'll start with what I have for now and as you move through it, I'll probably be handed more people that have signed up on a piece of paper here. And if in the end if you still want to testify and having college your name please raise your hand. And um well there's uh an option there on your screen to contact us. We'll make sure everybody that wants to testify is able to testify. We also have a number of members on the committee who I see on the screen. I'm going to announce him as time goes on to give people a few minutes to log in. Well announced68 our colleagues that are on the screen here uh that are members of this committee, we also will have members of the House and the Senate who may76 testify as you move along, we have rule to take them out of order only because sometimes it's a number, a number of committee hearings like today, this number of hearings that are on that may conflict with the schedules of the House and Senate members. So we try to get them in and get them out. Um, so you may see that happen throughout the cost of the hearing. So with that, I think99 we're set to go. I hope you can all hear me out there and I'm going to refer to the sign in sheet, the order of which people105 signed in and we'll start with that. So, SHOW NON-ESSENTIAL DIALOGUE
nick french Lakas, nick are you out there? Yes sir. Okay. You have the honour of kicking off the hearing today. So welcome, wow! Well, thank you. Thank you very123 much. I hope you can see me and hear me. Okay.
[]NICK FYNTRILAKIS] I appreciate the opportunity to come before you today. Um, Chairman Murphy jeremy, Crighton members of the committee um,134 I represent the massachusetts Association of137 Insurance agents. We have over Over 1100 members across the Commonwealth and pretty much every city and town is represented by our membership. Our members focused predominantly on property and casualty insurance, but also offer benefits packages, life insurance and a variety of other um, items and are very active in their communities. So very pleased to be here to represent them today to speak on Senate 661 and house 1080 an act relative to the commonwealth automobile reinsurers are strong support of this particular legislation.
Um, this is this bill has been filed for for quite a few years now. Um, and it really is a very simple bill that addresses a technical issue with regard to car. The car governing committee has six insurance producers that are assigned to it. Um, and in the, in the law that states that two of those producers are required to be what's known as the ERPs or I should say, what's formerly known as the ERPs sort of an antiquated, uh, system of, of prior to, and we have fixed and established rates. Um, the ERPs were, uh, you know, not part of the voluntary market if you will, since, since that time, that system is really not been in place. The europea, um, as it217 as it was once known, really doesn't exist anymore. So unfortunately, those220 two seats um, that are designated for producers have been vacant for a number of years now. Um, this bill would simply correct the language to ensure that any insurance producer in the commonwealth is eligible to be a part of the governing committee of car as opposed to only being eligible if you're an ERP.
Uh, and so we really view it as a technical correction. There's no no known opposition to this bill. Our friends on the insurance carrier side are in support of this legislation as well, which we appreciate, and I believe they submitted testimony to that effect. And so it really is sort of administrative and rudimentary and we would greatly appreciate the committee's consideration and supporting this263 and um, ensuring that265 independent agents and all insurance producers have adequate representation on the car governing committee which deals with many issues that are very important to us and to consumers in our industry. So keep it short and sweet. And I thank you very much for your time. SHOW NON-ESSENTIAL DIALOGUE
Thank you nic Any questions for nick
seeing none. We'll move on. Thank you very much. Nick. Thank you.
I see a number of committee members who are online with us today. I'd like to introduce represent um a Kilcoyne
Representative kate Lipper-Garabedian I see
steve Owens
J Barrows
and that's all I see for now. So as I see you, come on, I'll definitely announce you. Um SHOW NON-ESSENTIAL DIALOGUE
I'm going to turn over to Senator Crichton's introduce his senate colleagues. Thank you. Mr. Chairman331 recognized Senator Ed Kennedy was here on the committee as well. Thank you Senator. I like to call next. I see represented Hawkins on the screen in front of me represented. Would you like to testify now, would you like to wait. What is you know now now is good if that's all right with you.
Welcome. Thank you.
[REP HAWKINS:] Uh, I would like to testify on bill353 H 111 that I filed about Automobile body shop insurance rates. Uh, The rates right now for Labour the insurance companies pay to auto body shops is $40 an hour uh, before I was a teacher I actually ran an auto body shop and was quite involved. I was a member of the Bird Island Auto Body Shop Association and that puts that like 25 years ago. That's what they paid back then. I know I just had my truck service to the Chevrolet dealer that's $125 an hour labor. I dropped off my RV to be serviced this week. That's $175 an hour. And we're only paying the auto body shops $40 an hour and that's not what the employees get. That's what the shop gets. So anything for overhead which would include all it has to just waste from the, from the thinners and chemicals they have to use. Ali hi they are special welding procedures they have to use. I know I had a 2010 me out of it got rear ended on the highway and the back of the car was destroyed but it was hit by a concrete forms truck in the back of the car was destroyed. But I would say from the passenger420 compartment, small car.
So the way that these are repaired for crumple zones and protection of the, of the occupants matters mind had never been fixed. But if it had been fixed, I would hope it was fixed. A factory standards with the correct welding procedures, the correct parts, the fenders and doors are part of the crumple zone. How they're attached matters. It's, uh, and I think it's only going to get worse now with electric cars because they will also have to deal with some complex technology for accident avoidance. Uh, fancy lithium batteries, things like that will be involved in technology is crazy. Uh, and if they only get the stock is only getting $40 an hour and they have to pay for all this technology, all these environmental concerns, They're only paying their employees barely over minimum wage. And this is, this is a thank you a job that requires a lot of skill. Uh, National Fourth. It's a dangerous job. They've been dealing with this for a long time. They are not new to keeping the employees safe, but there is that issue to. Um, so I would urge you, uh, to consider this bill and thank you. Thank you for taking me first.
SHOW NON-ESSENTIAL DIALOGUE
I'm flattered. Thank you.
Any questions Hawkins
seeing none. We'll move on bankruptcy and have a good day. Thank you. Okay, next up, we have Margaret Daniels.
I'll go to you out there.
You see my slides. Yes, I am okay here. Margaret, thanks for coming to the hearing. So
it's your opportunity to testify. Um, yes,
[MARGRET DANIELS (CONCERNED CITIZEN):] well, I had Michael Day sponsored this bill for me. Um, it's for auto insurance rates. Um, when you have an accident. Um, uh, I had my first accidents after, uh, Driving for 50 years without any and I didn't hit a car, I just hit a curb. Um and I was penalized for that by the insurance company. My insurance went up 50 And I had to pay six years which I'm still paying because it happened in uh 2015 uh in most states only um have the penalty for the points for three years. So I don't know why Massachusetts has six years. So the bill is asking that um the percentage rate Be changed to 35 for accidents and um only three years for the penalty. And like I said, Michael Day is is sponsoring this and it's been in committee for um six years now. I've been waiting for some action on it and I appreciate you hearing it and I hope you will vote um for this reduction. Thank you. Thank you very much for letting me talk.
SHOW NON-ESSENTIAL DIALOGUE
Thank you Margaret.
Any questions for Margaret? SHOW NON-ESSENTIAL DIALOGUE
None Margaret, you're in good hands with represented Michael Day is a great state rep, don't tell him I said that the okay, I try to give him a hard time when I see him. Okay, thank you very much, thank you very much. SHOW NON-ESSENTIAL DIALOGUE
Uh next up is erin Hunt erin Yes, I'm here. Can you hear me? Yes sir go ahead.
Okay great thank you so much and thank you for the committee for the to the committee for the opportunity to testify here today. My name is Aaron Lawn and I am a legislative and regulatory consultant for the service contract Industry Council. The sc I see and I am submitting this testimony on behalf of house bill 1065 and support this bill and urged the committee to consider its passage by way of background. The sc I see is a national trade association that represents the motor vehicle service contract industry. We represent other industries such as consumer goods and home service contracts, but I'm here before you on behalf of the motor vehicle service contract component and we are National Trade Association that represents providers, administrators, insurers, some manufacturers and other industry participants that surround686 this entire genre of products and services.
Some of our members include for motor company, alley financial, automotive protection, corp otherwise known as Apco Chrysler Group, Toyota Motor Insurance Services, american home shield best by CNA national warranty and national electronics warranty and in totality, our members represent roughly or touch roughly 80% of the marketplace in terms of sales and servicing of service contracts. Legislation was passed in the commonwealth of massachusetts back in 2010 that provided a framework for the sale of of service contracts, largely for third parties to self service contracts, but it was limited to consumer goods and home service contracts. Motor vehicle service contracts were expressly carved out largely by the manufacturers automobile dealers association. This house bill 1065 advocates for allowing motor vehicle service contracts to be747 sold by 3rd parties and we feel this will increase competition in the marketplace and create a regulatory framework that provides transparency to the market place at all stakeholders. So we support this piece of legislation. Nation Committee to support as well. And thank you for the opportunity to testify. SHOW NON-ESSENTIAL DIALOGUE
Thank you erin. Any questions for ERin from the committee.
Seeing none. We'll move on. Thank you very much.
Next up we have Evangelos lucky papa George. I think you've um, a panel with you also.
Um, if you want to speak for the piano, you can, if the individual members would like794 to speak, that's okay too. Would just ask that each person try to limit themselves to the three minutes. Um, so with that welcome to the committee hearing today.
Just I mute yourself so I can hear you. I think you might be on mute.
Is that any better? MR Chairman? Yes. Yes. Well my apologize.
[UNKOWN NAME] Thank you. MR chairman Through you to the membership. My name is Guide lotus and I just wanted to give a brief historical perspective of House bill 11 11. I had the honor and privilege of chairing this particular committee back in 2000 and847 three and 2000 and four. Then it was849 known as you know, the joint committee on insurance and I just want to say even back in 2000 and three and four, the labor eight slash reimbursement rate for auto body in collision shops was a major major issue or something that the committee voted to move forward on leadership promised to address. Uh, since then there's been numerous commissions and studies all recommending the legislature addressed this issue and has been broad consensus on as rep Hawkins mentioned about increasing the reimbursement slash labour rate.
Since then. Mr Chairman, the collision repair industry. And I might add mass consumers have the lowest reimbursement rate in the nation. When the Insurance Reform Act of 1988 passed, it was the highest. The labour rate in massachusetts is now the lowest, but yet it's, we operate in the second most expensive state. All while there's been, as we all know, staggering insurance profits, record profits over the last several years. And I also want to add there's been 1000 auto924 body shops less, there's less excuse me less. 1000 less auto body shops today than there was 10 years ago. So I'm certainly respect respectfully asking the committee to finally finally address this issue, it's an issue that's been long overdue and I would ask you to support House bill 111 and act to947 establish a minimum reimbursement rate. And with the rest of my time
[LUCKY PAPAGEORG (AASP):]MR Chairman through you to the members, I would like to defer the executive director of a sp Evan poppy George, Thank you guys. Thank you. Chairman Murphy and chairman Crighton for this opportunity to speak to you and your committee. Um, as was just indicated, massachusetts has the lowest labor rate reimbursement in the nation. It is something that is having a dramatic effect on our industry. And unfortunately for the consumers of massachusetts because of the dwindling981 number of qualified collision repair shops, there's an increasing period of time that people are forced to be in their vehicles, vehicles that are potentially unsafe to be on the roads in the first place and then once the vehicles end up in a collision repair facility to repair times have been extended significantly because there is a true shortage granted a number of shops has dwindled by over1006 1000 but there's also been an increasingly fewer number of individuals getting into the collision repair industry as skilled technical technicians, they can make more money working as Unskilled labourer than they can coming in and doing a skilled repair job in a collision repair facility.
Working on today's vehicles at labor rates that are 30 years old is absolutely ludicrous. If we had only kept pace with the cost of doing business in Massachusetts in the northeast, based on the CPI I we would be having a much more equitable situation, people would be getting into the business, we would be able to paying our technicians to be properly trained to be properly reimbursed for the knowledge that they have been acquiring and doing the repairs in a very timely fashion, on behalf of the consumer insurers have in an arbitrary fashion set what they1069 call a prevailing rate based on contractual arrangements with a minority of shops in the commonwealth at that point of using contracts has been litigated and found not to be the true way to set a competitive prevailing rate. Those are contractual rates that are, that are agreed to1089 on a quid pro quo basis and it's having a devastating effect on the insured the consumer as well as the collision repair industry. We look forward to working with you chairman on the labour rate commission that was just established to finally address this issue by the sheer number of bills that have been presented on this issue in this session.
It's obvious that something has to be done and it needs to be done in this session. The study is going to reiterate what previous studies have found have been agreed to that the labour rate is insignificant. It hasn't kept pace with the cost of doing business. The increase in technology and what's needed to repair today's vehicles, as I stated1132 earlier, you cannot repair today's vehicles based on the rates that were being paid 30 years ago. Uh if the committee has any questions, I'd be happy to take it, take them now uh in lieu of that. We1147 will also be submitting additional written testimony on the issues and the bills, but we do ask that you release all the bills so that they can all be considered on their merits when it comes to discussing the labor issue here in the commonwealth. Uh, the next is a, we have two other panelists on our panel brian Bernard who I'd like to have speak next. He is a body shop owner in the carbon in the commonwealth in the town of rain, Hampshire TC auto collision. So brian, if you could speak
good morning and thank you again folks. So again, my name is brian Bernard. I'm co owner of total care accident repair service in random And I too am speaking in favour of house Bill 1111 and the Senate counterpart 709 uh, an act to establish minimum reimbursement rates for insurance claimants. So in 2010 when I opened my business Insurers were reimbursing consumers the labor rate of $40 an hour. 11 years later, the same insurers reimbursing consumers the same labor rate of $40 an hour, 11 years with a 0% increase in that rate. In the same period. Your insurance premiums have increased 48%. So today I asked the joint Committee on Financial Services to act on this issue which has weakened our industry for decades. The opposition to these bills will probably tell you that there is nothing to see here. Move along. But but the reality is these insurers, they have many tools in their toolbox to be able to suppress1246 our labor rates and they've been1248 allowed to stop on our businesses for far too long insurers point to part seven collision of the standard Auto Policy, which states that the cost of the repair is the cost to repair the auto is limited to the prevailing competitive price, which is the price we can secure from a licensed repair facility.
Wait a minute, define prevailing competitive price. How is it calculated? Was there a survey of some sort what makes it competitive in the first place, insurers remind us. That is the price we can secure. Well, how do they secure such a Such a1287 price when these same insurers are paying routinely paying labor rates of $50, 60 or $70 an hour in other states for a price to be competitive, the service must be performed in a competitive market in a normal arm's length. Non insurance transaction. But insurers see things differently insurers allow are allowed to have contracts with repair shops. These contracts set below market labor rates in exchange for marketing services and reduce administrative burden and the estimating process. That's the quid pro quo. Lucky referred to a moment ago. So insurers perversely call their discounted contractual price a competitive price. But it's not. It's a price that they alone1337 can obtain through a contract. So why would a repair shop get into one of these referral agreements? Well, it's done for protection. I used to be under contract with nearly every insurer in the state.
I feared what the insurers would do to me and to my business if I terminated the contract, I get into these contracts to prevent insurers from staring work away from me. But there's a huge cost associated with those contracts. So believe me, There is nothing satisfying about working for $40 an hour in this industry. So what's the actual prevailing competitive price, registered to repair shops across the state? Participate in a survey from National Auto Body Research. The survey of posted labor rates shows that there is indeed a range of rates that are both prevailing and competitive in our markets. The average of these rates presently is $58 per hour and it can be found at a website called labor rate hero dot com. The below market reimbursement rates make recruiting and retention of employees impossible. I had three skilled technicians. Um skilled labour technicians leave to go into unskilled labourer positions for significantly more money. Because other industries have that capability. I also had to technicians, very highly skilled technicians leave our employment to go across the border into Rhode island. Because Rhode island has significantly higher reimbursement rates. Our employees are leaving the industry. They're they're moving to other states to get to have jobs that pay in these careers. And it's it's brutal for us. So I asked the committee to act now to preserve our industry, let there be no technicians left to repair your cars. So thank you very much for your time. SHOW NON-ESSENTIAL DIALOGUE
Thank you brian,
anybody else from your panel want to testify?
No, that's it.
Well, thank you for taking the time today guy. Thank you for testifying today. Thank you for your work here in the building many years ago. I was on the committee when you were chairman of the committee back then. So thank you for your your work back then in today. So any questions for the panel? I want to turn it over to my colleague. Representative Bruce Ayers Thank you. MR Chairman. Just a few brief questions under the $40 lavery funny which the insurance companies wow the scope of the whole to our Uh a car 6 7 months later they're getting access. Is that
1524 [PAPAGEORG:] MR Chairman, is there any way that the question can be restated because the volume is not very high and whoever it was that was speaking at a
[AYERS:] consumers are being forced to use aftermarket parts with the angels repaired and I was wondering that it's going to be able the vehicle in the overall safety of the past. Getting problems after market parts.
[PAPAGEORG:] Yes. Yes. There is a significant question with regards to the safety and what ends up happening to the value of the vehicle when it is repaired with after market parts, you know, the the consumer um is notified that aftermarket parts are being used on the vehicle. The way the regulation is written based on the age of the vehicle. Um the parts are quote unquote designated to be used unless they want to pay the difference between that after market price and and only impact price. The, the, the repair facility typically has to use the aftermarket part. There are times that prices have been adjusted on the part of o E M s, but that is not a cure for that situation and it's somewhat irrelevant to the issue of labor rate other than to try to get aftermarket parts to fit in many instances to fit properly or to give the right appearance at the completion of a repair. There's an extra amount of time that goes into that and that's also a detriment to the collision repair as well as the vehicle owner and a long time Mr Chairman.
Just to add1643 to luckiest comments, we look at this is not only a reimbursement rate, but this is as much a consumer choice and consumer protection bill as well is as Lucky said, it will give consumers greater choice on where they go and alleviate the aftermarket parts which aren't always considered the safest. So again, we consider this not just the bill for the industry, but really a pro consumer bill as well. Right, thank you representative, thank you.
Question Sorry. Any questions out there from committee members have any further questions for the panel If I may. Mr chairman, I believe I have one more individual on the line to speak on our panel. Sure. Ok. The gentleman's name is brian mountain.1691 He is a body shop manager for uh,1695 store 24 collision 24 in Brockton massachusetts Brian If you could please. I know you have a statement prepared.
Yes, I do. Thank you. I'm good morning. Um, committee members um, my name, it was as if Brian mountain body shop director for including 24 in boston um, I'm a licensed David President been involved in the collision for 35 years. I'm here today to request the committee vote favourably on top bill 11 11 and establish a minimum reimbursement insurance plan.1730 His inclusion center director, I see negative effect at a standard rate of reimbursement is having on the claimant in the clinton repair industry as well. It with rapid changes in technology and requirements. These changes require new and specialised equipment and training. I'm expected to keep pace and be able to purchase equipment and then training and pay Today's technicians based on a substantial reimbursement, read insurance, pay their appointments Rate that is far below the national average, failure embarrassment in 1980 is it? It was an average of $30 Today. An average of $40. Brady has gone approximately 33% to 33 years. Eyewitness.
My other business costs, skyrocket Acting insurance premiums go up 261%. The minimum wage increase 270%. Consumer products Index increased 124% during the same period of time. Something is dramatically wrong with this picture. I've witnessed a steady decrease in the number of1795 collision repair facilities across the state and even fewer shops, a workforce that is steadily defining a number and increasing the age. Simply put do with any are considering it during the industry to become skilled technicians because they can make more money because I feel labour's they've had to resort to charging their customers hundreds of dollars times to make1819 up for substantive reimbursement, unable to afford to pay my technicians a fair wage. We use collision. Okay? We, as collision carers take on a huge liability, cannot afford to perform a proper repairs, insurance notice and uses weapons across claimants. First inclusion repairs such as myself. Something that has to be done. I Thank you for your time previously on 111 um and Bill House during very sorry, I was very nervous during this whole statement that I apologize uh a lot of body in my uh definitely not. Thank you very much for your time.
SHOW NON-ESSENTIAL DIALOGUE
Thank you brian anybody else from the panel I want to testify? Thank. Okay. Okay, that being said, we'll move on, thank you very much for your testimony. Mhm.
We're joined by Representative sally Kerans
Welcome representative, Thank you Mr Chairman, sorry for my lateness, nope. Not at all. Okay. Next we have Bill Ogonowski state auto dealers association. Bill you on.
Hello, can Linsky
[ROBERT O'KONIEWSKI:] massachusetts State auto dealers association. Thank you Mr Chairman and through you to your co chair, senator Crighton and the committee members, We represent the executive vice president. The association. We represent the 427 franchised new car and truck dealers across the Commonwealth. There's a number of bills on your agenda that we're going to briefly speak on. We also will submit a written testimony to supplement comments we also have with us on the on the labour rates issue. Dave Brown, who's a body shop manager for Bill de1944 Luca, and I believe Billy Deluca is going to be on the panel as well. But jumping into this a little bit, um, you have two bills on diminished value, House 1070 Senate 719, which we support basically creates a process by which the car, the vehicle owner can recapture the diminished value of the vehicle, post accident and post settlement and repair.
Um, We feel it's very important, especially in auto dealer world, where uh, if we have a vehicle that we're trying to resell and it's been in an accident, um, it's very difficult to get the true value of that vehicle once it's been repaired from an accident and we feel that a diminished value process and a policy supplement can be made part of the law to enhance that situation. So we would be supportive of those two bills on the service contract front. You have an individual from SCIC uh, we would oppose house 1065 as drafted. Um, sc I see Representative portrays this as a way to be a pro consumer and more competitive for the consumer. We would disagree is the way that bill is drafted. Sc sc I see is basically controlled by the to find the large financial entities which really don't have the consumer's interests at heart. We have uh if something is going to be done on the service contract front, we would hope that some languages included in that, as you would see in house 1183 and Senate 657 on actually protecting consumer choice as as um our dealers offer up not only service contracts from the manufacturers for whom they sell cars, but also independent third party service contracts as a way to provide some competitive balance for the consumer and some consumer choice.
So it's a very complicated issue. It's not as easy an issue as the sc I see would have you think it is. Um there's a reason why motor vehicle service contracts were cut out of the law 10 years ago2076 and any effort by SCIC to change the law, I think should involve some considerable discussions from all the interested parties so that we can get this2087 right moving forward on the auto body labor rates. There's a number of bills before you. Um, rep McMurtry has a bill, House 1152 Senator Moore has a bill, Senate 711, there are two other bills on the House side, 1048 and 1178. We are very supportive of any effort to look at this problem and get a solution in place to get the auto body labor rate. The reimbursement rate coming from the insurance companies paid to the repairs for insurance paid work. Right now. The insurance companies have had2122 a stranglehold on the reimbursement process for decades. And as you've heard eloquently from other individuals, it's managed to tamp down the rate over the years So that the rate that is being paid to the uh, the repairs does not reflect the true economics of the industry. As we sit here today. As a result, body shops have shut down. We've lost2147 uh, over 50% of the body shops at the auto dealerships. Um, we've, we've heard testimony of, of the number of body shops that have shut since the last special commission, uh, 10 years ago. We've seen as a result longer wait times for the consumers, more costly repairs for the consumers.
As you've reduced the number of body shops available to consumers. The consumers are basically2175 getting the short end of2177 the stick in this whole process. Their rates have gone up for insurance policies yet the repair process, the repair reimbursement situation has been very detrimental to the policyholders as well as the2190 body shops. And finally, you know, there's no new blood coming into the, into the industry. We're having a very difficult time recruiting auto body text as well as text on the mechanical side. You've seen vocational technical schools across the commonwealth eliminate education programs on the auto body side as well as the mechanical repair side because it's, it's the kids just don't want to get into a business that is, is just not working economically. So it's very difficult for not only these family owned body shops to encourage their own Children to maybe stick with the business, but also to get uh, individuals educated through the vocational2232 technical school's and get them in the business. It's very rewarding work.
Um, it's very exciting work. If you're, if you're a consumer paid work, you're getting the rate that is reflective of the economics of the, of the business. But unfortunately because of the stranglehold that the2251 insurance companies have on this on this side of the ledger. Um, it's very difficult to get properly compensated at the, at the repair level for the work. I'd like to turn it over to Dave Brown from the Deluca shop. And I believe if billy's on as well, Billy Deluca's are designated for the Special Commission.2270 So we're very interested in getting the special commission up and running as well. So we can get those public hearings across the commonwealth and get some recommendations in place and I appreciate your time today and that are the committee members here today. To listen to these issues. Thank you.
SHOW NON-ESSENTIAL DIALOGUE
Thank you, David.
Uh, hi, I'm testifying
House 1048, 1150-1178.
The collision repair technician of Massachusetts the average age of a
chairman cannot hear. Okay, let's see if it's on Dave. Hold on one sec. For me. We have trouble, trouble hearing. I'm not sure if it's on our end. Uh, you're in, but let me check with my
okay. It looks like the issue may be the speaker on your end or the microphone that you're using. Um, we're OK and I rent here, but it might just be an echo that's within your office there. That's kind of letting us catch every second word you're saying here. We know. Yes, I can hear you. I don't try to talk up. I'm sorry.
[DAVE BROWN:] Um, I'm testifying to support Senate. Um 7 11, House 10 48 House 11 50 to 11 78. The collision repair technicians, a dying breed in the state of Massachusetts. The average collision repair technicians, 59.5 years old. My shop has become impossible to attract young people into the trade. Um, there is kind of a trade off of the old guard to the new all that's going to go away and I'm afraid it's been gone too far to bring young people into the trade to have that happen. Um, it's because the internal trade again so low that why would they, why would the trade schools support A career that's going to put someone into that position. That's going to make minimum wage by the time they are done with all the training which they have to put in the same amount of training in tool purchasing as an automotive repair technician. Where those rates are in excess of $100 an hour due to the lack of collision repair technicians. Its lead to longer repair times, upset customers in body shops jumping the state line. We need your help in order to keep the collision repair business in the state. SHOW NON-ESSENTIAL DIALOGUE
Thank you. What did you say your shop was a missed the beginning of you of your2422 testimony. Where do you work? I worked for? The Bill will go to group. Okay. All right, thank you. Thank you. Davids shop is in the de Luca shop is an and over. Okay. Thank you. Thank you. Mr Chairman. Yeah.
Do you have anybody else that wants to testify? Velis Billy's Deluca's on bill. How did you get on? Yeah, like I said, Billy is is our dealer, he's on our board but he's also are Diggs the need2456 for the special commission. Um and Dave works four billion. So I don't think Billy maybe have made it to the call. That's fine. Mhm. Any questions? Yes, sure, go ahead.
[REP KERANS:] Thank you. Thanks Mr Chairman. Thanks both of you. All of you. Can you talk I don't know which one of you might be better equipped to talk about the difference between how the current set up effects um big dealerships versus you know, high street service where where I go in danvers. Um, you know, the small independent shop, is it the same set of concerns or do they differ between the shops attached to a dealership and the independence.
[O'KONIEWSKI:] Why would I'm uh as as the representative of the whole association that I will defer to dave on some other things. I would just say this, that I started with this assoc2523 and by the way, representative welcome back to the building. It's good to see you the um The when we, when I started here with in 2000 with the association, we had uh, well over 150 body shops operating as part of the dealerships and2541 the dealerships would2542 maintain body shops. Um, you know, they take cars and trade. Um, they need to prepare the cars, repair the cars for sale or maybe if they need to make some slight tweaks before they send the cars on the auction. But there is a large demand for body work on cars, especially on those that they've taken trade. And um, as the economics of the business just got more detrimental to maintaining those operations over time.
You've had a lot of dealerships just shut down the auto body shops. Um, and either rent out the facilities to another entity or uh, just contract with someone down the street to, I'll send you my work. Um, as I need to, And2588 so you, you've had a about a 50% cut, at least a 50% cut in those numbers for dealers ships with body shops. All right. So you've lost those employees, you've lost that tax stream, you've lost all that work. And the consumer would also partake in operation at a dealership body shop because if the consumer is going in for some mechanical repairs, they may also have a body shop prepare need that they can get done. That's been taken away as well. The economics, um, of it. So we, we kind of had a built in demand where you're taking in cars on a daily basis and trade and you need the work done.
It's the, the operation just doesn't exist anymore. And we find the work out to other body shops, but at the same time, you've had a large reduction in the body2643 shop numbers statewide amongst the independent ranks, because again, the economics doesn't work on insurance paid repair work because of the tamping down of the reimbursement rate for labour. And so, again, the consumer is really taking the2662 hit because, um, you then have a longer wait, time to get into a body shop to get the work done and the repair time is that much longer to, so, Um, it's just not a matter anymore of getting into the system and getting repairs done in a couple of days. You could be talking 3-6 weeks out before getting repairs done anywhere. You know, it's just, it's the consumer is just really they're paying, you know for an insurance policy at a rate that's higher than it was 10 years ago. And, and not getting the service they really need on a timely basis because of the lack of shops that are out there. So where we have a different need for sometimes getting that repair work done. Um The economics are still as detrimental because of these reimbursement rates. David, do you want to add anything to that?
[BROWN:] Yes. And that entire time the customers waiting to enter the shop, the 23 week period, they are driving a potentially unsafe vehicle until it looks like a driving, yep. Does that answer your question, representative?
[KERANS:] I think so. I guess I'm also wondering about these contractual arrangements. And so at the same time you had this massive loss of independent auto body shops. You have these contractual arrangements between insurers and the shops,
[O'KONIEWSKI:] Right. Oh yeah, I'll tell you, will be quite up front about this back in the special commission a number of years ago. Um, at one of our final group meetings, uh one of the insurance reps,2769 insurance company reps is frankly um, as a body shop, you can just cut a special deal with one of the companies and and get a specialized rate. And so I went out, I told our dealers with body shops, Talk to the insurance companies and get a contractual rate that's higher than The rate you're looking at on a regular on the reimbursed work. And we had a number of dealers do that where they reached out to the insurance companies and instead of getting reimbursed at 33 or $34,. They got it up to a high 30's at the time. This was 10 years ago, around 10 years ago on the last special2807 commission. So, you know, the Special Commission punted at that time because we were just entering the world of dereg on the insurance, where they were trying to get some, some out of state entities to come into the state and they were deregulating2821 the whole auto industry process and, you know, so they wanted to hold off the consensus of the commission at the time was the hold off doing anything until we can see how direct worked out in that time, as, as mr Gladys testified to.
You know, we've got a bill through the Senate that would establish a rate process. We got a bill through the House, we got a bill into Economic development bill and none of these things got through the whole process at any given session, but we were successful in trying to move the ball in different branches of the building. Uh, not just successfully getting something to the governor's desk. We've reached out to2865 the insurance commissioners over time to address this um to no avail. And and it really comes down to, you know, if we're not going to get any cooperation from the insurance companies is to we really need some relief through a legislative process and and get something on the governor's desk to address this problem. It's just not working when Mississippi is passing us on on a reimbursement rate, you should just say to yourself what's going on here? We're at the bottom were number 50 and it's not getting any better.
Mhm. Thank you. Well thank you for2900 your time today, appreciate thank you. Have another question from Representative
Hate Lipper-Garabedian
[REP LIPPER-GARABEDIAN:] Thank you Mr Chair and um thank you all for being here. Good to see you. Um I wanted to go back to your uh your testimony in opposition to house 1065 and I believe you mentioned in passing a bill that maybe addresses this topic from a different angle, but I confess I didn't get the number down in time and I just wanted to get a clarification on that.
[O'KONIEWSKI:] Yes, Representative. So um You know, this has been an ongoing issue for, I would say about 10 years now. And the2937 two bills that I had mentioned that are also on your agenda is house 1183 In Senate 657, which we've inserted language in um to address the protection of Consumer choice at the dealerships of the of the various products that the dealerships offer up to the consumer in the service contract arena. And that language is not in 1065. And in fact um predating you in the last session, we had bills filed to address these problems and we thought we had a deal with the SCIC people and they testified against the deal2980 bill the last session. Um, and you know, there's been no movement one way or the other on this legislation since then. And you2991 know, we just feel that if this is more complicated than, than what it was laid out, I believe earlier in the day and in previous years it's really shifting the um, the obligation of the contracts from the administrator side to the dealers side for example, and which were not supportive of necessarily and like I said, we would love to have some discussions with the interested parties on this, uh, and maybe try to move something forward, but there definitely has to be some language in there to actually protect3026 consumer choice other than just saying they're intending consumer choice protection.
[LIPPER-GARABEDIAN:] Got it. So I had written down the wrong number but now that I have, that will be helpful for me to go and take a look.
[O'KONIEWSKI:] Puppolo has long filed a bill for us. And on the Senate side, um, Senator DeZoglio was filed something on this.
Great, thank you so much. Nice to see you. Thank representative any further questions from members of the committee. Sure represent3056 of
[AYERS:] I just want to go back to talking about a dying industry. What concerns me is one of the points you made about the trade schools early on and I have a trade school in my legislative district and I've heard this, if you have a sophomore or junior uh, student who's mechanically inclined, he likes to work on cars and he has to set of3079 skills that allows them to do that. And he goes to a trade school and then after he gets uh, acclimated with3086 the industry and he realizes he can't afford to stay in the industry with some of the3091 surrounding costs for tools and what he's going to make when he gets out of school. What what happens to the auto industry when these body shops recruit people to get in the industry? How is that going to affect the industry? And what do you see happening?
[BROWN:] I can answer that if you like. So currently in the automotive field that is a lot easier because you can afford to help support the student and even purchase tools. Uh, we have a program where we give the students tools when they3124 graduate to become part of the program and the auto body program. I have nothing like that. The program can't financially supported the business care financially supported When you're only capturing again $40 an hour to repair the car. So unfortunately he said the average age of my uh, auto body mechanic is 59.5 years old. So could they do this? Yes, they could do this in New Hampshire, they can not in massachusetts. The business just doesn't support it.
[[O'KONIEWSKI:] And representative a3156 couple of things, you know, we've been strong advocates for, Well, you know, since I've been here for 20 years now, 21, years on trying to support the tech programs, especially on the mechanical side. Um, in order to, um, you got to look at it in terms of, of, of, um, like a farm system, right? Um, we're trying to, uh, engender kids interest in and it's, it's men and women, boys and girls. You know, we have a, we run a tech competition every year. We have a number of young ladies who participate from their, uh, technical high schools in that competition. Um, we run a tech, uh, scholarship foundation program to help financially support students as they go through the programs3207 post high school. And it's, as David said, it's much easier on the mechanical side to do that. But at the same time, you have like out in the berkshires, they build a phenomenal auto body tech program and then they cancelled it because they couldn't get the kids to get interested into it.
You had Springfield Tech eliminate their entire tech training program and you know, that, that's just a slap in the face to all the students out there who have an interest and want to be in these businesses, I openly tell people that if you, if you make it through on the mechanical side, at a dealership, a master technician will easily make six figures working at the dealership. Um and the diesel side, it's it's even much higher. Um you know the last couple of years, last 2-5 years I've had dealers tell me on the heavy duty trucks side that their diesel texts, they've got diesel text making $300,000 a year.3267 So it's unfortunate that um while we have this huge demand for texts and as the older text age out there raging out at a much faster rate than we can get younger individuals into the businesses and we've we've talked to a number of legislators over time, we've worked with the governor on this. Um, and uh it's not only here in massachusetts but it's a, it's a nation wide phenomenon where the lack of programs, the lack of students consequently getting in, it's really causing a major shortage around the country as well, not only on the mechanical side but also the auto body side. I thank you for the question. It's a great great topic to. You know, we've dealt with other committees on this on that particular topic topic because it touches a lot of different arenas.
Thank you very concerning. I appreciate your river. Thank you for your time on that. Thank you any further questions,
know what that will move on. Thank you.
Thank you Mr Chairman, thank you for your testimony chris3337 stock. Mhm
chris stock are3342 you on?
[CHRISTOPHER STARK:]I'm here. Mr Chairman and thank you very much. Uh Chairman Crighton Uh Chairman Murphy Thanks for holding this hearing today.3351 Uh My name is Christopher Stark. I'm the executive director of the massachusetts Insurance Federation. I am joined today by the american property casualty Insurance Association and the National Association of Mutual Insurance Companies in our opposition to House bills 1048 1111 1150 to 1178 and Senate bill 709 A 711, all of which have addressed labor rate. However, before I get into uh those bills which will3378 take up the most of my3379 testimony, I do want to highlight uh two bills that we support S. 7 25 and H. 10 80 which would revise the ADALB. Statute regarding the removal of inspection stickers. This is an antiquated law uh that has not been enforced For years. Uh we are looking forward to be taken off the books and in3402 lieu of that for it to be a notice to consumers. When this was enforced back in the early 1990s, it resulted in physical altercations between uh appraisers and their ah customers when they tried to scrape off the sticker. Uh And so this bill really is just making uh these statute that the status quo as it is and we would urge its passage is has been done in the previous session.
And as was noted by the agents association. We also support S 661 and H 1080 so that they can have, uh, the full access to these seats on the commonwealth automobile reinsurers governing committee.3453 Um, I also submitted an opposition statement to the committee on H 10 70 regarding the diminished value under property damage. One of the key reasons for that is it is very arbitrary to do. And this will lead to needless litigation under these policies for something that since auto reform came into place in 2000 and eight, we've really had that opportunity to make sure that we're offering products, uh, that consumers want. There has been no clamoring for, uh, this product, uh, and given the3495 arbitrary nature of calculating diminished value and the legal issues and ramifications from that. We would ask that that bill not be moved forward, but when we're talking about auto labor rate, uh, it's important to understand where we are right now and to look at this and the most holistic approach that we can. Uh, the joint trades letter was submitted to you today.
Uh, Chairman. And I hope that all the members of the committee will take the opportunity, uh, to read through all the data that were able to supply. But one of the biggest reasons that were opposed to the reintroduction of government price fixing into the auto insurance market is we've learned our lesson in that long struggle to 2008 in order to get, uh, rid of the fixed and established system and go to manage competition, Massachusetts through that entire time of fixed and established was consistently the 5th and 7th highest premiums in the nation. But after we made those reforms and ended that type3563 of government price fixing, we fell to 15th and we remain 14th as of 2000. And it is still proving that these reforms work. But what's at the core of the issues that we're dealing with when it comes to auto labor In massachusetts at its core, it's an excess of repair shops and fewer physical damage claims. You know, dr Tennison out of Cornell University testified to The study commission uh in 2008 about this and found that Massachusetts was an outlier with all of the other states in the region on a shops per vehicle calculation. And this pattern has held through to 2020. In fact, the A. I. B. Has been able to supply us with uh, some data that they were able to have in 2003, there were 606,000 physical damage claims in 2019, there were only 472,647. That was a decrease of over 22% of the number of physical damage claims. As these auto, as cars got safer In 2000, there were 797 registered repair shops in the Commonwealth today, there's 698. That's only a decline of 5.5%.
The other thing that I want to respond to with this and again, taking that holistic approach to looking at these numbers and this issue in general is that when we look at total labor cost, which is also driven by the cycle time that we have here3662 in massachusetts, which also is not necessarily a product of total labor cost. Uh, the highest or one of the highest in the nation is Rhode island. And they're often our competitors for the longest cycle times for repairs of any state in the nation. But when it comes to our total labour costs that insurers have experienced Massachusetts is in line at about $1143 per repair with Vermont at 1132, main at 1133 and the next 25 states All fall into a 10% range of roughly $100 in that total labor cost. That's compared with H 11 11. That is seeking to nearly double the labour rate without any contemplation of the cycle time and the length of repairs, uh, in massachusetts. And so I would3720 caution that, you know, we need to look at that. And the total labor costs that are occurring in massachusetts compared to our surrounding states, You know, new york is one of the highest, Uh, in total labor cost, it's at 1572.
But you know what, that doesn't equate to is that3738 it doesn't equate to an increase in wages per week. Uh, and the average wage is calculated by collision weak, which is a repair industry standard. Uh, the wages of Massachusetts were $995 for that week, while in New York, which has about a $400 higher total labor cost, the wages were 971. So we can't believe falsely that an increase in the labour rate is going to3767 result in an increase in wages. Finally, on the biotech issue, I3772 think that it's important for us to engage in this. I've been spending a lot of time over the last several weeks with experts nationally that are part of public private partnerships between industry, both repair and insurance, uh, and our biotech communities. And one of the things that I've learned is, we've got a lot of work to do, but it has more to do with the educational Foundation and those vortex schools, one of the biggest problems and hurdles that they3798 have, is that it takes years3800 to adjust curriculum, but, and when we're in a state of this race to autonomous vehicles where the technology is constantly changing, uh, it's important3809 for us to make sure that we're actually keeping up with curriculum, but that also goes to another major issue that we face in the biotech space and that is3819 the reward, uh, that a student from a Vo tech school3825 would get.
Um, and what the additional investments they would have to make after you have many manufacturers out there that in order to be certified repair3836 facilities or a repair person for one for instance, you have to go one week out of the year completely leaving your shop to a southern state for training. It's tens of thousands of dollars a year that the manufacturers place on the burden on these facilities. Each manufacturers different. So far independent repair facilities. It becomes even more difficult and costly for them as well. So there's a lot of other price drivers and factors that we have to manage with this. But when it comes3871 to labour rate, one of the key things is it wouldn't be pro consumer to do this. We would be rewarding these long cycle times, encouraging longer cycle times because there is just a set labour rate now um, that is well above would then be well above national averages. Uh, and if we were actually having this problem, cars will be going unrepaired and they're not um, and so for that reason and all these reasons and especially the fact that we have a legislative study commission that's going to be meeting. I would ask that this will be sent to study as well. Thank you Mr Chairman. I'll take any questions. SHOW NON-ESSENTIAL DIALOGUE
Thank you chris any questions from the committee members? SHOW NON-ESSENTIAL DIALOGUE
Yeah, I have a quick question for you if you don't mind. Mr chairman. Sure. Just uh we can see you but just state your name. Just so I can people out there.
[REP OWENS:] This is3929 rep steve Owens How you doing? Just about any colleagues who are going to ask questions. Just identify yourselves in case people can't see your name on the screen. So thanks steve. Go ahead.
3940 [REP OWENS:] Uh, yeah, just you're throwing a lot of data out and I just want to make sure that I got it right. Were you comparing accident numbers? Um, Uh, in 2020, is that what you're giving us for the for the growth or the sorry to shrink and the number of of repairs?
[STARK:] No,3956 I went back to 2019 for that just because 2020 was a significant outlier.
[OWENS:] Well, that's what I that's what I was going to say. And we got3965 a lot of information from you very quickly and I wasn't sure exactly what that what that number was.
[STARK:] Now, that number3971 is that my testimony is represented. Well, thank, thank you very thank you very much for that. SHOW NON-ESSENTIAL DIALOGUE
That's all I had. All right. Thanks. Thanks Representative. Any other questions from our colleagues.
Representative Ayers has a question.
[AYERS:] Just briefly I asked this question to the automatic officials. We've been imposed this to you Purchasing a new car today costs anywhere from $40, $60,000 on average. And if someone gets in an accident within a year or4003 so, perhaps you talk about what's happening in the industry here and how you see it, But being forced into purchasing aftermarket parts, relevant factory parts and appreciating the value to the consumer is a concern. And also the safety of these aftermarket parts. God forbid to get another accident that proper fit. Perhaps you could comment on that.
[STARK:] Yeah, absolutely. And you know,4030 I think that, that one of the keys here is that often in those first couple of years, you're really4035 talking about recycled parts. Uh, and in those instances, those are om parts, uh, you know, they are coming off a car that was in a similar in an accident with another part of the body that, that may have been damaged, that, you know, caused it to be4052 considered a total loss. Uh, and, you know, without that. Um, and doing that, you know, we have environmental implications that we have to think about any time that, you know, we're increasing the number of recyclable vehicles and parts that we're not using and they're safe. Uh, you know, there are several national standards for both4073 the recycled and the aftermarket parts for them to be able to be used, uh, and the standards for them do their best to ensure safety. And then it's also about, uh, you know, then working, which we do all the time with auto body shops on whether or not, you know, for whatever reason, that this part may not have fed or may not have been the quality that we thought we were getting out of the recycled dealer that we were using. And so, but oftentimes in4105 those first couple of years, you know, you've got a balance in the recycled part as well as in4112 the aftermarket parts, but the recycled parts are truly om parts. SHOW NON-ESSENTIAL DIALOGUE
Thank you Any further questions.
Okay, seeing none. We'll move on. Thank you. Chris, thank you frank. O brien. Are there frank? I am Mr chairman.
Thank you. And good morning, uh, for the record. My name is frank O'brien. I'm vice president state Relations for the american Property casualty Insurance Association. APCIA is a National PNC Company Trade Association. We have4154 roughly 1000 member companies and We write nearly 60% of the insurance sold nationally. Right here in the commonwealth. We have several of our members who are headquartered here and we have many more members who right business here On the auto insurance side of things, we write approximately 68% of the private passenger auto insurance sold in the Commonwealth. Um, I've submitted,4186 I hope successfully, uh, written statements on a number of the issues. I won't be labeled those. I like to just speak to two particular issues that are before the committee today. Uh, first I'd like to speak to, uh, several bills having to do with the issue of insurance rebating specifically, House Bill 1033 and House 1141.
I'll also speak just very briefly, uh, not to rehash anything on the auto body labor rate issue as as well. Uh, going back to the rebating bills, massachusetts has the oldest and arguably the most restrictive anti rebating law in the country. We believe that these laws have become increasingly obsolete in anachronistic uh, of law in massachusetts is particularly restrictive in that it would prevent anyone from providing anything of value for selling or obtaining an insurance policy. Both proposals before the committee makes a minor tweaks to this particular technical nuanced issue that has long been in our insurance code. We support them, but we also urged the committee at some point in time to take a deeper dive into this issue. The National Association of Insurance Commissioners, the any, I C as well as the National Conference of Insurance legislate4286 towards and coil, both took uh, deep dives into this issue as well and both have provided uh, legislators and insurance commissioners across the country with model legislation that would amend the various statutes in this particular area.
Several states are taking advantage of this and at some point in time, we would urge the committee to take a look at this. Um, moving on to the Auto Body Labor rate issue. I'd like to very briefly make three points. Um, first of all, uh, it is as clear from, from this hearing as it has been clear from4331 many hearings before. It's almost as if like we've got the Hatfields and the McCoys here. Um, and I'm either a Hatfield or McCoy, but it's almost as if the auto body industry and the insurance industry is never going to come to agreement on anything. And uh, that is unfortunate because we do need each other, we do have vehicles that need to be repaired and we also need to have a healthy partnership. Um, I would leave the committee with a couple of quick points on on the auto body labor rate issue and I'm happy to answer any questions because I've been dealing with this issue both here in the commonwealth as well as in a number of other states as well.
Uh first of all, no other state sets auto body labor rates. Several states have provisions in their statutes which require or mandate some sort of auto body labor rates. Survey Rhode island for example has one which is a survey of posted labor rates. There was some conversation about auto body labor rate surveys earlier in this hearing, but not only does no other states set an auto body labor rate, no other state Legislature has a bill pending before it like this one, like the several bills that are pending before this Legislature. And believe me, there has been no lack of auto body labor, excuse me. Auto body related legislation in states across the country, most notably our neighbors to both the north and new Hampshire and to the south and Rhode island, but nothing nothing like the bills that have4437 been proposed here.
The second point I would make to the committee is that I call this the no free lunch argument. There is no free lunch. If you add costs to a system, whether it is insurance or whether it is widgets, it flushes through the system and it impacts price if you add cost to the system like these bills proposed to do and the supporters on the auto body industry are white upfront about that, that there the purpose is to double or at least significantly increased Auto Body labor rates. You add cost to the system, It puts price pressure on the product. Now we have a lot of things that go into ultimately what happens to the price of insurance products, both competitive and business decisions as well as a rate setting and rate review process here in the commonwealth. But it's common sense. You add cost to the system. It's going to have an impact on price and that impact is not going to be to lower prices.
We also have, as was mentioned earlier, a process that will be in place where to take a deep dive on this issue. I expect that that will b in place. I understand. Uh, Mr Ogonowski and I'm sorry, I'm just butchered your name bob. I know that he is already uh uh designated his representative on that particular commission. We look forward to working with that commission and working with the legislature on this particular issue with that. Mr Chairman. I apologize for going on a little bit longer than I had planned to and I'm happy to answer any questions from the committee. Thank you. SHOW NON-ESSENTIAL DIALOGUE
Any questions frank.
Get off easy today frank. So there's no question that I can see. So I'd like to make just a comment on my own regarding the commission.
[AYERS:] Obviously, the commission has been established in the committee here is in the process of looking at the membership. We'll have a process in place which4576 will decide as a committee as to what the process will be or they be hearings or visits around the commonwealth or whatever it might be. We will look at the past commissions to see how they were laid out what the findings were. Although I know some of the findings anyway, but we're gonna be sending that commission up. I would recommend to all parties that have an interest in this issue. You know, I heard today and my colleagues4599 read today that there is an issue with the decline of somebody shops closing. Uh there is a problem4605 with attracting text of the industry and it may have an effect on the repair of cars, the safety of the cars after they repaired turnaround time.
So, those are just a few of the items I'm mentioning now, but evidently there is an issue within the industry and the body shop industry. So, I would refer to the experts that have been around this issue for4628 a long time to come to us with some type of solution. As a committee member, as chair of the committee. I've always tried to engage all parties to come to solutions rather than have me or our committee or my my senate share impose any type of condition upon you. You4644 have the knowledge and the expertise to tell us how to fix things. I I do not appreciate as a legislator, anybody uh, coming into our office and kind of drawing a line in the sand and not willing to compromise or talk about agreed upon solutions. So, as the commission moves forward, I would ask all of you in your infinite wisdom and experience with this issue, to give us some solutions to this problem.
Otherwise, there may be a continued decline in the number of body shops, the continued decline and maybe the quality of the work that's done to these facilities. Uh, and I don't want to see that happening to any industry, that those are jobs in our commonwealth, Those are services provided to our constituents. So, uh, I stand ready to work with all of you on this issue, to see if we can find some common solution. But between now and the time that the commission wraps up, I would ask you all to start seriously thinking about what is the problem here and how do we fix it? Because I'm gonna be asking you those questions along the way as the commission starts to meet and so please uh from now moving forward, help us find a solution to the issue before us. So, and I know that looking at who's on the call today that you all have the knowledge and expertise to provide us the answers to those questions.4724 So thank you very much.
No further questions. We'll move on to the next next uh person who signed up. Rory Whelan Rory, are you there?
I am MR Chairman Rory, you have the floor.
Thank you. Mr Chairman and members of the committee, I'd like to start off, my name is Rory Whelan I'm the regional vice president of government affairs for the National Association of Mutual Insurance Companies, uh the largest association representing property and casualty insurance companies in the country. And I would like to start off MR Chairman um directly responding to your remarks just a few moments ago, uh4774 I want to tell you that the industry on behalf of the PNC industry, we hear you um and it is well received and I assure you that we will look forward to working with you and members of the committee on addressing the larger issues uh and the auto repair uh ecosystem. But to this4798 point of this legislation regarding labor rates and uh these mandates uh for all of the issues in auto repair, consumers should not bear the responsibility of fixing it. And I think MR Chairman, this is what you were referring to, that there are larger issues, There are other issues that we need to tackle. Um And and but the for our association, the bottom line is, consumers should not bear that burden. And I'll paraphrase an old saying, if it ain't broke, don't break it.
Competition works for consumers and it is working for the auto consumer in massachusetts. Uh You've heard from my colleagues, there's a lot of data to support our position. Uh I'm not going to reiterate that. I'll simply appeal to your common sense, price fixing results in higher costs,4864 never lower costs, Those costs are ultimately borne by the consumer. So what I I think again to the Chairman's very I think eloquent and on point comments, uh there are other ways of addressing the challenges in the auto repair system in massachusetts. Uh and that simply mandating uh labor rates uh again, being the outlier in the entire nation. And doing so, um thus, again, uh making the consumer pay more is not the solution. And there are others. And I can tell you um you know, if you and the property and casualty insurance uh industry, it is hypercompetitive competition works just next time you to non u turn your tv on. And you see how many commercials that are, are appealing to consumers regarding home and auto insurance, um that drives down costs. And we know that we know competition drives down costs. So to impose an artificial arbitrary uh, state mandate onto auto repair costs would simply be uh antithetical uh, two good consumer policy. Uh and of course I would add that uh, this context or this proposal does not uh,4971 does not include other labor rates with rental car companies, municipalities, corporate fleets, etcetera. So it's sort of this this one off. Um, that that again, uh, in our opinion is anti consumer. I'm happy to answer any question. Uh, and and thank the chair of the committee for your time. SHOW NON-ESSENTIAL DIALOGUE
Rory. Thank you for your testimony. Any any questions for Rory?
Uh, then from the committee. All right, thank you for the testimony.
[AYERS:]I would I would just add, you know, I was on this committee a long time ago um when speaker Mariano is the chair of the committee And then I was around, I don't think I was on the committee when the last commission was done back in 2009, But the question that you are going to ask yourself have to ask yourselves as an industry is where do you want this issue to be in 2030 is your industry going to survive in its current form when it comes down to whether it be with be body shops? I don't know. We have text on entering the industry now, What's going to happen in 10 years without some type of change within the industry itself. Now, coming to the Legislature to have us fix an issue within your industry, in my opinion is not the way to go now, do I think that increasing labour rates is going to be a fix, all that will fix the problem?
I don't know, but I think that's just the easiest way to kind of shape the issue for the Legislature. And if someone's trying to increase salaries or benefits to the workers with within the industry, some file a bill to say, let's just increase the the hourly rate and that will eventually make its way to the employees that was brought up today. You know, does that necessarily mean that if we increase the rate of $50 an hour, $60 an hour, is that going to make its way into the pockets of the employees? I don't know that there's nothing, there's nothing to say that it will. So I've seen the issue float around the legislature for a while and I see the people on this call that have been very involved with this issue for 10 years, 15 years and we're still to the position where the industry comes to us to try to solve an issue. And evidently there is an issue because the body shops5108 are all saying the same thing. So I don't know what the answer is, but I would again, you know, thank you for your testimony. But I would again ask you to provide us solutions.
Maybe there's something short of increasing a labor rate. Maybe there's other savings within the system itself as to how you, how you operate claims and how you handle claims and how you handle fixing5128 the cars of the vehicles. So there might be other ways to save that money without increasing premiums I've heard today and I've heard it in the past that any increase to5138 the cost of the labour rate is going to automatically increased premium costs. I don't necessarily accept that you're gonna have to show me why increasing labour rates going to increase premiums because there's other ways that that money can come out of the system to not increase the premium. So that's something we're going to have to talk about and flush out. The goal is not to increase premiums to the commonwealth's consumers.
The goal is to make sure that these cars are safe. The goal is to make sure that these body shops are still there to support all of the insurance companies that need these cars fixed. So I think people on this call are a lot smarter than me. I speak for myself personally, A lot smarter than I am when I see the people on this call. And you I I think that you all know what the solution can be short of the legislature stepping in and telling and telling you what to do. So I just don't want to see another commission in 2030 from still the state representative then I think now is the time to really roll up our sleeves and get to the bottom of this issue before if the evidence before us is correct before the industry itself in regard to5203 the repair of facilities before the industry actually collapses, didn't have no one to fix the cars. So um I thank you for your testimony and as the commission moves forward we'll flush out all these issues um together.
SHOW NON-ESSENTIAL DIALOGUE
So thank you very much. Thank you Mr Chairman and your comments are well heated and you can count on our commitment to working through those issues with you. Thank you
Kathleen First Kathleen, Genova, Kathleen, you there?
[Kathleen GENOVA (SUBARU OF NEW ENGLAND):] Hello, I am here. I'm not sure this is working. I didn't think I'd signed up correctly. So I actually didn't finish organizing my comments and I thank you Mr Chairman for including me. So with that frank confession, I will be very brief and to the point I'm here to testify today on the various service contract bills. The committee has before two different versions. There is one version that the insurance industry has been putting forward for several sessions now which just tries to clean up an issue with the word with the law in terms of how service contracts are considered and then there is a house bill and a Senate bill by chairman Puppolo and senator5290 DiZoglio which add to that5293 a provision addressing the relationship between motor vehicle dealers manufacturers5299 and distributors, the Provisions that they seek to insert via that bill is something that is the subject of an entirely separate law called Chapter 93 B, which regulates the relationship between motor vehicle dealers, manufacturers and distributors.
There are omnibus bills that the S A. D. A in conjunction with various legislators have put forward the past several sessions addressing service contracts and multiple other issues. Um, I don't have it in front of me but probably a dozen other issues, including the identical language that is in Chairman Polos and Senator DiZoglio bill. Those issues are not financial service issues. They are concerning the commercial relationship between motor vehicle dealers on the one hand, and their manufacturers and distributors on the other. I realized at this point I neglected to say that I am vice president and general counsel of Subaru of New England, who is the commonwealth's only motor vehicle distributor were one of only four distributors in the country. All the other makes being sold in the commonwealth are directly or indirectly by an entity that is the manufacturer.
So on this issue, I would respectfully suggest to the committee that the franchise relationship service contract issue be deferred to the larger chapter 93 A bills that are pending before the Committee for Consumer Protection, That is the committee that historically, since at least 1998 when Mr O'Keefe. Linsky and I first started um I don't know if he first I first started dealing with these issues has been considering such issues for various on reasons. The service contract component has not moved forward in5423 that committee. I don't want to bog down today um discussing the wisdom or lack thereof of that piece of the legislation and rather just encourage the committee to only look at the service contract bill that set forward by Representative Donahue which really is the only bill that addresses simply the financial service component of service contracts in terms of whether or not they're regulated as insurance and to what extent in the commonwealth. Thank you very much.
SHOW NON-ESSENTIAL DIALOGUE
Thank you Kathleen. Any questions for Kathleen from the committee. SHOW NON-ESSENTIAL DIALOGUE
Seeing none. Thank you Kathleen for your testimony. Thank you. Is there anybody else that would like to testify on any bills before I say I've gone through our list and I want to make sure that we're able to reach everybody that had signed up. I'm not sure if these people have tried to sign up and that have not been able to. But according to my list here, Everybody on the call today who wants to testify has testified. So anybody else out there like to testifying a bill that is not testified yet. Mhm.
We double check with my crack staff here to make sure I'm not missing somebody. Mhm. Oh, nick. Okay, nick. Are you there?
[FYNTRILAKIS:] Yes. Mr Chairman. Um You can hear me. I apologize. I neglected to um I neglected to comment on the rebating proposal that was included in the hearing. I apologize for that. We will be submitting formal testimony uh in opposition to that particular piece of legislation. Uh and we remain concerned about um provision that would modify the state's um very rigid as was mentioned, rebating statutes. Uh we believe that those statutes are in place to protect consumers to ensure that insurance is sold for the purposes and merits of the insurance products that are offered um as opposed to any additional uh inducements or enticements5557 to purchase that coverage that might be um not in the best interests of the consumer in the long run or even in the short run. And so I just wanted to5566 make sure that I was on record stating that as I said, I don't want to belabor the hearing and I know it's it's going on now, but I apologize for not mentioned that earlier. We will submit a formal testimony that outlines our position more specifically, but5580 I did want to do that uh orally as well. Thank you.
[AYERS:] They connect it's a good point. Um I wanted to bring up earlier. So in regard to testimony, you can still mail or email or call us with testimony after today. Our officers, we have an open door policy, although an open door means something different than it did a couple of years ago, but we have an open door policy regard to testimony being submitted afterwards. So written testimony, it's just as important. We'll continue to discuss these issues and flush these things out. These are not easy issues. Obviously some of these and uh committee committee remains uh determined to try to find some solutions to these things. Um I appreciate all of you out there bearing with us during this time with this type of testimony. Obviously it's not it's not my my favorite uh form of testimony when I'm looking at a tv screen during this hearing. So we'll do this for the time being.
SHOW NON-ESSENTIAL DIALOGUE
Thank you for bearing with us during this process and hopefully we'll be back in this building at some point in the meantime if you have any questions or issues with the process, getting testimony to us call us re mail us. We remain here to assist all of you and making sure that we're able to do your jobs and getting information over to us and um with that if I hear anybody anybody looking around for thumbs up or thumbs down to see if we're need anybody5666 else to testify that looks like that's about it. So with that it's an emotional close today's hearing. 2nd 2nd. Thank everybody. I have a good day. Thank you Mr Chairman. Thanks. Thank you. Good to see everyone
© InstaTrac 2025