HOUSE . . . . . . . . No. 4412
The Commonwealth of Massachusetts
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HOUSE OF REPRESENTATIVES, February 20, 2024.
The committee on Financial Services, to whom was referred the
petition (accompanied by bill, House, No. 1035) of James K. Hawkins and
others for legislation to establish a set of minimum reimbursement rates
for labor by insurers to claimants for first- or third-party motor vehicle
insurance claims in the Commonwealth, the petition (accompanied by bill,
House, No. 1035) of James K. Hawkins and others for legislation to
establish a set of minimum reimbursement rates for labor by insurers to
claimants for first- or third-party motor vehicle insurance claims in the
Commonwealth, the petition (accompanied by bill, House, No. 1095) of
Paul McMurtry for legislation to authorize the Commissioner of the
Division of Insurance to set labor rates paid by insurance companies to
auto repairers, the petition (accompanied by bill, House, No. 1118) of
Edward R. Philips and Jacob R. Oliveira relative to the calculation of labor
rates paid by insurance companies to motor vehicle repair shops, reports
recommending that the accompanying bill (House, No. 4412) ought to
pass.
For the committee,
JAMES M. MURPHY. 1 of 4
FILED ON: 2/7/2024
HOUSE . . . . . . . . . . . . . . . No. 4412
The Commonwealth of Massachusetts
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In the One Hundred and Ninety-Third General Court
(2023-2024)
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An Act to establish minimum reimbursement rate to insurance claimants.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:
1 The purpose of this bill is to establish a set of minimum reimbursement rates for labor by
2insurers to claimants, for first- or third-party auto insurance claims in the Commonwealth. The
3newly calculated minimum reimbursement rate to the claimant will be determined by identifying
4the rate at the time of the Insurance Reform Act of 1988 adjusted to the rate of inflation to the
5time and promulgation of this bill becoming law.
6 The newly established minimum reimbursement rates will be phased in over a two-year
7correction period, which will begin within 30 days of the promulgation of this law with an
8increase of one-half of the difference between current rates and the newly established rates. The
9remaining half of the increase will follow at the end of the next twelfth month. This second
10increase will include the rate of inflation for the previous twelve-month period.
11 At the end of the two-year correction period, the minimum reimbursement rates to
12claimants will be adjusted yearly based upon the CPI for All Urban Consumers (CPI-U) Not
13Seasonally Adjusted, Northeast Region as published by the US Bureau of Labor and Statistics. 2 of 4
14 Under no circumstances shall the reimbursement rate to the claimant be less than the
15aforementioned calculated amount. A negotiation above the minimum reimbursement rates set,
16for the benefit of the consumer, will be determined based on a set of criteria. The criteria for the
17negotiations shall be predicated upon, but not limited to the type of vehicle (standard, high-end,
18heavy-duty, commercial, and/or body composition materials) labor type (body, refinish,
19structural, frame, aluminum, mechanical or other), expertise, level of training, certifications,
20equipment and geographic area of the chosen registered repair shop. No insurer shall refuse to
21negotiate on the basis of their ability to obtain a price that they can secure from another licensed
22repair facility conveniently located to the claimant.
23 Further, insurers are prohibited, other than by the means outlined in current laws and
24regulations, from suggesting, insisting, or overtly steering a claimant to use any specific
25registered repair facility to repair their damaged vehicle.
26 The promulgation of this law setting a minimum reimbursement rate to the claimant shall
27not invalidate any of the requirements as set forth in the governing statutes including but not
28limited to the: MGL Chapter 26 Section 8G, Code of Massachusetts Regulations; 211 CMR 123,
29211 CMR 133 or 212 CMR 2.0.
30 SECTION 1. Chapter 100A of the General Laws is hereby amended by adding the
31following two sections:-
32 Section 15. There shall be, within the division of insurance, an auto body labor rate
33advisory board to address any issues related to auto body labor rates. The advisory board shall
34consist of: 1 member appointed by the commissioner of insurance; 1 member appointed by the
35attorney general; 1 member appointed by the director of the division of insurance standards; 3 3 of 4
36members from the auto insurance industry appointed by the Automobile Insurers Bureau of
37Massachusetts, 1 of whom shall be chosen by the three members to serve as co-chair; 3 members
38from the auto repair industry from different geographic regions of the Commonwealth appointed
39by the Alliance of Automotive Service Providers of Massachusetts, Inc., 1 of whom shall be
40chosen by the three members to serve as co-chair; 1 member appointed by the Massachusetts
41State Automobile Dealers Association, Inc.; and 4 members appointed by the co-chairs, 1 of
42whom shall be from vocational-technical schools, 2 of whom shall be from a consumer advocacy
43group and 1 of whom shall be an economist with expertise on the insurance industry.
44 The advisory board shall meet not less than 2 times per year. The advisory board shall be
45responsible for creating, implementing and overseeing an annual survey given to relevant auto
46body shops as determined by the advisory board. The survey should compile data pertaining to
47contracted hourly labor rates, posted hourly labor rates and prevailing hourly labor rates and any
48additional information the advisory board deems relevant. The advisory board shall collect
49industry data including, but not limited to: (i) labor rates in neighboring states; (ii) auto body
50shop costs; (iii) total labor costs; (iv) inflation data; (v) work force data; (vi) vocational school
51trends; (vii) insurance premiums; and (viii) any additional information as requested by the
52advisory board. The results of the survey and the data collected shall be reviewed and analyzed
53by the advisory board annually and the board shall make a recommendation for a fair and
54equitable labor rate.
55 Annually, not later than December 31, the advisory board shall file a report of its
56findings, conclusions and any recommendations with the clerk of the senate and house of
57representatives, the joint committee on financial services, the senate and house committees on
58ways and means and the division of insurance. 4 of 4
59 Section 16. Not more than 30 days after receiving the annual report from the auto body
60labor rate advisory board under section 15, the commissioner of insurance shall set a minimum
61hourly labor rate that insurers shall pay on insured claims for repairs made by registered motor
62vehicle repair shops; provided, however, that the minimum hourly labor rate shall not be less
63than $55. The minimum hourly labor rate shall go into effect 30 days after it is set by the
64commissioner.
65 Further, the report filed on April 13, 2022 by the special commission to study auto body
66labor rates established in section 130 of chapter 24 of the acts of 2021, which described potential
67recommendations and solutions for the auto body labor rate in the Commonwealth, identified this
68legislation as a possible solution.