### COMMONWEALTH OF MASSACHUSETTS # REPORT OF THE AUTO BODY LABOR RATE ADVISORY BOARD DECEMBER 22, 2025 This page is intentionally left blank. ## TABLE OF CONTENTS Auto Body Labor Rate Advisory Board ......................................................................................................................... 1 History of Auto Body Rates ................................................................................................................................................. 2 2008 Special Commission on Auto Body Labor Rates ................................................................................. 2 2022 Special Commission on Auto Body Labor Rates ................................................................................. 3 Advisory Board Process ........................................................................................................................................................ 7 List of Public Meetings ................................................................................................................................................... 10 April 17, 2025, Virtual Public Meeting ............................................................................................................... 10 May 5, 2025, Virtual Public Meeting .................................................................................................................. 10 May 29, 2025, Virtual Public Meeting ............................................................................................................... 10 June 3, 2025, Virtual Public Meeting ................................................................................................................ 10 June 12, 2025, In-Person Public Meeting ........................................................................................................ 10 July 29, 2025, Virtual Public Meeting ................................................................................................................ 10 September 15, 2025, Virtual Public Meeting ................................................................................................ 10 October 29, 2025, In Person and Virtual Public Meeting ..................................................................... 10 November 24, 2025, Virtual Public Meeting ................................................................................................ 10 December 22, 2025, Virtual Public Meeting ................................................................................................. 10 Findings by the Auto Body Labor Rate Advisory Board ...................................................................................11 Auto Body Repair Industry’s Position .................................................................................................................... 15 Position of Auto Insurance Carriers ....................................................................................................................... 17 Recommendations and Potential Solutions ......................................................................................................... 19 Acknowledgment................................................................................................................................................................... 19 Appendix ..................................................................................................................................................................................... 20 Appendix A: Biographies of Board Members.................................................................................................. 20 Appendix B: Survey Questions to Auto Body Shops .................................................................................. 24 Appendix C: Survey Questions to Insurers ......................................................................................................... 25 Appendix D: Auto Body Shop Survey Summary ........................................................................................... 26 Appendix E: Insurer Survey Summary ..................................................................................................................27 Appendix F: Rhode Island Survey ........................................................................................................................... 28 Appendix G: AIB Estimation of Premium Impact ........................................................................................ 29 Appendix H: Board Recommendations ............................................................................................................. 30 Appendix I: 2008 Special Commission Report ............................................................................................... 90 1 ## AUTO BODY LABOR RATE ADVISORY BOARD The Advisory Board comprises the following 14 members: **Michael D. Powers, Co-Chair** Legal Counsel to the Commissioner of Insurance Massachusetts Division of Insurance **Stacey Gotham, Co-Chair** Actuary Insurance and Financial Services Division Office of the Attorney General **Mark A. Merante** Deputy Commissioner and General Counsel Massachusetts Division of Standards **Rick Starbard** Owner, Rick’s Auto Collisions, Inc. Revere, selected by auto repair industry Massachusetts Alliance of Automotive Service Providers **Brian Bernard** Owner, Total Care Accident Repair Service of Raynham Raynham, selected by auto repair industry Massachusetts Alliance of Automotive Service Providers **Matthew Ciaschini** Owner, Full Tilt Auto Body and Collision West Hatfield, selected by auto repair industry Massachusetts Alliance of Automotive Service Providers **Christopher S. Stark** Executive Director, Massachusetts Insurance Federation Auto insurance industry selected by the Automobile Insurers Bureau **Peter Smith** Manager, Material Damage Auto Claims MAPFRE Insurance Auto insurance industry selected by the Automobile Insurers Bureau **Samantha Tracey** Director, Claim Shared Services Arbella Insurance Group Auto insurance industry selected by the Automobile Insurers Bureau **Paul Burke** Vice President, Bay Coast Insurance Company Swansea, Massachusetts Massachusetts Association of Insurance Agents **JocCole “JC” Burton** Chief Executive Officer, Maven Construction, Inc. Business Community **Sean Kane** Safety Research & Strategies, Inc. Seekonk, Massachusetts Consumer Advocate **John Kwoka** Neal F. Finnegan Distinguished Professor of Economics Northeastern University Economist **David Brown** Service Director, Bill Diluca Chevrolet- Cadilac Inc. Andover, Massachusetts State Automobile Dealers Association 2 ## HISTORY OF AUTO BODY RATES 2008 SPECIAL COMMISSION ON AUTO BODY LABOR RATES The first Special Commission on Auto Body Labor Rates in Massachusetts (“2008 Special Commission”) was created by Section 108 of Chapter 182 of the Acts of 2008. ¹ The 2008 Special Commission was charged with studying existing practices in setting rates and investigating the benefits and costs associated with developing a rate, setting system: **SECTION 108.** There shall be a special commission to study autobody rates. The commission shall study existing practices in setting rates, and investigate the benefits and costs associated with developing a rate setting system, including but not limited to, establishing a tiered rating system for auto body shops, an average national hourly compensation rate, and use of a cost of labor multiplier for the commonwealth utilizing data provided by the Bureau of Statistics for the U.S. Department of Labor. The commission shall also report on the number of auto body shops in the commonwealth from 2000 until present, including the number of shops that have closed during that time period. \*\*\* The commission shall hold at least 2 public hearings and file a report of the results of its study including any legislative or regulatory recommendations with the clerks of the senate and house of representatives who shall forward the same to the joint committee on financial services and the senate and house committees on ways and means not later than December 31, 2008. ² After holding two public meetings in October and November of 2008, the Special Commission published its final report in December 2008. ³ In its conclusions, the 2008 Special Commission Report stated the following, before setting forth separate comments submitted by those in the insurance industry and those in the auto body industry: 1 2008 Mass. Acts Chapter 182, https://malegislature.gov/Laws/SessionLaws/Acts/2008/Chapter182 2 https://malegislature.gov/Laws/SessionLaws/Acts/2008/Chapter182 3 Report of the Special Commission on Auto Body Labor Rates, December 30, 2008 (“2008 Special Commission Report”). A copy of that report is attached hereto as Appendix I. 3 There is no dispute that the auto body labor rate has not kept pace with increases in the labor rates in similar industries. The question is what, if anything, needs to be done at this time to remedy the situation. Those in the insurance industry advise a wait and see posture, to allow the managed competition of the Massachusetts private passenger automobile insurance market to determine the appropriate auto body labor rate. Those in the auto body business, however, feel that an increase in the labor rate is so overdue as to necessitate an immediate increase. ⁴ The 2008 Special Commission Report also made three recommendations, ⁵ summarized in the following table. **2008 SPECIAL COMMISSION: THREE RECOMMENDATIONS** **DATA REVIEW** **REVIEW NEED FOR** **LEGISLATION** **REGULAR MEETINGS ON** **AUTO BODY LABOR RATES** The 2008 Special Commission recommended that the General Court review future data on auto body labor rates (through June 30, 2009) to determine what effect, if any, that managed competition in the motor vehicle insurance market had on the labor rates paid by insurance companies to auto body shops in Massachusetts. Next, the 2008 Special Commission recommended that the General Court consider whether legislation or other methods were necessary to ensure that the transition to managed competition in Massachusetts auto motor vehicle insurance resulted in insurers paying a fair and reasonable labor rate to auto body shops in Massachusetts. The 2008 Special Commission’s final recommendation was for representatives from the auto body repair industry and the motor vehicle insurance industry to meet bi-monthly to discuss best practices and other actions to improve accountability and quality of services that both industries provide to consumers. 2022 SPECIAL COMMISSION ON AUTO BODY LABOR RATES In 2021, the Massachusetts General Court passed Chapter 24 of the Acts of 2021. Section 130 of that chapter established the Special Commission on Auto Body Labor Rates (“2022 Special Commission”), to be co-chaired by the chairs of the joint committee on financial services. ⁶ The 2022 Special Commission was charged with studying auto body labor rates. The study was to include, but not be limited to: 4 2008 Special Commission Report, p. 8. 5 2008 Special Commission Report, p. 13. 6 2021 Mass. Acts Chapter 24, Section 130(a), https://malegislature.gov/Laws/SessionLaws/Acts/2021/Chapter24 4 (i) an analysis of auto body labor rates in the commonwealth, including a comparison of labor rates in surrounding states; (ii) an analysis of the impact of managed competition in the automobile insurance market on labor rates; (iii) an assessment of whether current labor rates are reasonable and, if no, an evaluation of potential methods for calculating a reasonable labor rate; (iv) the number of auto body shops in the commonwealth each year from 2008 to the present, including the number of shops that have closed during that time period; and (v) an analysis of the impact of the labor rates on the auto body labor workforce. ⁷ After holding four public hearings between December 2021 and April 2022, this Special Commission published its report on April 12, 2022, setting forth six “possible options and solutions,” ⁸ which are summarized in the following table. **2022 SPECIAL COMMISSION: POSSIBLE OPTIONS AND SOLUTIONS** **STATUS QUO** **PENDING LEGISLATION –** **SURROUNDING STATE** **AVERAGE** **PENDING LEGISLATION –** **INFLATION ADJUSTED RATE** Maintain the then-existing system whereby “[t]he insurance industry negotiates a labor rate with contracted auto body shops, and that rate is most often paid to auto body repair shops in the Commonwealth.” The average labor rate paid through insurance companies was approximately $40. The 2022 Special Commission Report stated, “This is not a viable recommendation and will not provide a long-term solution to the issue of auto body labor rates.” ⁹ At the time of report publication, there were four pieces of proposed legislation that would have set a government-mandated rate that insurance companies would be required to pay auto body repair shops based on the average labor rate of surrounding states. The bills all would have required the minimum hourly labor rate on repairs to be the average hourly rate from Connecticut, Maine, New Hampshire, Rhode Island, and Vermont. ¹⁰ At the time of report publication, the Committee on Financial Services had two bills before it that would have used the rate set in 1988 and adjusted it for inflation. The resulting rate would have been approximately $78 per hour, according to the Massachusetts Alliance of Automotive Service Providers. ¹¹ 7 2021 Mass. Acts of 2021 Chapter 24, Section 130(b), https://malegislature.gov/Laws/SessionLaws/Acts/2021/Chapter24 8 2022 Special Commission report, p. 11: https://www.mass.gov/doc/auto-body-commission-2022/download 9 2022 Special Commission report, p. 11: https://www.mass.gov/doc/auto-body-commission-2022/download 10 2022 Special Commission report, p. 11: https://www.mass.gov/doc/auto-body-commission-2022/download 11 2022 Special Commission report, p. 11-12: https://www.mass.gov/doc/auto-body-commission-2022/download 5 **2022 SPECIAL COMMISSION: POSSIBLE OPTIONS AND SOLUTIONS (CONT.)** **Alliance of Automotive** **Service Providers** **Massachusetts** **Recommendation** **Massachusetts State Automobile Dealers** **Association** **Recommendation** **Legislative** **Recommendation-** **Establishment of a Labor** **Rate Advisory Board** Recommendations included an immediate increase of $33 in the minimum reimbursement rate to the claimant with yearly adjustments based on the CPI for the northeast region; two alternative recommendations based on passage of the inflation-adjustment legislation (from option #3, above) with a tiered rollout of additional increases over three years. Recommended establishing a minimum hourly labor rate to be paid by insurers based on the repair shop’s average customer-paid hourly labor rate. This rate would be calculated from a sample of the shop’s recent customer- paid collision repair orders. ¹² Recommended the establishment of a Labor Rate Advisory Board with members from the insurance industry, auto repair industry, government, vocational schools, dealers, consumer advocates, and an economist. The board would conduct an annual survey of auto body repair shops, collect relevant industry data to be reviewed and analyzed by the advisory board annually and used to provide a basis and recommendation for which the board could discuss a fair and equitable labor rate. The advisory board would also be required to annually file a report of its findings, conclusions, and any recommendations with the Clerks of the State Senate, House, the Joint Committee on Financial Services, the Senate and House Committees on Ways and Means, and the Division of Insurance. ¹³ Following all of the above, the present Auto Body Labor Rate Advisory Board (“Advisory Board”) was established by Section 292 of Chapter 238 of the Acts of 2024, which provided the following: **SECTION 292** . There is hereby established an auto body labor rate advisory board to address any issues related to auto body labor rates. The advisory board shall consist of: 1 person appointed by the commissioner of insurance, who shall serve as 12 2022 Special Commission report, p. 13-14: https://www.mass.gov/doc/auto-body-commission-2022/download 13 2022 Special Commission report, p. 14-15: https://www.mass.gov/doc/auto-body-commission-2022/download 6 co-chair; 1 person appointed by the attorney general, who shall serve as co-chair; 1 person appointed by the director of standards; 3 persons selected from the auto insurance industry by the Automobile Insurers Bureau of Massachusetts; 3 persons selected from the auto repair industry from different geographic regions of the commonwealth by the Alliance of Automotive Service Providers of Massachusetts, Inc.; 1 person selected by the Massachusetts State Automobile Dealers Association, Inc; 1 person selected by the Massachusetts Association of Insurance Agents, Inc.; and 3 persons to be appointed by the co-chairs, 1 of whom shall be from a consumer advocacy group, 1 of whom shall be from a group representing the business community and 1 of whom shall be an economist with expertise on the insurance industry. The advisory board shall be responsible for creating, implementing and overseeing a survey given to relevant auto body shops. The advisory board shall collect industry data including, but not limited to: (i) labor rates in neighboring states; (ii) auto body shop costs; (iii) total labor costs; (iv) inflation data; (v) work force data; (vi) vocational-technical school trends; (vii) insurance premiums; and (viii) any additional information as requested by the advisory board. The results of the survey and the data collected shall be reviewed and analyzed by the advisory board. Not later than December 31, 2025, the advisory board shall make recommendations to the division of insurance for a fair and equitable labor rate and file a report of its findings, conclusions and recommendations with the clerks of the senate and house of representatives, the joint committee on financial services, the senate and house committees on ways and means and the division of insurance. ¹⁴ 14 2024 Mass. Acts Chapter 238, Section 292: https://malegislature.gov/Laws/SessionLaws/Acts/2024/Chapter238 7 ## ADVISORY BOARD PROCESS The Advisory Board held ten public meetings. Two were held in-person/virtually, one at the State House and the other at the Tri-County Regional Vocational Technical High School in Franklin, Massachusetts. The other eight were held virtually. Two surveys were created and approved by the Advisory Board. One survey was sent to all auto body repair shops registered with the Division of Standards, and the other was sent to all auto insurers that have 1% or more market share by policies written in Massachusetts. ¹⁵ The surveys requested responses to questions about the hourly labor rates for six categories of collision repairs: body labor rate, refinishing labor rate, aluminum labor rate, mechanical labor rate, structural labor rate, and frame labor rate. The Advisory Board also collected data on labor rates charged by auto body repair shops in neighboring states. Specifically, it obtained data reported by _LaborRateHero_ on the labor rates charged by a sample of auto body repair shops in Connecticut, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. Labor rates that insurers pay to auto body shops in Rhode Island were obtained from the Rhode Island Division of Insurance. The Advisory Board also received the results of an analysis that the Automobile Insurers Bureau of Massachusetts ("AIB”) conducted to estimate the impact that various minimum labor rates for auto body repair shops would have on consumers’ insurance premiums. On May 5, 2025, the Advisory Board held a public meeting and began discussions about the proposed elements of the survey to auto body repair shops and the methods to obtain the information. On May 29, 2025, the Advisory Board held a public meeting, and discussions about the elements and methods of the survey continued among the members. On June 3, 2025, the Advisory Board held another public meeting and voted to approve the questions for the survey and to have the Massachusetts Division of Standards send the survey to all 1,497 auto body repair shops registered with them. Auto body repair shops were given 30 days to respond to the survey, and thereafter, the data was collected and analyzed by the Advisory Board. A spreadsheet was created summarizing the responses provided by auto body repair shops. ¹⁶ 15 All automobile insurers with at least 1% market share by policies written in Massachusetts constitute 95% of the market in Massachusetts. 16 A copy of the table summarizing responses to the survey of auto body repair shops is attached hereto as Appendix D. 8 On June 12, 2025, a public/virtual hearing was held at the State House in room 1B to take testimony from interested parties. A total of fifteen individuals testified. Most of the people who testified were owners or employees of auto body shops who stated that current rates for auto body repairs are too low. By contrast, a representative from the American Property Casualty Insurance Association (“APCIA”) testified that the insurance industry opposes government price fixing, arguing that a fixed rate would negatively affect Massachusetts consumers by increasing premiums. On July 29, 2025, the Advisory Board held a public meeting to discuss the survey responses from auto body repair shops. As noted above, the survey of auto body repair shops was sent to the 1,497 auto body repair shops that were registered with the Massachusetts Division of Standards. The Advisory Board received survey responses from 527 auto body repair shops, 37 of which were duplicates and several others of which had significant input errors. After removing the responses that were duplicates or that had significant input errors, there were a total of 476 auto body shop responses. Consequently, the response rate for auto body shops was 32%, which may or may not be representative of the total 1,497 active shops statewide. ¹⁷ At the July 29 meeting, the Advisory Board also discussed the elements of the proposed survey of auto insurance carriers with a market share in the Commonwealth of written premiums of 1% or more, and the same subcommittee that had designed the questions for the Advisory Board’s survey of auto body shops agreed to design questions for the survey. That subcommittee comprised four members of the Advisory Board: two representing insurers and two representing auto body shops. At the September 15, 2025, public meeting, the Advisory Board adopted that subcommittee’s recommended questions for the insurer survey. The Advisory Board further agreed that the Massachusetts Insurance Federation would distribute the survey to the auto insurance carriers. The results of the insurer survey were reported at the Advisory Board meeting held on November 24, 2025. A spreadsheet was created summarizing and analyzing the survey responses. ¹⁸ A public meeting was held on October 29, 2025, at the Tri Valley Tri-County Regional Vocational Technical High School to fulfill the legislature’s mandate to obtain information about trends of vocational high schools for students attending auto body technician courses. Interested parties were allowed to testify in person and virtually. Auto body repair shop owners and/or employees stated that labor rates are problematically stagnant and that the auto body industry is struggling to recruit auto body technicians because of low rates. None of the people who spoke at the public meeting identified themselves as an administrator of a vocational school. At the conclusion of the meeting, the co-chairs 17 Statistical testing of non-response bias was not performed. 18 The table summarizing and analyzing the survey responses from insurers is attached hereto as Appendix E. 9 requested that any interested party engaged in the auto body repair industry or auto insurance industry submit written recommendations before the Advisory Board’s next meeting, scheduled for November 24, 2025. The Advisory Board received thirteen submissions, all from the auto body repair shop industry. ¹⁹ On November 24, 2025, the Advisory Board met to review collected data, discuss written recommendations submitted by individual Advisory Board members, and acknowledge members of the public who had submitted written recommendations to the Advisory Board. The Executive Director of the Massachusetts Insurance Federation confirmed that no state in the United States has established a minimum auto body labor rate. At the conclusion of the discussion, which showed that there was no agreement on a recommendation amongst Board members, it was decided that the Advisory Board would not adopt a Board recommendation but would attach to this report any recommendation submitted by any individual Advisory Board member who wished to provide one. A final vote on this report was taken by all Advisory Board members at the December 22, 2025, meeting (a quorum having been determined to be present), and the vote results were in favor of adopting this report. The vote was tabulated as follows: In favor: 7, Opposed: 6, Absent: 1. 19 Each of those recommendations are available at https://www.mass.gov/info-details/auto-body-labor-rate- advisory-board 10 LIST OF PUBLIC MEETINGS APRIL 17, 2025, VIRTUAL PUBLIC MEETING Recording can be found at: https://www.youtube.com/watch?v=l7oWPmv1MXQ MAY 5, 2025, VIRTUAL PUBLIC MEETING Recording can be found at: https://youtu.be/DOPTWxJMwig?feature=shared. MAY 29, 2025, VIRTUAL PUBLIC MEETING Recording can be found at: https://youtu.be/HZavRjUPy1Q?feature=shared. JUNE 3, 2025, VIRTUAL PUBLIC MEETING Recording can be found at: https://youtu.be/p74w4YsvEUY?feature=shared JUNE 12, 2025, IN-PERSON PUBLIC MEETING Recording can be found at: https://youtu.be/GjM7PavBeqs?feature=shared. JULY 29, 2025, VIRTUAL PUBLIC MEETING Recording can be found at: https://www.youtube.com/watch?v=iM-ze9oVZXk SEPTEMBER 15, 2025, VIRTUAL PUBLIC MEETING Recording can be found at: https://www.youtube.com/watch?v=\_HgjVKn\_cFk&feature=youtu.be OCTOBER 29, 2025, IN PERSON AND VIRTUAL PUBLIC MEETING Recording can be found at: https://youtu.be/AaZVOoGS8T8 NOVEMBER 24, 2025, VIRTUAL PUBLIC MEETING Recording can be found at: https://www.youtube.com/watch?v=VKHiFk99PTA&feature=youtu.be DECEMBER 22, 2025, VIRTUAL PUBLIC MEETING Recording can be found at: https://youtu.be/qq-lV7OOeWI 11 ## FINDINGS BY THE AUTO BODY LABOR RATE ADVISORY ## BOARD **Survey responses of insurers in Massachusetts** Insurer surveys were sent to all auto insurers having 1% or more market share by policies written in Massachusetts. ²⁰ There are 17 such insurers, and the Advisory Board received survey responses from 16 of them. ²¹ The insurer survey asked for a given insurer’s prevailing labor rate for each of five categories of collision repairs: body repairs, refinishing repairs, mechanical repairs, structural repairs, and frame repairs. ²² The labor rate for any given category of repairs varies by insurer. For body repairs, the survey indicated that the labor rate paid by the 16 insurers ranged from $43 to $55. For mechanical repairs, the survey indicated that the labor rate paid by the 16 insurers ranged from $45 to $80. The state-wide weighted average of labor rates that the survey indicated were paid by insurers was calculated for each category of repairs, using data from the survey responses of the 16 insurers. A weighted average labor rate reflects each insurer’s market share. For example, when the weighted average labor rate is calculated, the labor rate of an insurer that has 19.0% of the market share is given more weight than the labor rate of an insurer that has only 1.6% of the market share. For body repairs, based on computations from the survey results, the weighted average of labor rates paid by insurers who write at least 1% of the auto policies in Massachusetts is $49. A table summarizing the survey responses from each insurer which returned a survey response is attached as Appendix E. The table also lists the weighted average labor rate for each category of repairs, as calculated based on survey information. For the readers’ convenience, some information from Appendix E is set forth in the table below: 20 Surveys were sent to the 17 insurers who write 1% or more of the auto policies in Massachusetts, because together they write 95% of the auto policies in Massachusetts. 21 The one insurer who did not submit a survey response has 1.1% of the market share of auto policies written in Massachusetts. 22 See the Insurer Survey at Appendix C. 12 **Prevailing Labor Rates Paid by Insurers in Massachusetts** Based on data from survey results Category of collision repair **Body Refinishing Mechanical Structural Frame** Range of prevailing labor rates paid by the 16 insurers who responded to the survey $43 - $55 $43 - $55 $45 - $80 $43 - $55 $45 - $58 Weighted Average of prevailing labor rates paid by the 16 insurers $49 $49 $55 $46 $50 **Massachusetts auto body repair shops’ survey responses** Auto body repair shop surveys were sent to the 1,497 auto body shops that are registered with the Massachusetts Division of Standards. Of those, 527 submitted survey responses. But some responses were duplicates and some contained input errors. After excluding the survey responses that were duplicates or that had significant input errors, there were a total of 476 survey responses. Stated differently, the Advisory Board obtained usable labor rate data from 32% of the auto body repair shops in Massachusetts The 476 survey responses from auto body repair shops are summarized in Appendix D. The survey of auto body repair shops requested labor rates that each auto body shop charges for six categories of collision repairs. The labor rates for each of those six categories of repairs varies by auto body shop. Because there is no available data on each repair shop’s market share of collision repairs, a weighted average of auto body shops’ labor rates was not calculated. Instead, for each category of collision repairs, the auto body labor rates provided in response to the survey by auto body shops were used to calculate the following measures: the average, the median, and the mean excluding outliers. Each of those measures is used to measure the central tendency of a set of numbers. 13 The table below sets forth, based on the survey data, the minimum and maximum labor rates that auto body shops in Massachusetts charge for each category of collision repairs, as well as the average, the median, and the mean excluding outliers. This information is summarized below: ²³ **Labor Rates Charged by Massachusetts Auto Body Repair Shops** Data based on survey response information ²⁴ Category of collision repair **Body Refinishing Aluminum Mechanical Structural Frame** Minimum labor rates $35 $30 $40 $40 $40 $40 Maximum labor rates $200 $200 $350 $250 $225 $250 Average (mean) $68 $67 $98 $108 $84 $85 Median $65 $65 $90 $105 $80 $80 Average (mean) excluding outliers $65 $64 $94 $104 $81 $82 Thus, for body repairs, the statewide average (mean), median, and average (mean) excluding outliers of labor rates charged by auto body shops, based on the survey data, are $68, $65, and $65. For mechanical repairs, the statewide average (mean), median, and average (mean) excluding outliers of labor rates charged by auto body shops, based on the survey data, for mechanical repairs are $108, $105, and $104, respectively. Notably, the numbers in this table are based on the survey responses submitted by 476 auto body shops, which is 32% of the shops that were sent surveys. If all 1,497 auto body shops in Massachusetts had responded to the survey, it is possible that the numbers in the table would be different. In other words, it is possible that the numbers in the table are not an accurate representation of the labor rates charged by all 1,497 auto body shops registered with the Massachusetts Division of Standards. 23 See also Appendix D. 24 Survey responses that were duplicates or that contained significant input errors were excluded from the data. The data in this table is based on the ⁴⁷⁶ survey responses that were not duplicates and that did not contain significant input errors. 14 **Data collected from neighboring states** The Advisory Board obtained data on labor rates charged by a sample of auto body repair shops in neighboring states, as reported by _LaborRateHero_ . As for labor rates paid by insurers in other states, the Advisory Board obtained the prevailing labor rates that insurers in Rhode Island reported to their state regulator as the amounts paid for body repairs. The labor rates that insurers in Rhode Island reported that they were paying for body repairs are listed, by insurer, in Appendix F. Based on those reported rates, a weighted average of those labor rates was computed and is set forth in Appendix F. ²⁵ For body repairs the weighted average of these labor rates in Rhode Island is $54. That is higher than the $49 weighted average labor rate that the Advisory Board’s survey result indicates insurers in Massachusetts pay for body repairs. The Advisory Board was able to obtain data on labor rates paid by insurers in Rhode Island because Rhode Island’s Insurance Division requires insurers to report prevailing labor rates that insurers use to determine the cost to settle automobile property claims. No other state in New England requires insurers to report such data and neither does New York. Accordingly, the Advisory Board could not readily obtain data on the prevailing labor rates paid by auto insurers in other states besides Rhode Island. **Data on the estimated impact that higher auto body labor rates paid by insurers in Massachusetts would have on consumers’ automobile insurance premiums** . Without data from automobile insurance carriers - e.g. data on claims, losses, the amount of losses that are attributable to auto body repairs, etc. – the Advisory Board itself could not estimate the impact that increased auto body repair labor rates would have on consumers’ insurance premiums. Insurer representatives on the Advisory Board, however, asked the AIB to estimate the impact that an increase in auto repair labor rates would have on consumers’ auto insurance premiums. That estimate is set forth in Appendix G. According to the AIB’s estimate, a $10 increase in the labor rate would result in an approximately 3% increase in consumers’ premiums for auto insurance. 25 As explained in the section of this report on the survey of insurers in Massachusetts, a weighted average labor rate reflects each insurer’s market share. That means that when the weighted average labor rate is calculated, the labor rate of an insurer that has 32.7% of the market share is given more weight than the labor rate of an insurer that has only 1.2% of the market share. 15 AUTO BODY REPAIR INDUSTRY’S POSITION During two public meetings that were held by the Advisory Board on June 12, 2025, at the State House, and on October 29, 2025 at the Tri-County Vocational Technical High School in Franklin, several witnesses associated with auto body repair shops opined that the auto insurance industry is artificially suppressing labor rates for repairing auto body damage to motor vehicles in the Commonwealth. They contend that labor rates are well below the amounts needed to operate an auto body repair shop, pay a reasonable wage to auto body repair technicians, safely repair damaged motor vehicles, and remain in business. Because of increasing demands on the automotive repair industry due to:  changes in technology (such as electric batteries, the use of carbon fiber and other newly fabricated materials for manufacturing motor vehicles, and Advanced Driver Assistance Systems);  the need to calibrate these advanced systems, the need to purchase sophisticated tools and diagnostic machines, the costs of health benefits and workers compensation insurance, and;  increasing overhead costs such as real estate taxes, debt service, insurance, environmental compliance, and administrative costs; the auto body repair shop witnesses opined that the repair industry is on the brink of disaster. In addition, auto body repair shop witnesses asserted that the labor rates paid by auto insurers in Massachusetts are insufficient to maintain the labor force in the auto body repair industry. At the hearings, testimony from members of the auto body repair industry repeatedly expressed concern about the reduction in the availability of workers in the auto body repair industry’s workforce, especially for collision repair technicians. They stated that the motor vehicle damage repair industry is losing technicians to other higher wage trades, such as plumbers, electricians, and carpenters. Thirteen people associated with auto body repair shops made written submissions to the Advisory Board. ²⁶ According to one auto body repair shop owner’s written submission, his shop pays employees for 2080 hours at an average rate of $35 per hour, the shop’s actual labor cost is $57.15 per hour. He explained in detail that the shop pays collision technicians an average of $72,000, plus 30% for FICA, Social Security, and other benefits, for 26 https://www.mass.gov/info-details/auto-body-labor-rate-advisory-board members--general-public 16 a total average cost of $94,000 per collision tech. The owner stated that, although the shop pays its collision techs based on 2080 hours, their actual billable hours are reduced by paid holidays, paid breaks, paid time during training, and paid time for conducting maintenance and inventory of tools. According to the owner, this means that the shop’s average technician is able to bill only 1,656 hours. Given that the shop pays its average collision technician $94,640 in annual wages, the shop owner concluded that the shop’s actual cost of labor for the average collision technician is $57.15 per hour. That shop owner further indicated that, even if the shop were paid enough to cover the actual cost of labor for an average collision technician, it would not be sufficient to cover other costs such management and other staff. ²⁷ According to another auto body shop representative’s written submission:  “Collision technician wages lag far behind other licensed trades, driving workforce shortages and trade school closures.  Small, independent shops are closing or consolidating, unable to reinvest in training, tooling, or environmental compliance required under state and federal law.  Consumers face increased safety risks when shops are forced to limit or omit (OEM-required) procedures to stay within insurer caps.” ²⁸ Some auto repair shop industry representatives contend that insurers pay dealerships significantly higher labor rates than they pay to auto repair shops for the same work. For example, one repair shop owner stated, “We repaired a 2024 Honda Accord with significant suspension damage. Despite having the training, equipment, and capability to perform the repair correctly in-house, the insurer refused to pay our mechanical labor rate. So we scheduled the work at our local Honda dealership and the insurer didn’t hesitate for a second to pay the dealership’s much higher mechanical labor rate.” ²⁹ Another auto body repair shop owner stated, “[w]hen I try to negotiate an increase in the labor rate with an individual insurance company I am most often met with ‘We don’t negotiate labor rates, what we pay is the market rate’, the truth is - I can only remember one insurance company sending out a survey one time asking what my rates were, and that was 27 https://www.mass.gov/doc/bill-johnson-recommendation/download 28 https://www.mass.gov/doc/edward-force-recommendation/download 29 https://www.mass.gov/doc/casey-sullivan-recommendation/download 17 well over 10 years ago. Where is their ‘market rate’ coming from?” ³⁰ No witnesses at the public meetings identified themselves as vocational school administrators, and the Advisory Board was unable to obtain vocational school data on enrollment trends. According to auto body repair shop witnesses, however, vocational technical schools in Massachusetts are experiencing decreased enrollment of students in auto body repair courses and some are planning the outright elimination of vocational educational courses for auto body repair technicians. They state that the Tri-County Regional Vocational Technical High School, where the Advisory Board held a meeting on October 29, 2025, is being replaced by a new $256 million state-of-the-art vocational technical High School and will omit the auto body repair technician course. They state that the new school is under construction at the site of the current school and that when the new school is completed, the school administration will eliminate the course for auto body repair technicians. They also stated that the Essex North Shore Agricultural & Technical School is eliminating its auto body repair technician course in 2026. Of the vocational technical high schools which currently offer courses for auto body repair technicians, auto body repair shop witnesses testified that enrollment is greatly decreased. For example, a person who testified in support of auto body repair shops stated that the Lynn Vocational Technical Institute, which traditionally had 40 students enrolled at a time, currently has only 7 students enrolled in 2025. Representatives of the auto body repair industry contend that, because of all those factors, the auto body repair industry in Massachusetts is in distress and in desperate need of a fix. Many of them ask that the legislature mandate a minimum auto body labor rate that must be paid by auto insurance carriers to repair damaged motor vehicles. POSITION OF AUTO INSURANCE CARRIERS In contrast, representatives of the auto insurance industry assert that there is an active and vibrant market at work in Massachusetts, that the auto body labor market is creating more competitive labor rates, and that hourly rates paid by insurers vary among insurers. Representatives of the auto insurance industry contend that the labor rate paid by auto insurers is only one part of the story. They state that a common business practice among auto body repair shops is balanced billing of consumers for any shortfall between what auto insurance carriers are willing to pay and what auto body shops charge. The insurance representatives contend that articles appear almost monthly in _New England_ 30 https://www.mass.gov/doc/kevin-comstock-recommendation/download 18 _Automotive Reports_ (a monthly trade magazine for auto body repairers) on how to balance bill consumers. They also state that the auto insurance carriers’ have Preferred Shops Programs that auto body shops can voluntarily join, that consumers who participate in Preferred Shops Programs cannot be balanced billed under these programs, and that insurers are required to guarantee work done by shops in their Preferred Shops Program. ³¹ They contend that legislation mandating that insurance carriers pay any minimum labor rate will definitely increase consumers’ auto insurance premiums. They also point to the AIB estimate of premium impact, which estimates an approximate 3% premium impact for a $10 increase in auto body labor rates. ³² Representatives of the auto insurance industry also contend that, if the legislature were to set a minimum labor rate, that would not guarantee that auto body repair technicians would receive a minimum established rate for their work or that students would opt for the auto body repair technician courses. Further, they opine that even if there were a mandated minimum rate to be paid by insurers to auto body repair shops, the shops that do not participate in their auto insurers’ Preferred Shops Program would continue balance billing consumers. Insurers conclude that there is an active and vibrant market at work and that the legislature should not interfere with it. Instead, insurers believe market forces should continue to be allowed to apply healthy competition, which they state is creating competitive prices and competitive policy premiums for consumers. 31 Preferred auto body repair shops cannot balance bill consumers. More specifically, if a repair is made at an insurer’s preferred auto body repair shop, neither the repair shop nor the insurer can require the claimant to pay more than (i) the amount that the insurer’s approved appraiser determines is the cost of the repair of the damage, plus (ii) the amount of any applicable deductible to have the repair work completed. 211 CMR 123.05 (4) (d). Another benefit to consumers required under the regulation is that insurers must guarantee the work performed by auto body repair shops participating in the Preferred Shops Program. 211 CMR 123.06 (5). 32 AIB’s analysis assumed that the current auto body labor rates paid by insurers in Massachusetts is $44.99, that labor constitutes 36% of the total repair cost, and that all-coverages average premium is $1,234 per vehicle. According to the AIB, increasing the labor rate from the assumed $44.99 – to $47.24, $49.49, $49.99, and $54.99 – would result in an estimated increase in consumer auto insurance premiums of $8, $16, $18, and $36, respectively. 19 ## RECOMMENDATIONS AND POTENTIAL SOLUTIONS The Advisory Board collected industry data on labor rates in neighboring states, survey results on auto body repair shop labor rates and additional information related to auto body labor charges and insurance payment rates. Once the data was collected, the Advisory Board analyzed the collected data. The survey questions are included in Appendix B and Appendix C of this report. At the meeting held on November 24, 2025, Advisory Board members discussed recommendations that were written by the Members of the Advisory Board. At the conclusion of the discussion, which showed that there was no agreement on a recommendation amongst Board members, it was decided that the Advisory Board would not adopt a Board recommendation but would attach to this report any recommendation submitted by any individual Advisory Board member who wished to provide one. No recommendation made by a member of the Advisory Board was adopted by the Advisory Board, and the recommendations made by the members of the Advisory Board are their own opinions. Those recommendations submitted by individual Advisory Board members are attached as Appendix H. ## ACKNOWLEDGMENT The Advisory Board would like to thank Erin Shannon of the Office of the Attorney General for her invaluable assistance with managing the vital aspects of the Advisory Board’s logistics, including maintaining internet and software connections for the virtual meetings, copying videos of the meetings, assisting in writing the agenda and minutes, and acting as clerk for all filings that were submitted to the Advisory Board. 20 ## APPENDIX APPENDIX A: BIOGRAPHIES OF BOARD MEMBERS **Michael D. Powers, Counsel to the Commissioner of the Division of Insurance** Co-Chair Michael D. Powers serves as the Counsel to the Commissioner of the Division of Insurance and was appointed by Massachusetts Insurance Commissioner Michael T. Caljouw. For nearly four decades and spanning five Commissioners, Mr. Powers has served as counsel to senior leaders. Mr. Powers specializes in labor law and major enforcement actions and served as the Commissioner’s designee on the 2022 Special Commission on Auto Body Labor Rates and currently to the Merit Rating Board. Between his time in private practice as a trial attorney, he has held several positions in government: as General Counsel to the Massachusetts Turnpike Authority (overseer of Boston’s Big Dig), General Counsel for the Massachusetts Highway Department, and Legal Counsel to the Boston Police Department. He is a graduate of Suffolk University, Suffolk University Law School, and is a member of the Massachusetts Bar. **Stacey Gotham, Actuary, Insurance and Financial Services Division** Co-Chair Stacey Gotham serves as an actuary with the Office of the Attorney General, and she was appointed by Massachusetts Attorney General Andrea Joy Cambell. Ms. Gotham is a property and casualty actuary with over three decades of experience in industry and regulatory positions. She has specialized in various lines of insurance including private passenger auto insurance and is a member of the Casualty Actuarial Society and the American Academy of Actuaries. Ms. Gotham is a graduate of Rutgers University, the State University of New Jersey. **Mark A. Merante, Deputy Commissioner and General Counsel** Board Member Mark A. Merante serves as the Deputy Commissioner and General Counsel at the Massachusetts Division of Standards and was appointed to represent the Division of Standards. He has over two decades of experience in state government and is an expert in administrative law. Mr. Merante is a graduate of Harvard University, University of Massachusetts Boston, and New York University School of Law. 21 **Paul C. Burke, CIC CRM LIA, Vice President, Bay Coast Insurance Company** Board Member Paul C. Burke was appointed by the Massachusetts Association of Insurance Agents. Mr. Burke has been involved in the insurance business for nearly five decades and in 2003, partnered and became the President of Hadley Insurit Group (HIG), become one of the agency’s three co-owners. Since 1996, he has served as the elected Town Moderator in his hometown of Swansea and has served on the Board of Directors of the Swansea Ambulance Corporation since 1994. He is a former member of the Swansea Board of Selectmen and the town Finance and Advisory Board. **Rick Starbard, Rick’s Auto Collision, Inc. (Revere, MA)** Board Member Rick Starbard was appointed by the Alliance of Automotive Service Providers. Mr. Starbard is the President and owner of Rick’s Auto Collision, Inc., an OEM certified auto body shop dedicated to providing high-quality collision repairs and restoration services in Revere, MA. Previously, he served as a City Councilor for the City of Lynn and was a Collision Repair Instructor at the Lynn Vocational Technical Institute, his alma mater. **Brian Bernard, Total Car Accident Repair Service of Raynham (Raynham, MA)** Board Member Brian Bernard was appointed by the Alliance of Automotive Service Providers. Mr. Bernard has been involved in the collision repair industry since 1999 as the business manager for a multi-shop operator. In 2010, he started his own collision repair shop in Raynham, MA. Total Care Accident Repair employs 17 people, has achieved I-CAR Gold Class recognition, and maintains several OEM Repair Certifications. Brian is an Executive Board Member of the AASP-MA. **Matthew Ciaschini, Full Tilt Auto Body & Collision (West Hatfield, MA)** Board Member Matthew Ciaschini was appointed by the Alliance of Automotive Service Providers. Mr. Ciaschini is the owner of Full Tilt Auto Body & Collision, a family-owned full- service collision and mechanical center in West Hatfield, MA. Mr. Ciaschini is also the President of the Alliance of Automotive Service Providers of Massachusetts. **Christopher S. Stark, Executive Director, Massachusetts Insurance Federation** Board Member Christopher S. Stark was appointed by the Automobile Insurers Bureau to represent the Auto Insurance Industry. He is the Executive Director of the Massachusetts and Rhode Island Insurance Federation where he oversees all aspects of the Federation’s organizational and lobbying efforts. Previously, Mr. Stark served as the Regional Vice President for the National Association of Mutual Insurance Companies and served as the Vice President of the Insurance Council of New Jersey. He is a graduate of Seton Hall University. 22 **Peter Smith, MAPFRE Insurance** Board Member Peter Smith is the Manager of Material Damage Claims at MAPFRE Insurance and was appointed by the Automobile Insurers Bureau to represent the Auto Insurance Industry. Mr. Smith has over two decades of experience in material damage claims and has been a licensed auto and truck damage appraiser since 1998. Mr. Smith has also served as a Board Member on the Auto Damage Appraiser Licensing Board since 2019, representing the automotive insurance industry. **Samantha Tracy, Arbella Insurance Group** Board Member Samantha Tracy is the Director of Claim Shared Services at Arbella Insurance Group and was appointed by the Automobile Insurers Bureau to represent the Auto Insurance Industry. Ms. Tracy has over two decades of industry experience in liability claims, quality assurance, and branch management. Her expertise includes leading cross- functional teams, stakeholder relationships, and implementing processes to drive continuous improvement. She is a graduate of California State University, Fresno. **JocCole “JC” Burton, Chief Executive Officer, Maven Construction, Inc.** Board Member JocCole “JC” Burton serves as the appointee for the Business Community. She is the Founder of Maven Construction (also known as Woodline Solutions), a women- owned Boston, Massachusetts based company provides full service general construction management, energy solution, and energy retrofits. Her expertise in high-performing green projects stems from directing more than 40 LEED new construction and energy retrofit projects where geothermal, solar arrays and solar farms are reducing traditional energy sources on average of 23%. Ms. Burton also serves on the City of Boston’s Board of Examiners and is a graduate of University of California Berkeley and Georgia State University. **Sean Kane, Safety Research Strategies, Inc. (Seekonk, MA)** Board Member Sean Kane of Safety Research & Strategies, Inc. serves as the Consumer Advocate appointee. He is the founder and president of Safety Research & Strategies, Inc., a firm that provides research, investigation, analysis, and strategies on motor vehicle and product safety issues. Mr. Kane is a recognized safety policy and regulatory advocate and has a background in critical analysis of federal safety regulations, product safety technology, and injury prevention efforts. Mr. Kane is a graduate of Stonehill College. 23 **John Kwoka, Neal F. Finnegan Distinguished Professor of Economics, Northeastern University** Board Member John Kwoka is the Neal F. Finnegan Distinguished Professor of Economics at Northeastern University, and he was appointed to fill the economist seat. Dr. Kwoka teaches and conducts research in the areas of industrial organization, antitrust, and regulatory economics. His emphasis is on the application of economics to current policy issues in various industries. Most recently he served as Chief Economic Advisor to Chair Lina Khan of the Federal Trade Commission. Dr. Kwoka is a graduate of Brown University and obtained his Ph.D. in Economics at the University of Pennsylvania. **David Brown, Service Director, Bill DeLuca Chevrolet-Cadillac Inc. (Andover, MA)** Board Member David Brown is the Service Director at Bill DeLuca Chevrolet-Cadillac Inc and was appointed by the State Automobile Dealers Association. Mr. Brown has over 25 years of experience overseeing auto body repair shop operations. Mr. Brown is a member of the National Automobile Dealers Association’s auto body shop 20-Group, which comprises franchised dealers’ auto body repair experts from twenty locations around the country and meets periodically to discuss ongoing issues in the auto body repair industry. 24 APPENDIX B: SURVEY QUESTIONS TO AUTO BODY SHOPS **Repair Facility Information** Please provide the following information about your repair facility. (1) Name of Repair Facility (2) Registered Shop Number from the Division of Standards (3) Facility's zip code (4) Facility's county in Massachusetts (5) Name of the individual filling out this survey (6) Email address to reach the individual above (7) Phone number of your facility **Labor Rates** Provide the labor rate your facility charges consumers on non-insurance repairs, for the following categories of repairs. While we understand that you may have charges for other services, we are only collecting data for the following categories. Please use numerals or leave blank if non-applicable. (1) Body Labor Rate (2) Refinishing Labor Rate (3) Aluminum Labor Rate (4) Mechanical Labor Rate (5) Structural Labor Rate (6) Frame Labor Rate **Additional Questions** Please use numerals or leave blank if non-applicable. (1) If your facility has fleet or governmental contracts, please provide the average labor rate charged for the past 12 months. (2) If your facility completes both insurance and non-insurance involved repairs, please provide a good faith estimate of the average monthly percentage of repairs completed without insurance company involvement. 25 APPENDIX C: SURVEY QUESTIONS TO INSURERS **Insurance Company Information** (1) Name of Insurance Company (2) DOI License Number (3) Name of the individual filling out this survey (4) Email address to reach the individual above (5) Phone number of the individual above **Labor Rate Information** Please provide the current prevailing labor rate your company pays for collision repairs for the following category of repairs. Please use numerals or leave blank if non-applicable. (1) Body Labor Rate (2) Refinishing Labor Rate (3) Mechanical Labor Rate (4) Structural Labor Rate (5) Frame Labor Rate **Additional Questions** (1) Please provide the number of body shops your company has under a referral contract: (2) Are any concessions required from body shops to become part of your referral program/network? (Y/N) (3) Does your company voluntarily conduct any randomized surveys of body shops in order to establish your company’s prevailing labor rates listed above? (Y/N) 26 APPENDIX D: AUTO BODY SHOP SURVEY SUMMARY **Summary and statistical analyses of survey responses from Massachusetts auto body repair shops** **Labor Rate No. of Survey** **Responses** **Mean** **(Average)** **Median Mean** **(Average) Excluding** **Outliers** **Minimum Maximum** Body 463 $68 $65 $65 $35 $65 Refinishing 463 $67 $65 $64 $30 $65 Aluminum 417 $98 $90 $94 $40 $96 Mechanical 456 $108 $105 $104 $40 $107 Structural 448 $84 $80 $81 $40 $82 Frame 459 $85 $80 $82 $40 $83 Govt. or Fleet Contract ³³ 103 $86 $65 $72 $30 $1500 Non- Insurance Repairs ³⁴ 386 28% 22% 24% 0% 100% Survey Responses ³⁵ 476 Shops that were sent a survey ³⁶ 1497 Response rate 32% Average of shops’ reported monthly percentage of repairs completed without insurance company involvement 28% Correlation between non-insurance percent and body labor rate 27% Source: Survey responses submitted by Massachusetts auto body shops 33 For shops that have fleet or governmental contracts, the 12-month average labor rate charged for those contracts 34 For shops that complete both insurance and non-insurance involved repairs, the good faith estimate of their average monthly % of repairs completed without insurance company involvement 35 Responses include all survey responses received except duplicates and responses with significant input errors. 36 Surveys were sent by the Massachusetts Division of Standards to all auto body repair shops that are registered with the Massachusetts Division of Standards. 27 APPENDIX E: INSURER SURVEY SUMMARY **Prevailing labor rates paid by the 16 insurers in Massachusetts that submitted survey responses to the Advisory Board** **Prevailing Labor Rates Paid by Insurers in** **Massachusetts** Based on data from survey results Category of collision repair **Body Refinishing Mechanical Structural Frame** Range of prevailing labor rates paid by the 16 insurers who responded to the survey $43 - $55 $43 - $55 $45 - $80 $43 - $55 $45 - $58 Weighted Average of prevailing labor rates paid by the 16 insurers ³⁷ $49 $49 $55 $46 $50 Sources: Data, other than weighted averages, is from the survey responses submitted to the Advisory Board by 16 insurers in Massachusetts that responded to the survey. 37 Weighted Average measures the average labor rate of a given category of collision repairs, weighted by the market share of each insurer. 28 APPENDIX F: RHODE ISLAND SURVEY **Rhode Island auto body labor rate survey of insurers** **Company Market Share Body Labor Rate** Progressive 32.7% $54 Geico 10.4% $55 Allstate 10.0% $49 Amica 8.4% $52 USAA 5.9% $54 Liberty 4.9% $52 Auto Club 3.1% $58 Travelers 3.0% $54 Farmers 2.6% $56 Nationwide 2.5% $55 Mapfre/Commerce 2.1% $52 Selective 1.4% $78 Main St 1.2% $50 Ohio Mutual 1.0% $62 **Total & Weighted Avg 89.2% $54** Source: Rhode Island Department of Business Regulation, Insurance Bulletin Number 2025-02 ³⁸ 38 https://dbr.ri.gov/sites/g/files/xkgbur696/files/2025-05/INS\_Bulletin%202025- 2%20-%20Auto%20Body%20Labor%20Rate%20Survey%20effective%20May%202025.pdf 29 APPENDIX G: AIB ESTIMATION OF PREMIUM IMPACT **Estimated impact of increase to auto repair labor rate** Premium impact estimate based on 2025 AIB private passenger advisory rates. Assumptions Current Labor Rate $44.99 Labor Cost % of Total Repair Cost 36% Current All-Coverages Average Premium (per vehicle) $1,234 **Estimated Premium Impact** **Assumption Increase in Labor Rate** **Labor Rate Total $ Impact for** **Industry** **% Impact per** **Vehicle $ Impact per Vehicle** 5\.0% $47.24 $37,644,000 0.6% $8 10\.0% $49.49 $75,287,000 1.3% $16 $5.00 $49.99 $83,671,000 1.4% $18 $10.00 $54.99 $167,342,000 2.8% $36 Source: Automobile Insurers Bureau of Massachusetts 30 APPENDIX H: BOARD RECOMMENDATIONS **Recommendations by Various Advisory Board Members**  **Brian Bernard** , Owner of Total Care Accident Repair Service of Raynham  **Matthew Ciaschini** , Owner of Full Tilt Auto Body & Collision  **Rick Starbard** , Owner of Rick’s Auto Collisions, Inc.  **David Brown** , Service Director of Bill Deluca Chevrolet-Cadillac, Inc.  **Joint recommendation of** o **Christopher Stark** , Massachusetts Insurance Federation; o **Peter Smith** , MAPFRE Insurance; and o **Samantha Tracy** , Arbella Insurance Company  **John Kwoka** , Neil F. Finnegan Distinguished Professor of Economics, Northeastern University  **Sean Kane** , President of Safety Research and Strategies, Inc. **Introduction to the Variable Rate Solution** Submitted by Brian Bernard 11/17/2025 The Auto Body Labor Rate Advisory Board is tasked with making recommendations for a minimum labor rate that insurers would reimburse to registered repair shops. There is no single rate that meets the needs of everyone, hence the need to recognize a Variable Rate Solution. The more you understand about the collision repair industry, the more complex the task becomes. Our recommendation will have a significant impact on the following stakeholders:  **Employee Protection** o Employee wage growth – Stable income to afford high cost of living o Attract future talent into the trade schools o Keep Collision Technology programs open at our trade schools o Reduce or eliminate the exploitation of undocumented workers o Reduce or eliminate ‘under the table’ employment practices for businesses unable to afford legitimate wages o Stem the tide of attrition which strips the industry of talented workers to other industries o Protection for more workers with Workers’ Compensation Insurance o Our industry must hire 134,000 technicians over the next 10 years to backfill attrition due to retirement or people leaving the industry according to BLS o Low wages for high skilled work make this an unattractive career choice.  **Consumer Protection** o Complete indemnification for insurance paid repairs will eliminate the need to collect short-pay balances from consumers o Safe and accurate repairs are performed by better trained technicians o Maintain a strong licensing board (ADALB) with emphasis on consumer protection o Enforce and protect consumer’s right to choose a repair facility o Consumers benefit from a ‘lower than expected’ increase in premiums to support safe and accurate repairs.  **Small Business Protection** o Maintain a strong licensing board (ADALB) with emphasis on consumer protection and fair negotiation o Enforce and protect consumer’s right to choose repair facility o Enhance & enforce anti-steering laws as consumers are being told to avoid certain repairers. o Break the ‘command and control’ regulations that prevent competition and hinder free market principles. o Insurers recognize and pay true market pricing (which is the same price consumers pay when insurance is not involved). o Reduce unfair competition from unregistered shops and shops that exploit undocumented workers  **Massachusetts Protection** o Increased income taxes from higher wages and larger employee rosters with legitimate payroll employment o Increased tax base for the commonwealth from stronger businesses o Increased sales tax base from repair shops that can afford modernization of their tools and equipment. o Increased coverage for Workers Compensation and health benefits through employment which lessens the strain on state subsidies and hospitals. o Illegal shops do not comply with environmental regulations causing harm to our land, water and air.  **Insurer Protection** o A strong repair industry will be able to meet the demand of repairing today’s high-tech cars for the motoring public o Create a reasonable range of rates allowing insurers to maintain cost control while respecting free market principles for small businesses. o Insurer concern of escalating labor rates going exclusively into the pockets of shop owners is mitigated as the basis for reimbursement rates would be predicated on labor force wage growth. o Development of free market principles will reduce exposure to potential federal anti-trust violations. The best recommendations from this board would show direct improvement for each of the above-mentioned stakeholders. **Variable Rate Solution** A collision repair facility sells skilled labor and related services to return vehicles to pre- accident condition and safety. This recommendation is for non-specialty passenger vehicles. Specialty vehicles would command unique pricing outside of this model which would be negotiated between parties. Labor sales for collision repairers must be substantial enough to pay for the direct wages and benefits of technicians **plus** overhead cost of running the business (including support staff) **plus** a required profit margin. As such, the labor rate for each shop would be different based on their unique cost structure. The Variable Rate Solution identifies a range of acceptable rates, recognizing the uniqueness of shops. The inconvenient truth is that some shops today do not even deserve the suppressed reimbursement rates from insurers. There are shops that don’t train technicians. There are shops that fail to perform OEM procedure research to ensure cars are repaired to manufacturer engineering specifications. There are shops that ignore safety protocols as a cost cutting measure. There are shops that perform unconscionable shoddy repairs to vehicles, and their customers are unaware of the potential hazard and risk to their lives. There are shops that provide illegitimate payroll employment. These shops should be prohibited from conducting business and they should not benefit from increasing labor rates. Consumers deserve a higher standard. It would be improper for either the state or an insurer to dictate a labor rate for an entire market as they are incapable of quantifying the uniqueness among repairers. This is why we need a Variable Rate Solution. We recognize the state and insurers are stakeholders who ensure:  Consumers have a fair marketplace where their cars are repaired safely  Consumers are afforded stable insurance premiums with quality coverage that truly indemnifies them in the event of a claim **CALCULATION of the Variable Rate Solution** In this model, the **Minimum** Mandated Rate would be $63.00/Hour and the **Maximum** Mandated Rate would be $126.00/Hour. The Rates would be predicated on Technician Wages SOC Code 49-3021 using the 75 th Percentile Hourly Wage for Massachusetts as reported by the Bureau of Labor Statistics. We will consider this the Base Wage in the calculation below: Bureau of Labor Statistics provides 2023 data that the 75 th percentile of Technician Wage was $31.50/hour in Massachusetts. SOC Code 49-3021  Base Wage = $31.50/hour  Add minimum benefit and overhead load factor of 100%  Minimum Mandated Rate = $63.00 ($31.50 + 100% load factor = $63.00)  Repairers can accept the Minimum Mandated Rate **OR** establish their own Prevailing Market Rate according to the following: o See House Bill 1260 (attached) for methodology on how to calculate Prevailing Market Rate o House Bill 1260 formulation is based on the method that car dealers use to establish their labor rate for warranty and insurance repairs. o **Training achievement reaching “I-CAR Gold Class” would be a prerequisite for a shop to earn their Prevailing Market Rate from insurers.**  The Variable Rate Solution would recognize any Prevailing Market Rate up to **the cap of twice the Minimum Mandated Rate** . o **Minimum Mandated Rate = $63.00** o **Maximum Mandated Rate = $126.00 ($63.00 x 2)**  If Prevailing Market Rate is less than or equal to Maximum Mandated Rate, then insurer pays the Prevailing Market Rate.  If Prevailing Market Rate is greater than Maximum Mandated Rate, then insurer only pays the Maximum Mandated Rate. o A shop is not restricted from charging a balance bill for an overage o An insurer may not steer work towards or away from any shop for any reason  The Minimum Mandated Rate shall be updated annually based on BLS Data. o If the BLS does not have updated data for the current year, then CPI data shall be used in the interim until BLS is able to report such data. **Regulatory Recommendations**  Division of Standards and the Legislature shall establish modern requirements for obtaining/maintaining Repair Shop Registration Number. Consumers deserve better quality repairs.  Minimum training should be required for all shops  I-CAR Gold Class training recognition is VERY low in Massachusetts – Set target for 40% versus the 11% we have today.  Changes are required to AIB Standard Policy o Part 4 Collision: “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 conveniently located to you.” o This policy statement is incongruent to free market forces at work and wreaks of potential federal anti-trust violations.  Insurance industry to sponsor a $10,000,000 grant for tool upgrades to the repair industry to aid in closing the technology gap created by long term systemic rate suppression and monopsonistic power.  Over the past 30 years insurers have dictated unreasonably low reimbursement rates. While the industry has suffered nationally, Massachusetts has suffered the most with its average reimbursement rate 32.7% lower than the national average while the cost of living is 41.2% higher than the national average. Our industry is ill-equipped due to the actions of insurers.  Insurance industry to sponsor a $3,000,000 advertising program over 5 years to encourage students into the Collision Tech programs at Massachusetts trade schools. Failure to attract talent will amplify the issues in the industry if not addressed immediately. The future earnings potential as a technician makes it prohibitive for our kids to learn the trade, purchase the essential tools for success, have a family and buy a house in one of the most expensive places to live. The dream has been extinguished by the actions of insurers, and they should participate in rebuilding it.  The Auto Body Labor Rate Advisory Board shall continue to meet in perpetuity, a minimum of twice per year, to ensure the Variable Rate Solution continues to meet the needs of all stakeholders. **House Bill 1260** Bill H.1260 SECTION 1. Chapter 100A of the General Laws, as appearing in the 2022 Official Edition, is hereby amended by inserting after section 14 the following section:- Section 15. The commissioner of insurance shall set the minimum hourly labor rate that insurers shall pay on insured claims for repairs made by registered motor vehicle repair shops. In determining the minimum rate paid by insurers on all Massachusetts insured motor vehicle damage claims, the compensation for the minimum hourly labor rate that insurers shall pay on insured claims for repairs made by registered motor vehicle repair shops shall be calculated by utilizing the method described in this section: The compensation for the minimum hourly labor rate that insurers shall pay on insured claims for repairs made by registered motor vehicle repair shops shall be established by the repair shop submitting to the insurer 100 sequential customer-paid collision repair orders or 60 consecutive days of customer-paid collision repair orders, whichever is less, from which the repairer shall calculate the average customer paid hourly labor rate, which shall be declared the minimum hourly labor rate that the insurer will pay to the repairer. The minimum hourly labor rate shall go into effect 30 days following the declaration, subject to audit of the submitted collision repair orders by the insurer and a rebuttal of the declared rate. If the declared rate is rebutted, the insurer shall propose an adjustment of the minimum hourly labor rate based on the rebuttal not later than 30 days after submission. If the repairer does not agree with the minimum hourly labor rate proposed by the insurer, the repairer may file an action with the commissioner of insurance 30 days after receipt of the proposal by the insurer. In an action commenced under this section, the insurer shall have the burden of proving that the rate declared by the repairer was inaccurate or unreasonable. SECTION 2. Section 113B of chapter 175 of the General Laws, as appearing in the 2022 Official Edition, is hereby amended by inserting, after the word “commissioner” in line 14, the following:- “; provided, however, that collision repair hourly labor rates, set pursuant to section 15 of chapter 100A, shall not be included when considering programs to control costs and expenses under this section or section 113H.” SECTION 3. Within 90 days of the enactment of Section 1, the commissioner of the division of insurance shall promulgate regulations necessary to implement the provisions of Sections 1 and 2, inclusive. # **Establishing a Fair Auto Body Labor Rate in Massachusetts** ## **Introduction** Massachusetts’ collision repair labor rates have remained stagnant for years, creating a large gap between what body shops are paid and the actual costs of doing business. The prevailing insurance-paid labor rate for auto body work in Massachusetts was an average of **$44.99 per hour in Q1 of 2025** , which is the _lowest in the country_ and has barely budged for decades. By contrast, other skilled services charge far more, for example, **plumbers and electricians** routinely charge over **$200/hour** , and even general **auto repair shops** (mechanical work) often charge **$150/hour or more** in labor. This outdated $45/hr rate is clearly **out of step** with economic reality, making it difficult for body shops to attract skilled technicians and cover their overhead. To address this, a **data-driven calculation** can be used to determine a fair and competitive labor rate for auto body repairs in Massachusetts. The following outlines a step-by-step methodology to calculate an appropriate labor rate, tailored to Massachusetts’ conditions and benchmarked against comparable trades. ## **Step 1: Base Local Wage Data for Technicians** Any fair labor rate should start with the actual **wages earned by auto body technicians** in the local market. According to the U.S. Bureau of Labor Statistics (BLS), _“Automotive Body and Related Repairers”_ (occupation code 49-3021) in **Massachusetts** earn about **$28–$29 per hour on average.** This equates to roughly **$58,000–$60,000 per year** for a full-time technician, representing the **base pay** for skilled collision repair techs in the state. (By comparison, the national median wage for this occupation is about **$24–$25 per hour** , reflecting Massachusetts’ higher cost of labor.) This local wage figure (~$28–$29/hr) is essentially what a body shop must pay to hire and retain a qualified technician; it **does not** include any overhead or profit. Starting our calculation from this Massachusetts-specific wage grounds the labor rate in current market reality for technician pay. In short, **$28–$29/hr** is the _bare minimum_ cost of the labor itself (for the technician’s salary alone). _Why this matters:_ Using up-to-date **local wage data** ensures our baseline is realistic. If we mistakenly used national averages or older figures, we would undervalue Massachusetts technicians, who earn more due to the state’s higher living costs and demand for skilled labor. By beginning with the **Massachusetts average tech wage (~$28–$29/hr)** , we ensure the labor rate we calculate will at least cover the **true labor cost** in this state. ## **Step 2: Accounting for Overhead and Expenses** Simply charging a rate equal to the technician’s wage is not viable, an auto body shop has **many additional costs** on top of that base pay. **Overhead expenses** include employer payroll taxes and contributions (Social Security, Medicare, unemployment insurance), benefits like health insurance and retirement, paid time off, ongoing training and certifications, expensive equipment (frame machines, spray booths, diagnostic tools), consumable materials, facility rent or mortgage, utilities, insurance (liability, workers comp, etc.), and compliance with environmental and safety regulations. All of these must be covered by the labor rate charged to customers. In practice, these overhead items add substantially to the cost of employing a technician, often on the order of an **additional 15%–30%** on top of wages just for the **payroll burden and benefits.** And that is before even accounting for shop overhead and profit margin. Furthermore, not every hour a technician is on the clock is billable to a customer (due to downtime, administrative tasks, etc.), so the billing rate must be higher to compensate for non-billable time. Also, the labor rate collected pays for all In-Direct labor staff like Customer Service Representatives, book keepers, managers etc... It is a common rule in the auto repair industry that the **labor rate needs to be a multiple of the technician’s hourly wage** in order to cover all these expenses and allow for a sustainable profit. Many successful repair shops aim for a labor billing rate roughly **2\.5 to 3 times** the direct pay rate of their technicians as a common industry practice. This multiplier accounts for the full burden of overhead (as described above) and a reasonable profit margin. Using this rule of thumb on our Massachusetts wage data: if a technician earns about ~$28–$29/hr, their **fully burdened cost** (with ~30% in payroll taxes/benefits) might be on the order of **$36–$38/hr** . Applying an industry-average markup, a shop would need to charge on the order of **2\.5–3× that amount** to break even. For example, even using a mid-range factor of 2.7× and a slightly conservative loaded wage (~$31/hr), we get: **$31 × 2.7 ≈ $83.70 per hour** So roughly **$84/hr** is the **minimum labor rate** required _just to cover the technician’s pay and the shop’s overhead_ at a sustainable level. In other words, a body shop needs to bill on the order of **$80– $85 per hour** for labor **per technician** simply to **break even** (before considering any additional profit or local cost factors). This aligns with industry norms; auto repair businesses typically mark up labor rates to stay solvent. _Why this matters:_ This step ensures the proposed labor rate isn’t arbitrary. It directly ties the rate to the **actual cost structure** of running a shop in this field. By using a standard multiplier on the known wage (here, ~2.5–3× the wage), we’re accounting for real-world expenses, from the $100k+ spray booth to the technician’s health insurance, that must be paid out of the labor charges. The resulting figure (~$84/ hr) represents a **data-backed breakeven point** for Massachusetts shops given the current wage and overhead levels. Breaking even is not enough. ## **Step 3: Adjusting for Massachusetts’ Cost of Living** Massachusetts is a **high-cost state** , and this affects everything from salaries to rent to utilities. To ensure our labor rate fully reflects the economic environment, we need to adjust the preliminary rate upward to account for Massachusetts’ well-above-average cost of living. One way to do this is by using regional cost indices. Data show that Massachusetts consistently ranks among the **most expensive states** in the U.S. on cost-of-living measures. For instance, comprehensive cost-of-living indexes (which include housing costs) estimate Massachusetts at around **40%–45% higher than the U.S. average** in overall living expenses. (Massachusetts was recently ranked the 2nd most expensive state, only behind Hawaii. Even more moderate metrics like the Bureau of Economic Analysis’s Regional Price Parity put Massachusetts prices roughly 8–10% above the national baseline, which is still among the highest in the country. To be **conservative yet realistic** , we will use a + **25%** adjustment to represent Massachusetts’ higher costs relative to the nation. In other words, we assume that operating a business in Massachusetts costs roughly one-quarter more than the U.S. average. Applying this 1.25× cost-of-living factor to our prior result (~$84/hr) gives approximately **$105 per hour** (calculated: $83.70 × 1.25 ≈ $104.63). This yields an _inflation-adjusted_ labor rate of about **$100–$105 per hour** for Massachusetts. Another way to view this is: a $105 Massachusetts rate would have roughly the same purchasing power for a shop as about $84/hour would in an average-cost state. We’ve essentially scaled our figure to match Massachusetts’ higher expenses in rent, energy, insurance, taxes, and so on, which tend to run 20–30% above U.S. norms on many metrics. _Why this matters:_ If we calculated a rate using only national cost assumptions, we’d **undervalue the service in Massachusetts** , where everything from real estate to utilities is pricier. Massachusetts shops and workers face higher baseline costs, technicians have higher living expenses, and shops pay more for overhead, so a higher labor rate is justified to keep the business viable. By **adjusting for regional cost-of-living** , we ensure the recommended rate keeps pace with Massachusetts’ economic reality and doesn’t leave local businesses at a disadvantage. This +25% adjustment is deliberately a bit lower than the full estimated cost difference (~40%+), which builds in some conservatism while still acknowledging that **Massachusetts is a costly state to do business** . ## **Step 4: Benchmarking Against Comparable Market Rates** After calculating a data-driven rate (roughly **$105/hour** ), it’s important to validate this figure against the broader market , i.e. what other skilled trades and automotive services are charging in Massachusetts. This “sanity check” ensures our proposed range is neither unrealistically high nor leaving money on the table. Here’s how our estimated rate compares: • **Mechanical Auto Repair Rates:** Independent **general auto repair shops** in Massachusetts (for mechanical work like engine or brake repairs) routinely charge well into the triple digits per hour. It’s common to see customer-paid labor rates around **$175 per hour or higher** for mechanical and diagnostic work. In fact, recent industry surveys put the **average auto repair labor rate** in Massachusetts in 2024 at around **$130–$135 per hour** autoleap.com. Neighboring Northeast states are similar or higher (e.g. New York averages ~$135). Our proposed collision labor rate of ~$100–$105/hr is **below** these prevailing mechanical rates. This suggests the number is reasonable and not inflationary from a consumer perspective, it’s actually still _cheaper_ than what Massachusetts drivers already commonly pay for other auto services. • **Dealership Service Rates:** Dealership service departments tend to have even higher posted labor rates. Many Massachusetts new-car **dealerships** charge on the order of **$150–$250 per hour** for repairs in their service centers, depending on the brand and location. For example, luxury brand dealers or shops in the Boston metro often exceed $200/hr. A ~$105 collision labor rate would **still be lower than or comparable to typical dealership prices** , reinforcing that it lies in a competitive and acceptable range. • **Other Skilled Trades:** It’s also illuminating to compare our figure to other skilled trades beyond automotive. **Plumbers, electricians, and HVAC technicians** in Massachusetts routinely charge well over **$200 per hour** for their labor. Even less specialized services can have high rates, for instance, **bicycle repair shops** often charge over **$100/hour** for labor in Massachusetts. These benchmarks highlight that labor-intensive services in any high-cost state command high hourly rates across the board. In that context, a **$100–$115/hour** rate for certified auto body repair, a trade requiring significant training, sophisticated equipment, and heavy regulatory compliance, is entirely justifiable and in line with market norms. By contrast, the current ~$45 rate for insured collision work is **wildly out of step** with every other trade or service (it’s so low that even a bike mechanic earns more per hour than a collision technician under the present insurance reimbursements). This stark comparison underscores why a reset is needed. **In summary,** looking at the wider market confirms that a collision repair labor rate on the order of **$95 to $115 per hour** is **reasonable** for Massachusetts. It falls well within the range of what Massachusetts consumers _already pay_ for similar labor in other automotive contexts, and it remains far below what is charged in other skilled trades. Our calculated figure (~$105) sits comfortably mid-range in this $95– $115 band, indicating it is a balanced target. ## **Step 5: Rate Increase Roll-out Plan** ### **Objective** Increase the labor reimbursement rate from the current **$46/hour in 2025** to a **2030 nominal rate that equals $105 in today’s dollars** , adjusted for inflation. ### **Step 1: Determine 2030 Equivalent of $105 (Future Value)** Using the **future value formula** : **FV = PV × (1 + i)^n FV = $105 × (1.03)^5 = $105 × 1.15927 ≈ $121.73** **Target Nominal Rate for 2030: $121.73/hour** ### **Step 2: Calculate Constant Annual Growth Rate from $46 to $121.73** **121\.73 = 46 × (1 + r)^5** Solving gives: **r ≈ 21.3% annual increase** ### **5-Year Rollout Table (2026–2030)** **Year Nominal Rate Real Value (2025 Dollars) Annual % Increase** 2025 $46.00 $46.00 – 2026 $55.81 $54.17 +21.3% 2027 $67.71 $63.78 +21.3% **Year Nominal Rate Real Value (2025 Dollars) Annual % Increase** 2028 $82.16 $74.13 +21.3% 2029 $99.66 $85.89 +21.3% 2030 $121.73 $105.00 +21.3% By **2030** , the rate will be **$121.73/hour** , matching the **real value of $105/hour in 2025** when adjusted for projected inflation. ### **Implementation Considerations** • **Consistent 21.3% annual increases** should be adopted as part of regulation or insurer reimbursement policy updates starting in 2026. • The **2025 base rate of $46/hour** should be formally documented as the starting point. • The **floor should be indexed** annually **starting in 2031** using an agreed-upon inflation metric (e.g., Boston CPI or Massachusetts RPP). ### **Benefits of This Model** • Predictable, enforceable year-over-year increases. • Prevents recurring rate stagnation (as experienced since the 1980s). • Supports vocational workforce stability and investment planning for shops. • Complies with **Advisory Board mandates** for inflation modeling, cost structure evaluation, and labor market alignment. ## **Conclusion and Recommendation** Using objective data and a transparent methodology, we have derived a fair Massachusetts auto body labor rate of roughly **$105 per hour** (with a sensible range of about **$95–$115/hr** ). This figure was arrived at by **grounding the rate in actual technician wages** , scaling it for realistic business overhead, and adjusting for Massachusetts’ higher cost of living, then cross-checking against prevailing market rates in related fields. The analysis demonstrates that the current $45/hr rate is untenable and unfairly low, while a rate of ~$100+ is well-supported by economic data and industry benchmarks. An extended roll-out plan would help both consumers and the insurance industry mitigate the impact of the rate of increase. **Adopting a labor rate in the ~$105/hr range** would allow Massachusetts body shops to **pay technicians competitive wages** , cover their operating costs (equipment, training, insurance, etc.), and invest in the quality and safety of repairs, all while remaining in line with what consumers already pay elsewhere. This change would help stabilize the collision repair industry in the Commonwealth by making it financially viable to run a modern, compliant shop and attract skilled workers. In short, **$100–$105/hr** is a professional, data-backed rate that reflects the _true cost_ of collision repair service in Massachusetts’ economy. I respectfully urge the Auto Body Labor Rate Advisory Board to consider these findings and move toward implementing a fair and **equitable labor rate** that will sustain this industry and protect consumers in the long run. **Sources:** The above analysis cites data from the U.S. Bureau of Labor Statistics for wage figuresbls.gov, industry guidelines on labor rate markupsblog.autovitals.com, economic cost-of-living indicesrentcafe.com, and comparisons to other trades and automotive sectors drawn from surveys and reportsautoleap.com repairerdrivennews.com , among others, to ensure that all claims are well-founded in evidence. Each citation corresponds to the relevant supporting document for verification. ### Rick Starbard ABLRAB Member Opinion Submission November 21, 2025 ### To be honest, I don’t know where to begin. ### The collision repair industry in Massachusetts is calamity. Reimbursement rates paid to collision repair shops have remained mostly stagnant for almost forty years while business costs and salaries have soared, especially in Massachusetts. Vehicles have become so much more complex and are now rolling computer systems, manufactured from an array of materials that quite frankly, most of the industry is ill-equipped and ill-trained to safely and properly repair. ### Technicians who have stuck it out because they had nowhere else to go are ageing out and retiring at a rapid pace. Vocational schools, which are the farm system that most trades rely on for new technicians, have come to realize that students are far better off in other trades because the salaries and benefits offered in the collision repair industry do not compare to the pay, benefits and growth that their peers enjoy in any other field. As a former collision repair instructor myself, I saw the collision repair program at the Lynn Vocational Technical Institute go from one of the best equipped programs in the state and one of the top drawing programs in the school, to become a place that the school places the kids that can’t get into the programs that they want essentially making the collision program the dumping ground for kids that don’t want to be there. Other schools are simply closing programs after investing millions of dollars in state and federal funds while others are not even including collision programs in new schools under construction as the program doesn’t even fit the bill as a dumping ground for students who don’t fit anywhere else. I recently spoke to a former teaching colleague who is teaching at Northeast Metro Tech in Wakefield. He told me that his sophomore class went from 22 students to nine because the parents of 13 students had their children removed from the program with pay being the number one issue. ### This is the third auto body labor rate working group that the legislature has convened to address the exceedingly low labor rates paid to repair insured collision damaged vehicles in Massachusetts. I served the first group in 2008 who found that the legislature should act if rates had not moved significantly in the following year after managed competition was allowed in the state. Thirteen years and two working groups later NOTHING has changed. While I applaud the efforts of all who have served on this board for the past year, I sincerely hope that the outcome is different this time, but I am not holding my breath. After over 42 years of running a collision repair business and serving on industry boards both locally and nationally while constantly investing in the latest equipment and training hoping that it ### would ultimately pay off has made me to come to realize that I have been on a fool’s errand. My business partner and I can’t wait to get out and none of our family members want anything to do with taking over the business. ### We have all seen the surveys. We have all heard the impassioned pleas by members of the collision repair industry. They are the exact pleas for relief that we heard back in 2008, albeit more desperate this time around. We see school systems divest from training for the industry while the knowledge needed to repair today’s ever-changing vehicles is at an all- time high. The insurance industry has sought out a minority of shops in the state who are desperate for work but unable and unwilling to compete in an open market to essentially strongarm them into signing a contract for an artificially low rate so that they could call that a market rate that they would pay for all repairs. As a collision repair shop owner, we are forced to balance what we can afford to give to our employees and what we must pay to keep the doors open, including insurance costs. While our employees are paid less than their contemporaries in other trade areas, they fall way behind in the benefits that we can afford to offer. In fact, some of our employees decline health insurance because they can’t afford their portion of the premium payments. The bottom line is that the cost of doing business in Massachusetts is one of the highest in the country while the labor rates paid to repair collision damaged vehicles is undeniably the lowest. ### The numbers show that auto body labor rates should be in the $120 per hour range at a minimum. I think that should be the goal going forward over time as I understand that while reasonable and necessary, change that drastic would be tough to absorb. My thoughts are that minimum labor rates paid for paint/body be $80 per hour and adjusted to $100 per hour after year one and $120 the following year with increases tied to the CPI and market conditions being considered going forward. Minimum rates for structural, mechanical and exotic materials should be raised accordingly. Once the rates are adjusted to adequately reflect reality, a board of industry stakeholders should be immediately convened to set minimum standards to be considered a Massachusetts registered repair shop to be enforced by the Division of Standards, something that has not changed since the inception of the shop registration system almost 40 years ago. Industry stakeholders should also be working to fix our broken system of attracting and training the next generation of technicians, but this cannot be achieved at any level until the minimum rates paid for collision damage repairs in the Commonwealth reflect reality. ### In conclusion, I as an independent business owner, am not enthused at the thoughts of asking the state to set rates. That being said, I understand that the latitude that has been given to the insurance industry to control the rates paid for collision repairs is not going to change. In a perfect world, I would prefer to compete in an open market without insurers using contracts that I didn’t sign used against me because they have weaponized a small number of repair shops who cannot compete for themselves. ### Respectfully submitted ### Rick Starbard Rick’s Auto Collision, Inc. 655 North Shore Rd. Revere, MA 02151 October 30, 2025 To Whom it may concern, My name is David Brown, and I am a current appointee to the Massachusetts Auto Body Labor Rate Commission. I want to say thank you for the opportunity to be a part of this process. As you are aware I am tasked with coming up with a recommendation for a fair and equitable labor rate. This issue is a very polarizing one. There is a lot of data as well as a lot of emotions at the meetings. I am glad that the board collected data not just from the surveys. They also collected inflation data, vocational-technical school trends, labor rates in other states as well as other additional data. I thought about giving a short one-line recommendation. After a lot of deliberation, the people that have set this board in motion deserve more than that. Since the labor rate has not been allowed to adjust naturally for a long time it has skewed not only the rates in our state but also the surrounding states that may use our data to determine their rates. It is my belief that we need to cast a larger net to calculate the correct rate for this state. 1\. Cost of living adjustments since 1986(the year the state adjusted the labor rates) to current would put the rate at $106.67 2\. The national average of body labor rate times the cost of living in this state would put the rate at $97.55 3\. Massachusetts Equal Pay Act (MEPA). The insurance companies will pay the service department $189.00 per hour for working on a vehicle. Shouldn’t the body shops get reimbursed at the same rate. On the current Auto Body labor Rate Commission survey. The mechanical rate came back as: Mean = $108.00 Median = $105.00 Trimmed Mean= $106.70 It is my recommendation to put the body shop rate at $106.70 on par with the mechanical rate. Equal pay for equal work. Finally, I recommend that we create a process so that a rate can be established annually as set forth in this legislative session’s House 1260 (https://malegislature.gov/Bills/194/H1260) and House 1285 (https://malegislature.gov/Bills/194/H1285) through an advisory committee as set forth in Senate 797 (https://malegislature.gov/Bills/194/S797). In this way we can guarantee that a rate will be reviewed and established annually as economic and industry conditions change. Thank you. **Recommendations and Summation of Positions Submitted** **On Behalf of the Insurance Industry** Massachusetts Auto Body Labor Rate Advisory Board November 24, 2025 **Introduction** The insurance industry submits this position statement following the hard work engaged in by the Auto Body Labor Rate Advisory Board (“the Board”). The Auto Body Labor Rate Advisory Board was established to “address _any issues related to_ auto body labor rates”. The enabling statute that created the Board provides that: _The advisory board shall collect industry data including, but not limited to: (i) labor rates in neighboring states; (ii) auto body shop costs; (iii) total labor costs; (iv) inflation data; (v) work force data; (vi) vocational-technical school trends; (vii) insurance premiums; and (viii) any additional information as requested by the advisory board._ Ultimately, the goal of the Board is to collect enough data to enable the Board members to have an understanding as to what range of hourly rates are fair and equitable and to make recommendations to the Division of Insurance. The two industry surveys conducted to date illustrate that there is a robust and thriving collision repair market in Massachusetts. However, the insurance industry suggests that more data is required and a more detailed survey would be necessary if any conclusions or recommendations from the Board are to be considered as a factor in determining a range of fair and equitable hourly labor rates in Massachusetts. Furthermore, the facts make it evident that competitive forces are actively shaping the total cost of repair in Massachusetts. Imposing a legislative mandate on labor rates would disrupt these real-world dynamics and undermine the existing competitive market to the detriment of Massachusetts consumers. To date, the Board actively pursued data from auto body shops and insurers in Massachusetts relative to the hourly labor rate that auto body shops post and the hourly labor rates that insurers pay. ¹ Until this point in time, no data has been collected as to the auto body shop industry’s average overhead or profit and loss data, nor has any data been collected as to the many other streams of revenue that auto body shops receive from insurers. Data as to rates posted by shops and as to rates paid by insurers do not provide total insight into a shop’s profit margins. Of course, it is in the interest of body shops and insurers for shops to earn a reasonable profit. 1 It is significant that the auto body shop survey reflects the “posted rate” and not necessarily the “paid rate”. The posted rate is not necessarily the amount that consumers actually pay. Further, the rates that shops agree to accept from insurers, which is a majority of the repair work performed by body shops, was excluded from the auto body shop labor rate survey. Unfortunately, the Board has no data from which Board members can identify what the profit margins are for any shops in Massachusetts. Importantly, the hourly labor rate is only one element of a body shop’s total revenue. There is no data yet as to the revenue that shops generate based on other revenue sources. For example, shops may be paid a significant mark-up on parts and services. There is a significant variance between the wholesale price the shops pay for OEM (original equipment manufacturer) parts and the MSRP price paid by insurers. Nor is there any data as to the additional pure profit shops generate from scans and calibrations which are regularly sublet (amongst other sublet services which are often subject to mark ups as well). See data submitted by the Federation which demonstrates that the average total repair cost in Massachusetts is $4107 and the average total repair cost in the New England states is $4612 a difference of 12.28%. ² If we back out Rhode Island, which is an outlier and where consumers pay more significantly more for their automobile insurance, the difference between Massachusetts and the other New England states drops to 3.18 percent. In short, the Board should understand there are vast differences in the claims settlement process among claims negotiated by insurers. Some claims involve a labor rate component that results in shops achieving a higher gross profit. Other claims involve scenarios where insurers allow more flexibility in permitting large mark-ups on parts and services, more flexibility in repair time allowances and more flexibility in “P-Page” (Procedure Page) allowances, all of which increase revenue for shops. This is why the Federation has long held that the only statistic that provides any value in achieving parity between Massachusetts auto body shops and shops in neighboring states is the Total Cost of Repairs. As an additional note on this topic, please see below a snapshot from a recent repair, highlighting that while some insurers use the items above to increase the revenue stream for auto body shops, in this example they actually just put on the appraisal an amount dedicated to differences in the labor rate. Massachusetts is not nearly the outlier proponents claim when it comes to total labor costs nor total repair costs in the New England region, as noted in the data presented separately and reattached to this recommendation. Thus, any recommendation for a government-set price for auto labor repairs is unnecessary and imprudent public policy. This is particularly true in the current economic climate. Labor rate increases even at modest levels will result in adding tens of millions of dollars to loss costs across the industry. Any labor rate increases near those proposed by the auto body shop industry would add hundreds of millions of dollars to loss costs annually at a time when Massachusetts consumers can least afford this burden. 2 As set forth in more detail below, much of the differences in market conditions in Massachusetts are reflected by the oversupply of auto body repair shops in Massachusetts compared to other states. If Massachusetts shops were unable to earn a reasonable profit one would expect to see fewer shops doing business in Massachusetts. Instead, shops are competing for the business and competition is benefiting Massachusetts consumers. The insurance industry is committed to working with the Legislature and Division of Insurance on key reforms that will improve market dynamics, require a labor rate survey, improve the talent pipeline, contain costs for repair facilities, and modernize regulations to help develop trust among the stakeholders and improve the system for all parties—and especially consumers. However, the industry will never support a government set labor rate. The following are our recommendations for how market dynamics can guide the Commonwealth to a fair and equitable labor rate. For these reasons and for the other reasons set forth below, the insurance industry submits that a more detailed survey process, similar to the survey process utilized in Rhode Island is in order. **The Oversupply of Repair Shops in Massachusetts** Based on the earlier analysis performed by Dr. Tennyson in connection with the 2022 report to the prior Labor Rate Commission, it was clear and undisputed that there was an oversupply of auto body repair shops in Massachusetts based on 2019 data, the most recent data available at that time. Indeed, in 2019 the ratio of auto body shops relative to the number of registered motor vehicles in Massachusetts was the highest among all states in the region. Relative to population, the number of auto body shops in Massachusetts was significantly higher than in Connecticut, New Jersey and New York, only slightly higher in New Hampshire and notably lower only relative to Rhode Island. The oversupply of auto body repair shops in Massachusetts remains evident using 2022 data, which is currently the most recent available. That said, there is some evidence that the oversupply of shops lessened somewhat from 2019 to 2022. First, the absolute number of auto body shops in Massachusetts fell by 33 from 1,192 in 2019 to 1,159 in 2022, a decline of 2.8%. It’s notable that over the much longer 11-year period from 2008 to 2019, the absolute number of auto body shops fell by only 16, a decline of just 1.3%. Second, whereas in 2019 Massachusetts had the highest ratio of auto body shops to registered motor vehicles of all states in the region, by 2022 the Commonwealth ranked third, behind New York and Rhode Island. Likewise, population metrics are also indicative of a modest reduction in the oversupply of auto body shops. The ratio of body shops to population fell slightly (the result of the decline in the number of shops and an increase in population). That said, this ratio remained higher in Massachusetts than any other state in the region with the exception of Rhode Island. In 2019, this ratio was high in two states—Rhode Island and New Hampshire. Data for 2022 indicates that number of shops per registered motor vehicle in Connecticut is only 69% of the number in Massachusetts; by the same measure New Hampshire has 71% as many body shops as Massachusetts, and New Jersey 80%. New York and Rhode Island, on the other hand, have materially more shops per motor vehicle than Massachusetts. It is worth noting – despite concerns about the economic health of the repair shop industry in Massachusetts – the number of auto body shops relative to the number of motor vehicles is actually higher than it was in 2008. From 2008 through 2022 the number of repair shops in Massachusetts declined by 4.1% while over the same period the number of motor vehicle registrations declined by 5.4%. For this reason, the number of auto body repair shops relative to the number of motor vehicles in Massachusetts actually _increased_ . Specifically, the downward trend in motor vehicle registrations means that the number of repair shops per 1,000 motor vehicles has _grown_ by 1.5% since 2008 despite a net loss of 49 shops from 1,208 in 2008 to 1,159 in 2022. The relative number of shops in Massachusetts has also grown in comparison to its neighboring states, which have seen consolidation in the industry. In Connecticut the number of registered motor vehicles declined by 12.6% from 2008 to 2022, and the number of body shops declined by 16.5%. New Jersey saw a 6.3% decline in motor vehicle registrations over the period, and an 18.8% decrease in the number of body shops; in New York there was a 24.5% decline in motor vehicles and a 7.8% decline in shops. Trends in motor vehicle registrations were different in New Hampshire (11.2% increase in motor vehicles and a 7.1% decrease in shops) and Rhode Island (1.5% decrease in motor vehicles and a 5.9% increase in shops) but remain indicative of industry consolidation rather than expansion. A final measure of repair shop capacity is in relation to motor vehicle accidents and insured claims. Data reported by the Massachusetts Automobile Insurers Bureau ( _AIB Loss Trend Analysis - Private Passenger Auto as of March 31, 2025_ ) indicates that the number of insured claims for property damage liability and collision has decreased sharply over the past decade while the number of insured comprehensive (other than theft and glass) claims has increased. The AIB data show 239,704 property damage liability claims in 2015 compared with 234,292 in 2019 and 190,552 in 2024—a net decline of 49,152 claims—equating to drop of 20.5%. Likewise, the AIB reported 201,609 collision claims in 2015 compared with 184,833 in 2019 and 141,797 in 2024—a net decrease of 59,812—representing a 22.3% decline. A much different pattern is observed for comprehensive claims, which totaled 36,448 in 2015, 37,410 in 2019 and 43,174 in 2024—a net _increase_ of 6,726 claims or 18.5%. While it is true that claim frequency across all personal auto coverages dropped sharply during the COVID-19 pandemic in 2020 and 2021, property damage and collision claim frequencies have only partially rebounded in the years since, seemingly stabilizing at a new plateau that is materially lower than that observed prior to the pandemic. Thus, the absolute number of property damage and collision claims in Massachusetts has fallen much faster than the number of auto body shops. This suggests more competition among existing Massachusetts auto body shops, a factor which would lead to more competition and lower labor cost. **Insurer Premiums and Profit Analysis** Insurers have been able to maintain a growth in premiums significantly lower than the rate of inflation since 1989, which has been to the benefit of the driving public. In fact, if we look back to 1989’s premiums adjusted for inflation (Dec.1989-Dec.2022, the last available year of data) would be $1,932 ($821 in ‘89) yet the NAIC numbers for 2022 have combined premium at $1,251, which is 52% less than the rate of inflation. If we wanted a very simple calculation for fair and equitable labor rate, it would be to extend the same increase in premiums to the labor rate. Such calculation would result in a roughly 150% increase from the $30/hr. rate in 1989 to $45/hr. today. However, the insurance industry opposes mandating a labor rate, especially as proposed by legislation like Senate Bill 797, which sets the floor at the midrange of neighboring states labor rates ($55/hr.) and House Bills 1285 and 1260, which would force a set rate by the Division of Insurance based on customer paid repairs—while ignoring that insured policyholders are customers. Such an approach, without a concomitant tempering of other revenue streams, may not only result in total repair costs in Massachusetts which are higher than our neighboring states, but it will create more conflict and discord in the negotiation process between insurers and body shops. Additionally, we know from prior legislative sessions, that the repair facilities really want a CPI adjusted rate from 1989 to 2025 with a prospective indefinite CPI adjustment, based on results from September 1989 when the labor rate averaged $30/hr. to September 2025 ³ , the amount of such a proposal would increase the labor rate to $77.95/hr. Such an increase, based on the AIB premium estimates circulated to the Board, would result in approximately $117 more per vehicle in costs to consumers if implemented this year. This approach would result in Massachusetts having one of the highest labor costs in New England. Contrary to some of the comments that have been made by the auto body representatives, the profitability of the auto insurance market has been low in the Commonwealth during the last two years of data available. According to the NAIC ⁴ , in New England, only Connecticut had larger underwriting **losses** than the 3 https://www.bls.gov/data/inflation\_calculator.htm 4 https://content.naic.org/sites/default/files/publication-pbl-pb-profitability-line-state.pdf Commonwealth in 2023. In that year private passenger auto insurers ran a -3.2% underwriting profit, meaning the industry lost $3.30 cents for every $100 in premium written. In 2022, there was a modest underwriting gain of 1.7% or $1.70 in profit for every $100 in premium. **Recommendation 1—Annual Auto Labor Rate Survey** Rhode Island has performed a labor rate survey annually since 2006. The Federation would support adopting language similar to the current statute in Rhode Island ( **_§ 27-29-4.4. Auto body repair labor rate surveys)_** ) to ensure the market is continuously monitoring the auto body labor market in the Commonwealth. Obviously, we will need to adjust this language to fit Massachusetts’ statutory scheme, and it will be important to ensure that the body shop survey is based on the **paid** labor rate and not the charged rate, as consumer discounts should be as important as the insurer-calculated prevailing rates. This solution is another way to ensure the market is performing to achieve a fair and equitable labor rate. **Recommendation 2—Regulatory Reforms—Supporting House Bill 1152** The Automobile Damage Appraiser Licensing Board (“ABALB”) remains today as a relic of the “fixed and established” regulatory scheme, despite other moves to make auto insurance and collision repairs more competitive. H.1152 would revise the statute to fit most practical aspects of the current regulatory scheme. ⁵ Importantly for the issue at hand, this legislation adopts the following notice language, which is based on the New Hampshire and New York approach for when disagreements on cost are unreconcilable. _If the appraiser for the insurer and the repair shop fail to agree on a price for repairs, the insurer shall furnish to the insured or claimant a written statement containing the following disclosure:_ _“Under Massachusetts law, you are always entitled to use the repair shop or facility of your choice. Unfortunately, we have been unable to agree on price with the facility you have chosen. In this situation, our payment for repair cost may be limited to the price available from a recognized and conveniently located repair shop or facility registered by the Division of Standards, that is willing and able to repair the damaged motor vehicle within a reasonable time. You may be responsible for the difference between our payment and the price charged to you by the facility you have chosen. Upon your request, we will furnish the name of a repair shop reasonably convenient to you that is able to repair your vehicle for the price in your appraisal.”_ One way that consumers are currently disadvantaged by the enabling ADALB statute is through the following language: _If the appraiser and the repair shop fail to agree on a price for repairs, the appraiser shall not obtain a competitive estimate from another repair shop unless the owner of such other shop, or his authorized agent, either of which shall be a licensed appraiser, has inspected the vehicle and prepared an itemized estimate of repairs to be performed. No such competitive estimates shall be obtained by the use of photographs, telephone calls or in any manner other than a personal inspection._ 5 The Division of Insurance has investigators, already issues license renewals, manages the NAIC system for licensees to ensure that abuses in other states are captured by our Division, and professional regulators are much better suited to make findings regarding the future status of a licensee over those who want to score political points or settle old vendettas. This single-sided mandate stymies a competitive market by preventing insurer appraisers from sourcing alternative locations without the express consent of the shop owner. Lifting this requirement and replacing it with the notice provision above would allow for competitive pricing to occur, which in many states results in higher labor rates over time. This approach for Massachusetts deserves our consideration rather than continuing down a path of policies designed to artificially price repairs, which as has been clearly demonstrated, has helped deflate labor rates over time. Moderating the complicated and cumbersome current ADALB process by adopting the New Hampshire/New York language would go a long way toward modernizing the approach to disagreements relative to repair costs in Massachusetts. It is time to re-task the Division of Insurance with oversight of appraisers and allow the market to more properly dictate the cost of repairs. That is why the insurance trades strongly support H.1152 as a market-based solution to ensure a fair and equitable labor rate is achieved organically. **Recommendation 3—Containing the cost of technological advancements** Advanced Driver Assistance Systems (ADAS) are reducing the frequency of collision claims across the United States and here in Massachusetts, but the collisions that do occur come at a lofty cost due to these intricate systems. Thanks to economies of scale, marketing, and governmental mandates, the use of ADAS has grown exponentially since introduced to the market in the 1990s. These systems, existing in some manner in almost all new cars sold today, primarily focus on crash-avoidance technologies through lane assistance, blind-spot detection, automatic emergency braking, and adaptive cruise control. The fast pace of ADAS advancements is disrupting traditional repair models that have offered consumers choice over the last century, leading to both increased labor costs and a reduction in repair capabilities of independent shops. Using these intricate systems as a justification, auto manufacturers are attempting to circumvent the Commonwealth’s Right to Repair initiatives through **procedure mandates, tooling costs, and certification programs for ADAS and auto body repairs.** The insurance industry is not anti-repair facility. The industry supports efforts to bring about fairness and competition for repair shops, but technological advancements in vehicles challenge the financial stability of small independent facilities. This type of existential threat is not going to be solved through government price- fixing for auto labor rates. Rather, as is occurring across the country, Massachusetts repair shops might consider creating networks amongst themselves, or through multi-shop ownership agreements, to access the technological capabilities and financial resources needed to fix increasingly complex vehicles. Through legislative action or another voter initiative, Massachusetts may consider further expansion of the Right to Repair ballot initiatives, passed by voters, to force greater access to and reduce the cost of manufacturer repair certification programs, which could also have ancillary benefits for the Commonwealth’s vocational schools. Additionally, enforcement of the current Right to Repair laws is essential to ensure that access to repair and diagnostic tools and access to all necessary vehicle data to complete repairs is available at competitive rates. These steps could foster more meaningful competition in the repair market and provide repair facilities with more long-term protection than a government-set labor rate, which will increase repair costs without any tangible consumer benefit. While not directly related to the labor rate, ⁶ these steps would provide for a fair and equitable increase in profitability for auto-body repair facilities. 6It is however noteworthy that shops derive significant revenue from mark-ups on ADAS calibrations and scans. These mark-ups must be taken into account when evaluating the labor rate and the total revenue paid to shops. **Recommendation 4—Improving the Talent Pipeline** When it comes to the talent pipeline, it is of utmost importance for the Board members to understand that **higher labor costs do not necessarily correlate to higher wages** . The highest total labor cost states in New England often have both higher labor costs and lower average weekly wages for collision repair technicians than Massachusetts (see table 1 which was produced for the 2022 study commission and Table 2 is updated with current analysis). State **2021 Data** Total Labor Costs (CCC Data) Average Weekly Wage (Collision Week) ⁷ Average Weekly Wage (Zip Recruiter/ADP) ⁸ Massachusetts $1143 $995 $912 Connecticut $1414 $982 $858 Maine $1133 $871 $857 New Hampshire $1213 $1034 $952 Rhode Island $1733 Not Available $846 Vermont $1132 $975 $897 **Table 1** State Total Labor Costs (CCC Data) Average Weekly Wage (Collision Week) ⁹ Average Weekly Wage (Zip Recruiter/ADP) ¹⁰ Massachusetts 1346.79 $1471 $1,206 Connecticut 1,854.17 $1397 $1,051 Maine 1,422.95 $1474 $1,069 New Hampshire 1,531.87 $1514 $1,074 Rhode Island 2,033.52 Not Available $1,082 Vermont 1,379.72 $1441 $1,174 **Table 2** Beginning with supporting an effort to encourage participation in vocational training for collision repairs, the Legislature acknowledged that more needed to be done when it enacted Section 57 of MGL Chapter 74 ¹¹ . This legislation focused support, training, and educational programs to address Class 1 licenses, which are dedicated to the repair technicians of dealerships. By extending the purpose of this grant program to future Class 2 license holders, we can begin stronger private public partnerships to address the seven enumerated goals for such a grant program. The goals of Section 57 of MGL Chapter 74 are laudable but require stakeholder engagement as a key part of any successes in elevating collision repair vocational programs. Insurer and collision repair stakeholders already are acting nationally to address this through the Collision Repair Educational Foundation (CREF) and in collaborative ventures throughout the country. It is neither fair nor equitable that those repair facilities who are doing the largest volume of repairs are not permitted to take advantage of the state program, nor that the 7 2021-0909-Collision-Repair-Establishments-and-Wages-Q1-2021-and-Q1-2020-Analysis.png (1200×1598) (collisionweek.com) 8 Q: What Is the Average Collision Repair Salary by State in 2021? (ziprecruiter.com) 9 https://collisionweek.com/2025/08/08/fourth-quarter-2024-collision-repair-average-weekly-wages-2-4-compared-2023/ 10 https://www.ziprecruiter.com/Salaries/What-Is-the-Average-AUTO-BODY-Technician-Salary-by-State 11 General Law - Part I, Title XII, Chapter 74, Section 57 (malegislature.gov) program has been underfunded for many years—the legislature should take steps to address both aspects of this issue. State and federal standards also must be reviewed in the context of collision repair vocation training. In an era of ever-changing technology in vehicles, the methods for repairs are rapidly changing. As an example, metal body welding is now perhaps less important to teach than plastic welding or learning about proper calibrations and inspections. However, the process to change curriculum is a regulatory burden for educators, especially since it can take years for approvals of vocational curriculum changes. The training and pay for vocational educators must also keep up with the knowledge required to bestow upon students a foundation in collision repair that prepares them to enter the workforce and apprenticeships. Together, stakeholders and legislators should review all of the governing statutes for vocational institutions and ensure there is adequate flexibility to teach how to repair the automobiles of the 21 st century. **Conclusion** In addition to the solutions offered above, the Federation redirects your attention to the conclusion made in the 2022 testimony to the Legislative Commission by Dr. Sharon Tennyson, economist and Professor of Public Policy and Economics at Cornell University, which illustrates the necessity of analyzing specific aggregated data across both the insurance and repair industry prior to making any other formal recommendations specific to the auto labor rate: “Aside from concerns society may have regarding fair labor compensation, the mere fact of lower labor costs or lower costs of auto body repairs is not an economic policy concern. The important question is whether lower costs result in lower quality of repairs, reduced quality of the repair experience for consumers, and reduced incentives for investment and innovation in the auto body repair industry. These potential effects of lower labor rates can create a public interest in the issue from an economic standpoint. But, evaluating whether these effects are occurring requires data at a greater level of detail than can be obtained from readily available industry statistics. Data on the distribution of labor rates (not just average values), variations by geographic area, and qualifications of the shops would be needed. Analysis would include investigation of the relationship between labor rates and (i) whether the quality of repairs is acceptable; (ii) whether damaged cars are going unrepaired; (iii) whether consumers face excessive delays in obtaining repairs; (iv) whether repair shops are using outdated equipment and technology; and (v) whether consumers are satisfied with the repair experience. If labor costs are lower for insured versus other repairs, differences between insured and uninsured repairs must be investigated, along with any difficulties in quality, cost, or compensation that insureds may encounter in seeking insured repairs. Looking solely at average labor rates or labor costs does not illuminate these issues. Given the importance of the decision for the future of the insurance market and the cost of insurance for Massachusetts drivers, and the limited data upon which the decision would be made, it would be reckless to make any decision to establish a regulated labor rate at this time.” Insurers strongly believe that the health of our auto insurance market relies on independent body shops, who deserve a reasonable profit. However, the Federation remains concerned that unlike rate setting practices for towing by the Department of Public Utilities (Section 6B of chapter 159B) or insurance rates by the Division of Insurance, or rate setting in other regulated industries, this Board has not had the opportunity to review profit and loss statements from the wide array of shops. Such data is essential to ensure that a rate is fair and adequate to both the shops and the consumers in the Commonwealth. For that reason alone, it is premature for any recommendation to be adopted that sets a rate for auto body labor charges in the Commonwealth. Finally, the outcome of this Board’s decisions, if it would choose to take steps to create a statutory labor rate, must be viewed in the context of consumer subsidization of body shops. For every $10 increase in the labor rates, consumers will be subsidizing shops an additional $36 per vehicle. This type of subsidized protectionism has long term implications not only for the auto insurance market in the Commonwealth, but for all consumers and businesses in the state that will view this as the first of many efforts to create a system of subsidized protectionism. In the long term, a state-mandated increase in auto body labor rates will be neither fair nor equitable for Massachusetts consumers, especially in the current economic climate. Respectfully submitted, Christopher S. Stark Member, Auto Body Labor Rate Advisory Board Executive Director, Massachusetts Insurance Federation **Supplemental Submission** **On Behalf of the Insurance Industry** Massachusetts Auto Body Labor Rate Advisory Board December 15, 2025 To the extent there has been testimony that auto body repair shops are leaving Massachusetts in droves, please find the updated list of auto repair and glass shops from the Automobile Insurers Bureau (“AIB”), linked here: Repair & Glass Shops. ¹ This data demonstrates that a number of shops are still entering the market with an awareness of current levels of costs and reimbursements and only two shops are no longer registered. It is hard to imagine that the market as described by advocates for a statutory labor rate would be attracting new entrants. There are currently 1557 auto body repair shops registered to do business in Massachusetts. Significantly more shops than in our neighboring states. Further, relative to some of the comments in the various recommendations, the industry submits that the Massachusetts PPA insurance market is not highly concentrated as suggested. In fact, a 2024 R Street report gave Massachusetts a Herfindahl-Hirschman Index (HHI) score of 1009. Anything less than 1,500 in their metrics is considered a competitive market. Respectfully submitted, Christopher S. Stark Member, Auto Body Labor Rate Advisory Board Executive Director, Massachusetts Insurance Federation 1 https://www.aib.org/ContentPages/Public/RepairGlass.aspx ### **Amended Statement by John Kwoka Professor of Economics, Northeastern University Member, Auto Body Labor Rate Board December 10, 2025** ### This Board has been charged with evaluating the labor rate for auto body work in ### Massachusetts, and recommending an appropriate rate or method for determining the appropriate ### rate. As the economist on this Board, I have examined the issues in the usual method of ### economics: to determine how the labor rate is currently determined, and whether that process has ### resulted in rate roughly comparable to a competitive market rate or whether it is subject to ### distortions that fail to deliver a rate that is appropriate for both buyers and sellers. I say “roughly” ### since many markets do not look perfectly competitive but at least are “workably competitive.” ### Others, though, may have real problems that require intervention to protect buyers or sellers, ### whichever side is being harmed. ### I have conducted that analysis of the auto body labor rate, which I will detail below. ### Based on that analysis and my understanding of the market, I have come to the following ### conclusions: ### (1) The pricing process for establishing an auto body labor rate most closely resembles a ### bargaining process rather than a textbook market where many buyers and sellers come to some ### common price. Here, individual “buyers”–insurers that contract for body shop workr--engage in ### periodic rate transactions with body shops. In trade, body shops essentially offer the necessary ### labor services to customers of the insurers. This type of process is what occurs in a so-called ### “bargaining” market. ### (2) Price in a bargaining setting is not determined by the usual intersection of some ### supply and demand curves since these do not really exist in these markets. Instead, all that can be ### said is that price must be somewhere in the range between the minimum that each shop needs to ### operate–its zero-profit point--and the maximum that the insurer is willing to pay. Where in this ### range price will fall depends on each side’s relative bargaining power. ### (3) I find that, in the process for establishing auto body labor rates in Massachusetts, the ### balance of bargaining power lies strongly in favor of insurers. The result is that the labor rates ### are much closer to the body shops’ absolute minimums than they are to the ability of insurers to ### pay. This imbalance needs to be remedied. ### In the rest of this memo, I will summarize my assessment of the type of market process ### involved in setting the auto body labor rate, expand on my conclusions, and offer my specific ### recommendations at the end. ### The Auto Body Labor “Market” ### In the ordinary textbook “market,” there are many buyers and sellers that interact ### regularly so the process settles at the intersection of the supply and demand curves without any ### significant influence over it by individual firms or players. The price that results is appropriate in ### economic terms since it is adequate to cover sellers’ cost and leaves something over, but at the ### same time it is also reasonable for buyers, who pay an amount that also leaves them with a net ### benefit. The total of these benefits to both sides are the “gains from trade,” and these total gains ### are shared by each side. That sharing does not need to be equal, but there must be some net gain ### for each side in order for them to continue to operate in the market. ### Not many real-world markets operate exactly like this, but many are close enough to be ### “workably competitive.” But in other markets, the entire pricing process works differently. For ### example, many familiar markets involve contracting, that is, bidding for some business or for ### some purchase based on specs set out by the other side. Sometimes auctions are used to sell (or ### buy) some specific, often unique product. Other markets operate with bargaining between the ### sides when a deal must be struck between only one or a few parties to the transaction. A familiar ### example is union collective bargaining with employers, rather than each worker by themselves ### having to bargain with an employer. Other examples are hospitals with insurers and video ### distributors with program suppliers (like the current controversy between Disney and YouTube ### TV). ### What characterizes bargaining markets in particular are two things. One is there is only a ### small number (maybe just one) of either buyers or of sellers that are involved in periodic or one- ### off transactions. A second characteristic is that completing the transaction–coming to some ### agreement--is essentially necessary for both sides, since there is no product or market without the ### participation of both. Union labor has nothing to do without their employers, any more than ### companies can do without their worker unions. Hospitals need insurers, but insurers’ only ### business is to provide insurance to hospitals. YouTube TV can only do without Disney so long, ### but Disney also needs YouTube TV viewers. So both sides are locked in a process that needs to ### come to some agreement to do business, and so they will. (In fact, Disney and YouTube TV just ### settled.) ### This is essentially the auto body labor rate process in Massachusetts. On the one side are ### individual auto body shops that need insurers to make it possible for customers to pay for repairs. ### On the other side, insurers have contracts with customers but their coverage require body shops ### to do the actual work. Each side needs each other in order to conduct any business. This is not a ### textbook market where price arises from numerous continuous interactions between suppliers ### and demanders. ### Price in a Bargaining Market ### The next question is exactly how price in such a bargaining market should be determined ### in general and and how it actually is determined in the case of auto body labor . In the general ### case of a bargaining setting, each side has a price point that they will not go beyond. The buyer ### will not pay more than some maximum that leaves them with no net gain from the transaction ### (economics calls this point buyers’ “willingness to pay”). The seller will not accept an amount ### that does not cover their costs–the “zero-profit point”-- and leave them with some net gain. No ### price outside this range makes sense, but exactly where price ends up between these extremes ### cannot be predicted. Instead, it is determined through a bargaining or negotiating process ### between the two sides, and the side with the greater bargaining power will secure the larger share ### of the gains from trade. Greater bargaining power usually results from a greater market power, ### greater financial resources, or the greater ability to weather a brief period without business. ### In the usual bargaining setting (such as union contracting or video agreements), both sides ### offer proposals and after discussion and negotiation (and, yes, sometimes strikes or blackouts), ### some compromise is likely reached. The auto body rate business involves two sides but it works ### differently. Each insurer periodically reviews and may revise what it is prepared to offer as a ### labor rate. While in principle at the same time body shops could make their own proposal ### followed by negotiation toward a mutually agreeable solution, as in other bargaining markets, ### that does not seem to be the case here. At most, the body shops in an insurer’s referral network ### may be consulted or surveyed, and they may propose a different rate, but it seems that the rate ### proposed by the insurer almost certainly sticks. Among other reasons, any body shop interested in ### that insurer’s business will likely have to just accept the insurer’s rate. But “having to take it” is ### an indication of the lack of bargaining power for that side, in this case, the body shops. Put ### differently, an insurer can do without a particular body shop more easily than a body shop can do ### without the insurer’s referral business. ### In this auto body labor rate process, I therefore conclude that the insurer side of the ### market has greater–probably much greater--bargaining power than the auto body shop side. As a ### result the benefits from this business–the gains from trade–go more substantially to the insurers ### than to body shop owners and workers. ### The Basis for My Conclusion ### Determining the balance of bargaining power in any bargaining market is generally not ### straightforward, and the auto body labor rate process is no exception. There is, however, a range ### of data and evidence that, in its totality, convinces me of the imbalance of bargaining power ### strongly favoring insurers. Here are several reasons for my conclusion: ### (1) The number of licensed auto body shops in the state has been in slow long-term ### decline. This suggests that many shops may be operating at or below their lower bound of zero- ### profit operation and slowly exiting the market. This interpretation is consistent with the decline ### in auto body programs at vocational schools in the state. A decline in the number of shops ### shrinks job and career opportunities, deterring possible trainees for positions that no longer seem ### as promising. On the other hand, this decline in the number of body shops could also be caused ### by a decline in the need for them to the extent that collision frequency and claims have declined ### over time (though the cost of repairs may have risen to offset this). ### (2) There are relatively few insurers, and the largest have very substantial size. Standard ### economic measures of market concentration would categorize the Massachusetts market as ### “highly concentrated.” In a true bargaining process these would negotiate with a similarly small ### number of body shops on the other side. In reality, however, auto body shops are numerous, ### relatively small, fragmented, and often scattered across the state. This structure of the market ### leaves the insurer side with greater market and bargaining power. Body shops are in a “take it or ### leave it” situation since they cannot really afford to reject the insurers’ rates and the business that ### comes from being in a referral network. Insurers face no such risk from not having one or a few ### body shops agree to their rate. For that reason, insurers have what is often called “buyer market ### power.” ### (3) The auto body labor rates set by insurers have not increased much in the recent years ### and have fallen behind those of other skilled trades. This is true even as skill levels and necessary ### training for auto body work have increased due to the greater complexity of autos. This, too, ### suggests that labor rates may be deviating from the level necessary to sustain employment and ### operation of body shops. This would go hand in hand with declines in the number of vocational ### schools with auto body training programs and the number of auto body shops themselves, but of ### course, they could also reflect a decline in the overall business. ### (4) There is additional evidence consistent with lagging labor rates from insurers. The ### Board’s survey found that auto body shops on average are reimbursed at $46 per hour for work ### through insurers, but these same shops charge an average of $68 for uninsured work where they ### deal directly with customers and can charge whatever rate they believe is appropriate in the ### market. That rate is nearly 40 percent more than that set by insurers, although there is likely ### some differences between work provided in the uninsured market vs. the insured market. ### Nonetheless, the large gap between the rates for insured and uninsured service certainly suggests ### that current labor rates on insured work fall short of what they need to be. ### (5) In addition, it is notable that auto body repair rates in the state vary considerably ### across insurers. According to survey data available to the Board, rates range from a low of $43 ### per hour to a high of $55 per hour–more than a 23% difference. The full explanation for these ### differences is not clear, but it is interesting to observe that the lowest rates are associated with ### some of the smaller and more traditional insurers in the state. By contrast, two of the highest ### auto body labor rates are from the newer entrants into the market. Those insurers may be bringing ### into the state auto body labor rates familiar to them from other states and settings–which are ### often higher than the rates from the older insurers in this state. Interesting, too is the fact that ### their higher rates have not handicapped them in the market for auto insurance: whether their ### premiums are higher but still satisfactory to customers, or whether margins are smaller or their ### business models are different in some other way, these new entrants have increased their market ### shares substantially even with their higher labor rates. ### In summary, I believe that there is sufficient evidence to conclude that the current auto ### body labor rate is relatively low, close to the lower bound for the trade and for auto body shops. I ### agree that some of the evidence could be stronger and some facts have alternative interpretations, ### but I am convinced that the totality of the evidence supports this conclusion. ### A Fair and Equitable Rate ### There are two possible approaches to fixing the labor rate deficit. The first would alter the ### balance of bargaining power between auto body shops and insurers. The second would more ### directly adjust the rate itself. ### The first approach would follow from recognition that at present the auto body shops are ### not in a position to effectively bargain with insurers. An insurer can much more easily do without ### a particular body shop than a body shop can do without the customers of most insurers. That has ### resulted in the rates calculated and announced by insurers becoming the actual rates without ### effective pushback. In order to rebalance the bargaining power of the two sides, auto body shops ### might be allowed to bargain collectively with insurers over the labor rate. Collective bargaining ### by body shops would mean that insurers would have to bargain meaningfully since each would ### find themselves facing the prospect of losing not just a single auto body shop but a large group of ### shops. This grouping could be based on their referral networks or their trade association or some ### other collective bargaining unit. ### What would emerge from this process would be similar to the outcome of collective ### bargaining between labor unions and employers, and for the same reasons. Recognition of the ### imbalance of bargaining power is exactly what led to legislative sanctioning of collective ### bargaining by labor at the federal level. Collective bargaining by auto body shops in ### Massachusetts would likely also require legislative sanctioning as well. It would, however, allow ### the state to remove itself from any rate setting process. ### The second approach would be to directly address the rate itself rather than the rate ### setting process. Given the complicated nature of labor rate determination, calculating what ### constitutes a “fair and equitable labor rate” is not straightforward. I have nonetheless conducted ### an analysis based on available data and my understanding and have concluded that at the present ### time, the appropriate rate would be somewhere in a range centered on $83 per hour. ### I base this conclusion on two types of evidence. The first is a comparison to rates for ### similar services that are determined in more flexible interactions between sellers and buyers that ### have some characteristics of a competitive market. The second type of evidence is based on past ### rates that may have more closely approximated the appropriate rates, which can then be adjusted ### to current conditions. Here I describe both approaches. ### The Board has conducted an important survey of the roughly 1600 licensed body shops in ### the state, and obtained an adequate response rate of 30 percent. The survey asked repair shops for ### their rates on work not covered by insurance. While uninsured work may not be identical to ### insured work, these rates can be set by shops as they wish, and accepted or not by customers who ### are either satisfied to pay those rates or look elsewhere. Setting too high a rate would deter ### customers, while too low a rate would be inadequate compensation. This two-way adjustment ### process is the way competition should work in any market, and under the right conditions the ### resulting price might be a good indication of the supply-demand price. ### Whther the uninsured market meets these conditions is not clear. Uninsured work is only ### a fraction of a body shops’ total work, and the work may not be the same as insured work. ### Uninsured customers are often drivers who choose not to report damage to their insurer. Some ### uninsured work may be on expensive classic cars, which again is not insurable or not fully ### insured. To that extent, the work may simply require more expensive labor. On the other hand, ### body shops may be cautious in what they charge for uninsured work, since customers may balk at ### prices too far in excess of posted (insured) prices. In short, there are factors that might cause ### uninsured rates to be distorted in either direction. ### For these reasons, it is difficult to know whether or by how much the uninsured rates ### **TABLE 1** Average Labor Rates ($) ### Insured Rate Uninsured Rate Difference (%) ### Body 49 68.0 38.8 ### Refinishing 49 66.9 36.5 ### Mechanical 55 108.0 96.4 ### Structural 46 84.0 82.6 ### Frame 50 85.4 71.0 ### Sources: Board survey of insurer rates Board survey of auto body shops ### \*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\* ### found in the Board’s survey diverge from competitive rates, but regardless, I believe that those ### rates are useful indicators of what more competitive rates would look like. And the differences ### are clear and substantial. As shown in Table 1, actual labor rates on uninsured work are ### systematically higher than the allowed rates on insured work, and by substantial amounts. They ### range from 36.5 percent higher for refinishing to 96.4 percent higher for mechanical work. For ### body work in particular, the underpayment is nearly 39 percent. With information about the ### percentages of each type of work actually performed in body shops, it would be possible to ### calculate the weighted overall aveage underpayment, but the unweighted average is a 65 percent ### underpayment. ### Based on these comparisons, it would follow that body and refinishing work should be ### compensated no less than 67 or 68 dollars per hour, and mechanical, structural and frame repairs ### should be compensated at least 84 or 85 dollars per hour. These numbers are consistent with the ### substantial current underpayment to body shops. ### These comparisons do not necessarily represent the full extent of underpayment since ### either or both rates may be distorted by suppression of labor rates for insured work. This takes ### me to the second type of evidence, which begins with some past benchmark rate and then adjusts ### it to current market conditions. For this, I focus on the labor rate for body work, although similar ### effects likely apply to the other rates. I believe there are two possible bases from which to start: ### the labor rate in 1988 and the labor rate in 2008. Each has advantages and limitations. ### The 1988 rate appears to have been set at $30 per hour as a result of an agreement ### between insurers and body shops at that time. If it was truly an agreement, then it could be ### interpreted as “fair and equitable” by both sides at the time. The obvious disadvantage of using ### the 1988 rate as a baseline is that it was nearly 40 years ago. Many events and factors have ### affected the economy and labor rates since that time, so that it is questionable whether beginning ### with that rate is truly appropriate. ### The alternative baseline is the rate in 2008. The 2022 Report of the Special Commission ### recounted the history of labor rates and reported that as of 2008 “The average labor rate that is ### paid to auto body shops in Massachusetts, when being paid through insurance companies, is ### approximately 40 dollars per hour.” It went on to say that between 2008 and 2022, “the auto body ### labor rate has not increased significantly.” The virtue of using 2008 as a benchmark is that it is ### much more recent than 1988, but still, of course, many years ago. The disadvantage is that the ### 2008 rate of 40 dollars is the rate announced by insurers, so that it understates the rate that would ### be agreed to by body shops. ### Rather than choosing between the two baseline rates, I use both the $30 rate in 1988 and ### the $40 rate in 2008 in my analysis, while being sure to note their limitations. Each base number ### needs to be adjusted by factors that influence labor rate changes over time–and more specifically, ### labor rates in Massachusetts. In Table 2, I provide these comparisons. The first three columns ### report actual auto body rates for insured work in 1988, 2008, and 2025. The last two columns ### calculate the total percent increase from 1988 to 2025 and from 2008 to 2005. Below that are the ### same numerics for the average hourly wage in the entire country and in Massachusetts. ### What is immediately apparent is that while the insured hourly labor rate rose by 63 ### percent over this entire period, this is far below the US average hourly wage increase, which ### tripled over the same time. If the state labor wage for insured body work had increased at the ### same rate beginning in 1988, it would have risen to $99 by 2025, which is more than double the ### current $49 per hour. A comparison beginning with the 2008 insured labor rate indicates a ### continuing shortfall in labor rates relative to US hourly wage increases. Since 2008, US hourly ### wages have risen by 72 percent, still much more than the 22 percent increase for insured body ### work in this state. If the Massachusetts auto body rate had increased at the same rate as US wages ### since 2008, the rate in this state would now be $69 rather the current $49. This is likely an ### underestimate since, as noted before, the 2008 rate was already below the appropriate rate for that ### year. ### These estimates based on past rates assume that auto body wages would and should ### change over time at a rate similar to broader indexes. That would be true only on certain ### conditions not examined here, so that is a caveat to these calculations. That said, these do ### **TABLE 2** Comparison of Auto Body Rates and Overall Hourly Wages ### Pct. Increase since ### 1988 2008 2025 1988 to 2025 2008 to 2025 ### Avg Labor Rate 30 40 49 63.3 22.5 (insured body work) ### Avg Hourly Wage US 9.41 18.04 31.05 330.0 72.1 ### MA n/a 26.4 41.4 n/a 56.8 ### Sources: Board Survey Report of Special Commission on Auto Body Labor Rates, 2022 Bureau of Labor Statistics, Average Hourly Earnings of Production and Nonsupervisory Employees, Total Private ### \*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\* ### indicate substantial underpayment of labor rates at present, and confirm the evidence from rates ### on uninsured work. Overall, it is clear that Massachusetts hourly rates for insured auto body work ### are well below every benchmark. ### I conclude with two further comparisons. It is well understood that wage levels (and ### prices) are higher in Massachusetts than elsewhere. That does not necessarily mean that the rates ### of change over time are different, but I have checked that to be sure. Reliable data for hourly ### wages for 1988 in the state do not seem to exist, so the only comparison is with the year 2008. ### As shown in the bottom row of Table 2, the hourly Massachusetts wage has risen by 57 percent ### since 2008, once again well in excess of the 22 percent increase for auto body shops in the state. ### Lastly, a comparison is often made between wages and the overall rate of inflation, as ### measured by CPI. This comparison reflects whether wage increases have kept up with prices, ### allowing for gains in the standard of living. There is no reason, however, to expect all wages to ### grow at the same rate as CPI, since there are changes specific to every labor market that affect its ### wages. These include growing or declining demand for sector services, changes in skill levels ### and training requirements, and so forth. Nonetheless, given some interest, Table 3 reports percent ### changes in CPI since 1988 and since 2008, up until 2025. As is evident, auto body labor rate ### changes have lagged increases in both the US and the state measures of general price inflation as ### measured by CPI over both time intervals. ### In summary, I find indications of auto body labor underpayment ranging from significant ### to substantial. The various estimates imply that a “fair and equitable” labor rate for auto body ### **TABLE 3** Comparison of Labor Rate and CPI Increases ### Percent Increase to 2025 from: 1988 2008 ### Avg. Insured Labor Rate 63.3 22.5 ### CPI US 74.4 47.2 ### MA 79.7 50.0 ### Sources: Board Survey Bureau of Labor Statistics ### \*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\* ### work would likely fall somewhere between $67 per hour and $99 per hour. I view both of these ### estimates as boundary values rather than the most likely value. The lower end is subject to ### understatement given the history of underpayment, while the upper end is based on a much ### earlier benchmark that risks overstating the value. As a result I would recommend the midway ### point of $83 per hour, although there is some range of reasonable estimates around that value. ### Additional Issues and Questions ### Determining a fair and equitable rate is the key step toward remedying the current system. ### I comment briefly on three additional issues that follow from this determination. ### First, since this rate is substantially in excess of the current rate, it would seem prudent to ### institute this rate in a series of steps over time–although not too long a time. Phasing in this ### increase would allow body shops, customers, insurers, and ratepayers to adapt to this new rate ### schedule. ### Second, this rate would need to adjust periodically in accordance with some external ### benchmark that would reflect changes in costs related to the business of auto body repair. ### Establishing such a process would avoid, or at least minimize, the need for on-going ### administrative actions. There are several possible indexes for rate adjustment noted in my ### discussion. ### Third, this rate should be a minimum so that a body shop that performs especially high ### quality work can charge a correspondingly higher rate. Body shops could be rated based on ### training, equipment, consumer complaints, etc. This would help customers make informed ### choices, and provide incentive to distinguish themselves by the quality of service provided. ### And finally, there are certain issues about both the appropriate current rate and the next ### steps that might benefit from further investigation. The following is a list of some of those ### questions. ### (1) Regarding uninsured auto body work, what fraction of total body shop work is this? ### How is it different from work covered by insurance companies? How do shops decide on their ### rates for uninsured work? ### (2) How do insurers arrive at the labor rate that they announce? Based on what ### information? Why are rates different among insurers? How often do they change? ### (3) How are rates for body shops at auto dealers determined? Why are they so different ### than for independent body shoip? ### (4) What are the reasons for shop closures? Can some information be compiled about the ### causes? ### (5) To what degree are insurer-set labor rates passed through to actual workers in body ### shops? ### (6) How do other states address the issue of auto body labor rates? Do some set them or ### set targets or criteria, and if so, how do they establish rates? How different are the rates among ### states, and why? ### (7) To what degree are auto body labor rates passed-through to insurance premiums and ### to insurers’ profit? Are there reliable studies of this pass through? ### November 24, 2025 ### TO: Stacy Gotham, Michael Powers, Co-Chairs, Auto Body Labor Rate Advisory Board Members of the Auto Body Labor Rate Advisory Board ### FR: Sean Kane, Auto Body Labor Rate Advisory Board Member ### RE: Auto Body Labor Rate ### The following are my observations and recommendations to the Auto Body Labor Rate Advisory Board (ABLRAB). ### As you know, I was appointed as the consumer advocate member of the ABLRAB, which was established by the Mass Leads Act of 2024, Section 292 of Chapter 238. ¹ The responsibility of ### the ABLRAB is included in Section 292 of the Act, which states: ### The advisory board shall be responsible for creating, implementing and overseeing a survey given to relevant auto body shops. The advisory board shall collect industry data including, but not limited to: (i) labor rates in neighboring states; (ii) auto body shop costs; (iii) total labor costs; (iv) inflation data; (v) work force data; (vi) vocational- technical school trends; (vii) insurance premiums; and (viii) any additional information as requested by the advisory board. The results of the survey and the data collected shall be reviewed and analyzed by the advisory board. ### Not later than December 31, 2025, the advisory board shall make recommendations to the division of insurance for a fair and equitable labor rate and file a report of its findings, conclusions and recommendations with the clerks of the senate and house of representatives, the joint committee on financial services, the senate and house committees on ways and means and the division of insurance. ### As the consumer advocate member of the board, my primary focus is how the labor rates and any recommendations made by the ABLRAB regarding labor rates may impact Massachusetts consumers. Labor rates that are too high can make repairs unaffordable, whereas a rate too low negatively impacts the quality, safety and availability of the repair. ### The Commonwealth’s Division of Insurance requirements, pursuant to 211 CMR 123.06(3)(b), are associated with insurance company customer referrals to registered repair shops, which includes the following regarding the insurers’ choice of such shops: ² 1 Section 292, Chapter 238 of the Acts of 2024. AN ACT RELATIVE TO STRENGTHENING MASSACHUSETTS’ ECONOMIC LEADERSHIP. Accessed at: https://malegislature.gov/Laws/SessionLaws/Acts/2024/Chapter238 2 211 CMR 123.06(3)(b). DIRECT PAYMENT OF MOTOR VEHICLE COLLISION ANDCOMPREHENSIVE COVERAGE CLAIMS AND REFERRAL REPAIR SHOPPROGRAMS. Accessed at: https://www.mass.gov/doc/211-cmr-123-direct-payment-of-motor-vehicle-collision-and-comprehensive-coverage- claims-and-referral-repair-shop-programs/download ### In determining which registered repair shops will be referral shops, the insurer shall consider all of the following criteria, and only the following criteria: the quality and cost of repairs at a particular shop, the quality of the service given the customer, the responsiveness of the shop to the customer's needs, the ability of the shop to perform repairs without undue delay, the geographic convenience of the shop for the claimant, cooperation of the shop with the pre- and post-repair inspections and the shop's compliance with applicable laws and regulations. ### These same criteria – quality, cost, responsiveness, timeliness, geographic accessibility, cooperation with the pre- and post-repair inspections, and the shop’s compliance with applicable laws and regulations – are important to consumers, regardless of a repair shop’s status with a particular insurer. Although consumers may state these criteria in slightly different ways, their concerns are certainly associated with repair quality, which necessarily requires that repairs are done properly to ensure safety, and that the repairs are accessible and completed within a reasonable amount of time. ### Consumers are also concerned about insurance premiums, deductibles, and the effects a claim may have on their premiums versus paying for repairs without submitting an insurance claim. ### Auto body labor rates make up one aspect of motor vehicle collision repairs, and what is evident is that insurers have been successful at suppressing these rates, which is detrimental, including to consumers. If auto body labor rates fail to keep pace with the required technological training, skills and tools, as well as the rising costs of operating the businesses that provide collision repairs, consumer access to quality repairs is affected. Similarly, practices that encourage or promote collision repairs to be done in a manner that does not follow automobile manufacturers’ (also known as Original Equipment Manufacturers, or OEMs) procedures may present quality and safety risks for consumers and other motorists. While these alternative procedures may be more appealing because they cost less and are less time intensive, they frequently incomplete or ineffective and may result in crashes or further repairs in the future. ### **ABLRAB Survey** ### The ABLRAB survey, sent to 1,497 active body shops registered with the Commonwealth’s Division of Standards requested data on the rates for six categories of collision repair labor: body, refinishing, aluminum, mechanical, structural and frame. The survey also requested the governments and/or fleet contract labor rate and non-insurance repair percentages. ### The ABLRAB received 475 usable responses, which represents 30% of the total shops surveyed. These data were analyzed by the co-chair, Stacy Gotham, who provided the following statistical summary: Labor Rate Size Mean Stdev Median Avg Excl Outliers Trimmed Mean Body 463 68.0 20.3 65.0 64.6 65.3 Refinishing 463 66.9 20.1 65.0 63.9 64.6 Aluminum 417 98.3 34.4 90.0 94.4 96.2 Mechanical 456 108.0 33.6 105.0 104.3 106.7 Structural 448 84.0 26.8 80.0 80.6 81.8 Frame 459 85.4 27.8 80.0 81.6 82.7 Gov and/or Fleet 103 85.6 143.3 65.0 71.8 68.1 Non-Insurance % 386 0.28 0.2 0.22 0.24 0.25 ### The insurers were also surveyed for the data on the rates they paid in the six categories of collision repair labor: body, refinishing, aluminum, mechanical, structural and frame. In addition, insurers were asked the following three questions: ### • Please provide the number of body shops your company has under a referral contract ### • Are any concessions required from body shops to become part of your referral program/network ### • Does your company voluntarily conduct any randomized surveys of body shops in order to establish your company’s prevailing labor rates listed above? ### These data were analyzed by the co-chair, Stacy Gotham who provided the following statistical summaries: **Name of Insurance Company** **market share** **Body Labor Rate** **Refinishing Labor Rate** **Mechanical Labor Rate** **Structural Labor Rate** **Frame Labor Rate** **Name of Insurance Company** **Please provide the number of body shops your company has under a referral contract:** **Are any concessions required from body shops to become part of your referral program/network** **Does your company voluntarily conduct any randomized surveys of body shops in order to establish your company’s prevailing labor rates listed above?** ### While these data provide some insight into the labor rates and practices, the take-aways appear to be limited. What is not known from these data are the differences between those that responded and those that did not respond, what percent of their work was represented in each category, or the volume of repairs by the responding shops. ### However, it is notable that the percentage of non-insurance reported by body shop respondents was less than 28%, yet for each labor rate category, the average posted rates were significantly higher than the average insurance companies paid. ### An implicit assumption in the reported data appears to be that all labor hours are alike – without allowance for differences in the education, training, or experience of the technicians. There is also no allowance for differences between repair shops in the technical means, technical support, and the tools provided to technicians to assist in repairs. ### In addition, the ABLRAB does not have the costs or profit margins associated with body shop operations or the auto insurance business in the Commonwealth. ### **The Collision Repair Industry** ### The automotive industry, like many others, has been undergoing rapid transformation in the last couple of decades. During this period, automotive systems have changed dramatically – they are more complex, software intensive, and include more automation. New technology-driven features that have rapidly proliferated into vehicles during the last decade are designed to reduce the driver’s engagement and increase comfort, convenience and safety compared to their predominantly mechanical predecessors. ### This transformation has resulted in vehicles that were once an assemblage of largely mechanical components controlled solely by a driver, to highly complex mechatronic designs that generate hundreds of data points in seconds or milliseconds from a multitude of sensor types that are processed by Electronic Control Units (ECUs). Most modern vehicles rely on a network of 50 - and some luxury models 100 - or more ECUs to process and share specific data elements. ³ These ### ECUs (aka, computers) process these data based on software/firmware algorithms that instruct various actuators within the vehicle to carry out specified actions. The result is that the role of the vehicle driver has increasingly become more akin to a supervisor rather than an operator, and vehicle operation may be executed based on drivers’ inputs, or it may be shared or overridden by a driver assistance systems. ⁴ A simple example: If a driver depresses the accelerator and the drive ### wheels lose traction and begin to spin, the vehicle’s ECUs, detecting the loss of traction, will intervene to regain maximum available traction based on the conditions through the amount of torque that is allowed to the wheels. The ECU will typically reduce the throttle through strategic brake application (including to individual wheels as needed), regardless of whether the driver continues to request more throttle via the accelerator pedal or whether the driver depresses the brake pedal. ### As a recent article in the trade journal _Automotive News_ succinctly stated: “Much of what a modern driver does is thoroughly divorced from the mechanics of the past.” ⁵ This is increasingly ### the case with vehicles that include Advanced Driver Assistance Systems (ADAS) which include common features like automatic emergency braking (AEB), lane departure warning/lane keep assist (LDW/LKA), advanced cruise control (ACC) which control the steering braking and acceleration of the vehicle beyond the driver's input using predominantly radar, and camera- based systems. ### The effects of the shift from separate mechanical components to mechatronic systems that have the ability to _override the driver and control the vehicle throttle, brakes and steering_ , which are still rapidly evolving, means that post-collision repairs to these complex systems require new skills, continual training, and a plethora of tools and access to detailed OEM repair information and methods. ADAS require specialized pre- and post-repair assessment to detect potential problems and to ensure repairs include proper calibrations. In both cases, access to OEM tools and information are required, along with specialized training. There is also a lack of standardization associated with the specific functions of these systems, which continue to evolve and adopt various enabling technologies, as do the tools, training, processes and techniques required to keep these systems operating within the OEM specifications. ### In addition to the transformation from mechanical to mechatronic, the vehicle fleet once solely consisting of vehicles with internal combustion engines (ICE), is made up of hybrid electric vehicles (HEVs) which reply on ICE and electric powertrains, electric vehicles (EVs) that includes battery EVs and fuel cell EVs (FCEVs). ⁶ HEVs and EVs differ from ICE vehicles in ### that they have high-voltage electrical systems, which require different handling and storage considerations that affect repairers and that are guided by technical bulletins from each OEM, 3 AutoPI.io. “ECU Explained (2025): Architecture, Networks & OTA Updates.” Updated Aug. 14, 2025. Accessed at: https://www.autopi.io/blog/what-is-electronic-control-unit-definition/ 4 Sheridan, T.B. (2021). HUMAN SUPERVISORY CONTROL OF AUTOMATION. Chapter 28, HANDBOOK OF HUMAN FACTORS AND ERGONOMICS (eds G. Salvendy and W. Karwowski). https://doi.org/10.1002/9781119636113.ch28 5 Molly Boigon. “Cars that run on code: How chips changes the vehicle.” Automotive News, Mar. 10, 2025. Accessed at: https://www.autonews.com/technology/an-100-chips-in-cars-0314/ 6 I-Car. “Understanding Hybrid And Electric Vehicle Names.” May 7, 2021. Accessed https://rts.i-car.com/crn-1540.html ### including specific paint booth time/temperature recommendations to prevent damage to high- voltage components. ⁷ ### Other aspects of vehicle repairs require consideration of the various materials used in the vehicle body and structure. In 2006, I-CAR, an inter-industry non-profit training, research and educational program provider for automotive repairs, described the state collision repairs for vehicle components made of advanced high-strength steels (AHSS), and concluded: ⁸ ### What is important to note is that when working on late model vehicles, the old rules may no longer apply. A part such as a front rail may be made from several different types of steel, attached together by a variety of joining methods. ### The collision industry is currently in the infancy stage when it comes to repairing advanced high-strength steels. There is still a large amount of research that needs to be conducted to determine the limits of repairability. The steel and vehicle makers are working diligently to determine proper repair techniques such as welding, drilling, and cutting. Currently, the only universal recommendation for repairing AHSS is that heating for straightening purposes is not recommended due to the adverse affect on the strength of the steel. ### Eight years later, an I-CAR publication addressing prior collision repair guidelines cited the previous “Kink vs. Bend Rule” that “Simply stated, bent parts were often repairable and kinked parts required replacement. . . . The kink vs. bend rule is no longer as simple as it sounds. A part may not look like it is kinked, but it may not be able to be straightened without damaging the grain structure, if it isn’t already damaged by the collision. The damage may be in the form of micro-cracking which is not easy to see. In more extreme cases, cracking may occur during straightening which is easier to see, and will require part replacement.” ⁹ ### A 2017 article on body construction and material repair guidelines highlighted the types of questions collision repair technicians are confronted with: “What is the MPa of the front lower rail? What is outer uniside made of; steel, aluminum, or composite? Can heat be used to straighten or is it cold straightening only? What are the repair limitations?” ¹⁰ The article went on ### to say: ### As we know with today’s vehicles, they can be constructed from a wide variety of materials. To repair vehicles, knowing if the OEM provides information on body construction materials and repair guidelines is a crucial step in providing a complete, safe, and quality repair. 7 See I-Car: high-voltage repair considerations at https://rts.i-car.com/global-search- results.html.tab=0&gsc.q=repair%20considerations%20for%20High%20voltage%20&gsc.sort=date 8 I-Car Advantage Online. “Advanced High-Strength Steels—A Collision Repair Perspective.” Jul-Aug. 2006. Accessed at: https://i-car.co.nz/wp-content/uploads/2018/10/general-technical-info-advanced-high-strength-steels- july-aug-2006.pdf 9 Jason Bartanen. “Repair or Replace? – Material Tensile Strength Key to Repairability” I-Car Collision Repair News. Sep. 23, 2014, Accessed at https://rts.i-car.com/crn-120.html 10 I-CAR Repairability Technical Support. “Body Construction and Material Repair Guidelines.” Oct. 20, 2017, Accessed at: https://rts.i-car.com/crn-706.html ### After researching for these articles, we found that the majority of the OEMs provide the construction material and/or MPa and material repair guidelines. Many go so far as provide position statements pertaining to the use of heat, while others provide a convenient steel repairability matrix. ### The article is followed by links to 18 OEM body construction and material repair guidelines – and each link provides a host of additional links specific to OEM information and resources, including updated recommendations, technical articles, training courses, and OEM repair websites which require paid subscriptions. Following are just a few examples: ### • **Structural Steel Parts Restrictions** . (BMW of North America, LLC, Bulletin #: C-2-0912- 0024, Sept. 12, 2024) **“** Due to complexity of repair and the requirement of highly specialized tools, training, & repair procedures, BMW of North America restricts the provision of certain structural carbon fiber, aluminum, and newly expanded structural steel parts to those collision centers that successfully complete specific training requirements and who possess the required tooling pertaining to the repair. Structural steel parts restrictions will launch on October 1st, 2024.” ¹¹ ### • **USE OF HEAT WHILE REPAIRING DAMAGED STRUCTURAL & NON- STRUCTURAL COMPONENTS. POSITION STATEMENT.** (FCA USA LLC, which includes its Chrysler, Dodge, Jeep, Ram, Fiat brands) “Structural components are designed to help ensure occupant safety and structural integrity of the vehicle. If this type of component becomes damaged, it requires repair and/or replacement. Some repair methods may require damaged areas to be heated and “pulled” to relieve stress before disassembly...” ¹² ### • **“USE OF OEM STRUCTURAL FASTENERS AND ADHESIVES”** (Ford Motor Co., Collision Position Statement, Oct. 1, 2025): “For all structural and cosmetic body repairs on Ford Motor Company vehicles, including aluminum repairs, technicians should follow the Ford Motor Company original equipment repair procedures by using: Ford Motor Company- original structural rivets, Ford Motor Company-approved structural adhesives, and Ford Motor Company-approved installation tools. Rivets or fasteners not approved by Ford Motor Company, whether self-piercing, blind, solid or flow-drill, have not been tested by Ford Motor Company and could compromise the repair. Each Ford Motor Company-original rivet is engineered for a specific location (with its own part number, mandrel and tool specification) to achieve the correct depth, spread and bond. Adhering to these Ford Motor Company original equipment guidelines help ensure the vehicle’s designed form, fit, performance, durability and safety are fully restored.” ¹³ 11 “BMW adds structural steel parts to restricted list.” Bulletin #: C-2-0912-0024, BMW of North America, LLC, Sept. 12, 2024. Accessed at: https://www.repairerdrivennews.com/wp- content/uploads/2024/10/Structural\_Steel\_Parts\_Restrictions\_Bulletin-1.pdf 12 “Use of Heat During Repair” Position Statement. Mopar, FCA US LLC. Jan. 7, 2022. Accessed at: https://www.moparrepairconnect.com/dA/e4cfa28960/Use%20of%20Heat%20During%20Repair.pdf 13 “USE OF OEM STRUCTURAL FASTENERS AND ADHESIVES” Ford Motor Co., Collision Position Statement, Oct. 1, 2025. Accessed at https://rts.i-car.com/images/pdf/oem-info/ford/statements/41117.pdf ### • **“Body Repair Manual Welding & Sectioning Guideline Revisions”** (American Honda Motor, Co. Sept. 2025, 13300 v.7): This version of Honda’s general guidelines for welding and sectioning Honda vehicles, it lists the most current approved methods and materials applicable to all of its models and it supersedes previously published body repair manuals. ¹⁴ ### • “ **Collision Position Statement Pre- and Post-Repair Scanning, Calibrations”** (Nissan USA, Nov. 1, 2025) Nissan revised and updated these procedures to “To help ensure that all advanced technology systems, whether for safety or infotainment, are functioning as designed, all 2008 and newer Nissan vehicles require a pre- and post-repair diagnostic scan.” ¹⁵ ### **Collision Repairs: Who Pays and What are the Cost and Outcomes?** ### Ensuring proper repairs is critically important for consumer safety. This is true for the range of repairs whether they involve the mechanical systems, body structures or electronics systems. ### Concerns about the costs associated with vehicle collision repairs are not unique to the Commonwealth; these concerns are apparent throughout the U.S. and even globally. One cause that all parties involved – vehicle OEMs, insurers, collision repair shops and consumers – appear to understand is that increased vehicle complexity is a significant contributor. ### The following is a brief summary of other sources of data and information regarding vehicle collision repair costs, the causes and some solutions. ### One of the often cited reasons for increased collision repair costs are vehicles with ADAS. Key sensors for these systems are located on vehicles in areas that are often affected by minor impacts or areas that can often sustain damage in day-to-day driving – windshields, mirrors, bumpers. Repair experts note that these systems require more than diagnostics – they can often require reprogramming and calibration. According to Mitch Becker, a collision industry trainer for 30 years and an I-CAR instructor for more than 25 years: “These procedures require a scan tool capable of accessing these procedures. This is not about clearing a code, this is about making sure everything is aimed or that all components can talk to each other when activated. Everyone in the industry has seen or had to do some sort of scan, but recalibrations can be much more extensive. I’ve run into many companies that think as long as the scan is done, it’s all complete. That could not be farther from the truth.” ¹⁶ Becker correctly emphasizes that vehicle ### component systems – which include ADAS features that now control throttle, brakes and steering – work together and: 14 “Body Repair Manual Welding & Sectioning Guideline Revisions” Honda Body Repair News. 13300 v.7. American Honda Motor, Co. Sept. 2025. Access at: https://rts.i-car.com/images/pdf/oem-info/honda/body-repair- news/13333x.pdf 15 “Collision Position Statement Pre- and Post-Repair Scanning, Calibrations” Nissan USA, NPSD/25-946. Nov. 1, 2025. Accessed at: https://rts.i-car.com/images/pdf/oem-info/nissan/position-statements/24715.pdf 16 Mitch Becker, Technical: Recalibrations – Are You Aiming in the Right Direction? Body shop Business. Oct. 11, 2017. Accessed at: https://www.bodyshopbusiness.com/technical-recalibrations-aiming-right-direction/ ### Not only do they need to be checked to be sure they communicate correctly with each other, but also that they’re aimed correctly. It’s like Christmas tree lights – if one bulb doesn’t work, it affects the whole string. Also, think about a motion detector alarm. It doesn’t work if it’s not aimed correctly. The DTC lights on the dash will not be an indicator of any problems. Be sure to understand that just because there is no light does not mean it’s right. ### Studies show that repairing a modern vehicle with ADAS can be twice as expensive due to the sensor and calibration costs. ¹⁷ ¹⁸ ### Recent reporting by _Automotive News_ cites the growing cost of vehicle ownership, which includes rising insurance premium rates and proliferation of advanced technologies. The article also points to the “friction that has surfaced between insurers, auto manufacturers, repair shops and consumers with the evolution of driver-assist technology.” ¹⁹ The article (which is available ### via a shared gift link in the footnote below) cites Mike Nelson, founder of insurance tech startup QuantivRisk, a lawyer and claims adjuster: ### Mechanics once held expertise and expected insurers to agree with their assessments of needed repairs. Now, he said manufacturers hold sway. They have prescribed guidelines for fixing more sophisticated technology and requirements for how systems are calibrated, and mechanics must follow along. ### “There’s huge liability in recalibrating,” Nelson said. “As we try to go down this path, it’s only going to get more complicated.” ### Indirectly, there is also liability in not recalibrating. ### Customers who balk at higher repair costs at Caliber Collision facilities will often look elsewhere for shops willing to make repairs without calibrating the sensors, Ebrahimi said, rendering systems like automatic emergency braking inoperative. ### Worse, they can later sell those vehicles to unsuspecting buyers. ### Cars lack a straightforward means for determining whether sensors are properly functioning, Nelson said. ### Another point of particular interest reported by the _Automotive News_ article cites a collision repair executive: “Of the approximate 33,000 body shops in America, he said only a fraction 17 Ellen Edmonds. “New Vehicle Technologies Double Repair Bills for Minor Collisions.” AAA. Oct. 25, 2018. Accessed at: https://newsroom.aaa.com/2018/10/new-vehicle-technologies-double-repair-bills-minor-collisions/ 18 Crash avoidance features improve safety but complicate repairs. IIHS News. Feb. 15, 2023. Accessed at: https://www.iihs.org/news/detail/crash-avoidance-features-improve-safety-but-complicate-repairs 19 Pete Bigelow, Driver-assist technology has surprise side effect: higher insurance, repair costs. Automotive News. May 22, 2025. Accessed at: https://www.autonews.com/technology/an-adas- collison-repair-0522/?utm\_id=gfta-ur-251124&share- code=CEEVFW4PRJG53BRI2ADY2QNILU&user\_id=4517954&customer\_secondary\_source=aac\_articleGifting ### have the proper lighting, perfectly level floor and automaker-specific targets to calibrate sensors. It can cost $600,000 to $1 million to outfit a shop with the right equipment, he said.” ### How post-collision repairs and calibrations associated with ADAS systems require adherence to OEM guidelines, tools and procedures are echoed by Mike Reynolds, an advanced certified diagnostic technician and instructor. ²⁰ Reynolds describes and demonstrates these issues in a ### detailed video, which also addresses how _efforts to reduce these costs can result in improper repairs and unsafe outcomes that may not be known or detected by untrained technicians without the use of OEM guidelines, tools and procedures or by consumers_ . ### In February 2023, the Insurance Institute for Highway Safety (IIHS) reported on its survey of owners of vehicles equipped with front crash prevention, blind spot detection or rearview or other visibility-enhancing cameras. Among those who reported that at least one of those systems had been repaired for any reason, about half said they had issues with the features after the job was completed. ²¹ According to the article: ### Post-repair problems with the technology were substantially more common among people who had features repaired because of crash damage or in connection with a windshield replacement. About two-thirds of owners whose crash avoidance feature repairs involved windshield replacement and nearly three-quarters of those whose repairs were required due to crash damage said they had issues with the technology after repair. In contrast, fewer than half of owners who had repairs done for other reasons faced problems afterward. ### Windshield repairs often make it necessary to calibrate crash avoidance sensors and cameras, though it’s a common step in many repairs. Automakers stipulate systems be calibrated anytime a sensor is removed and replaced or reinstalled. Likewise, calibration is typically an early step in addressing a malfunctioning feature. About two-thirds of respondents who had had repairs done said that calibration was included. Those respondents also reported a higher incidence of post-repair issues. ### Repeat trips to the repair shop are not uncommon with other routine mechanical repairs, either, and most owners reported that their insurance or warranty covered the complete cost, minus any deductible. ### However, the higher incidence of post-repair issues for repairs that involved calibration suggests that repairers are struggling with the calibration process. Some calibrations are complicated and require large spaces, specialized training and expensive equipment. Calibration software is subject to frequent updates, making it difficult for shops to keep their tools up to date. This is further complicated by a lack of standardization of calibration processes. Institute researchers are tracking these problems to monitor whether they persist or diminish over time. 20 Mike Reynolds. Revision 5. Jan 6, 2025. Accessed at https://www.youtube.com/watch?v=69t8CyI4rWY 21 Crash avoidance features improve safety but complicate repairs. IIHS News. Feb. 15, 2023. Accessed at: https://www.iihs.org/news/detail/crash-avoidance-features-improve-safety-but-complicate-repairs ### Repair problems are important to track because they have the potential to slow the spread of crash avoidance features that aren’t standard equipment. However, in the current study, only a little more than 5 percent of the owners said they would not buy another vehicle with the feature they’d had repaired. Repair hassles also might prompt drivers simply to switch off crash avoidance features, eliminating their safety benefits. ### “These technologies have been proven to reduce crashes and related injuries,” said Mueller. “Our goal is that they continue to deliver those benefits after repairs and for owners to be confident that they’re working properly.” (The details of the IIHS study were published in the _Journal of Safety Research_ . ²² ) ### Another source of data and information relevant to the ABLRAB to consider comes from Crash Network. This organization provides “Research, news and analysis for the automotive collision industry” and publishes a “survey series from Collision Advice and _CRASH Network_ to discover how insurers pay for "not-included" repair procedures.” These surveys are described in part, as follows: ²³ ### With the goal of helping shops become more aware of the "not-included" repair operations they are doing and whether other shops are being compensated for those procedures, CollisionAdvice and _CRASH Network_ developed this survey series to provide a real-world picture of the payment patterns of the eight largest U.S. auto insurers when it comes to "not-included" repair operations. ### Throughout the course of a year, the "Who Pays for What?" series covers nearly 100 different "not-included" procedures and estimate line items with each survey covering a different part of the repair process including: Refinish Operations; Body Repair Operations; Scanning & Calibration Operations; Shop Supplies; and Frame & Mechanical Repair. We ask shops to describe how often they are paid, by each insurer, for each procedure: "always," "most of the time," "some of the time," or "never." ### Other surveys include the Insurer Report Card, which surveys body shops nationally on an annual basis in which they request shops to grade to each of the insurance companies they interact with, by asking based on one question: “How well does this company’s claims handling policies, attitude and payment practices ensure quality repairs and customer service for motorists?” According to the Insurer Report Card, what sets highly-graded insurance companies apart from others based is that they “don’t pressure them to cut corners or install lower-quality parts just to save money. The best insurance companies also aren’t adding more administrative steps that slow down the repair and claims process.” ### Many surveys can be obtained by individuals for individual use by request. 22 Alexandra S. Mueller, Jessica B. Cicchino, David S. Zuby, Joseph V. Calvanelli. Consumer experiences with crash avoidance feature repairs. Journal of Safety Research, V88, 2024. Accessed at: https://doi.org/10.1016/j.jsr.2023.10.003. 23 https://www.crashnetwork.com/collisionadvice/02moreinfo.php ### CCC Intelligent Solutions, a company that provides workflows for insurers, collision repairers, automakers, parts suppliers, and lenders, to improve the claims and repair process and efficiency, provides reports on data and trends in the property and casualty insurance industry. It’s 2024 Q4 report cited the following key points from 2024 in review: ²⁴ ### From shifting claims volumes to the rising costs of repair and the growing presence of electric vehicles ( E\\/s) and hybrids, 2024 was a year of adaptation, with stakeholders working to stay ahead of the curve in an unpredictable environment. ### One of the biggest shifts this year was inflation, which drove the cost of motor vehicle insurance up by 51% (since 2022), causing consumers to become more selective about filing claims for minor damages. Repairable claims of $2,000 or less - often seen as small but frequent - now make up just 26% of the mix, down from 43% in 2019. ### Other significant points cited by CCC in 2024 ### • aging vehicle fleet - vehicles seven years or older now make up nearly 45% of all repairable claims had a significant impact on total loss frequency this year and fewer new ### • repair costs for older vehicles remained lower than for newer models, total losses soared as their values continued to drop ### • high [vehicle] purchase costs, loan rates, and auto premiums resulted in an uptick in uninsured or underinsured motorists (UM/UIM) claims - notably, auto casualty claims - as consumers struggled with affordability. This trend is not just a byproduct of lower vehicle values and inflation - it's also driven by the increasing claims costs. ### • Collision repair shops faced rising costs which continued to squeeze margins, while labor rates were up by 4.7% in 2024, rising faster than inflation and repair cost increases slowed compared to the double-digit jumps of 2021 and 2022, total repair costs still rose by 3.7%, driven primarily by labor ### Of particular interest, Thatcham Research, an automotive risk research and guidance organization, issued UK Insurance Industry Requirements (IIR) for the safe repair of ADAS equipped vehicles, which it announced in March 2020. ²⁵ These guidelines include: ### Inspection, realignment and calibration requirements must be considered in all repair situations where ANY of the following is included within the repair, service or maintenance procedure: 24 Kyle Krumlauf, Eric Bahnsen. “Crash Course 2024. A Year of Shifting Gears: How the Auto Claims and Repair Industry Adapted to Economic Strain and Evolving Technology in 2024. CCC Intelligent Solutions. Accessed at: https://www.cccis.com/reports/crash-course-2024/q4 25 Thatcham Research. UK Insurance Industry Requirements (IIR) for the safe repair of ADAS equipped vehicles. Mar. 2020. Accessed at: https://www.thatcham.org/wp-content/uploads/2023/07/IIR-Requirements-March-2020- Thatcham-Research.pdf ### • ADAS sensors, ### • parts likely to affect the operation and functionality of ADAS sensors, or ### • vehicle geometry ### When specified, inspection, realignment and calibration operations must be completed post repair to confirm that the sensors are functioning within the vehicle manufacturer’s technical specification. ### A repairer shall, **in all cases** : ### identify the presence, or not, of ADAS on the vehicle and ensure this is recorded. ### where ADAS are present, ensure repair procedures clearly identify if inspection, realignment and calibration are required and why. ### complete all relevant inspection, realignment and calibration activities as detailed within the repair procedures. ### inspection, calibration, realignment and road tests shall be carried out by a currently competent person. ### ensure the calibration results confirm that the sensors are functioning within the vehicle manufacturer’s technical specification. ### produce fully verifiable and auditable records and provide a copy to the Asset Owner / Work Provider. ### (The IIRs apply to Thatcham’s member insurers, which are identified in the March 2020 document cited.) ### Finally, the Automotive Body Parts Association (ABPA), which represents the aftermarket collision parts industry’s 2025 report, which includes surveys of drivers in the U.S., addresses the auto manufacturers’ roles in rising repair costs: ²⁶ ### The cost of collision repairs is climbing rapidly, placing an immense financial strain on American drivers—far beyond what can be explained by normal inflation. This report, prepared for the Automotive Body Parts Association (ABPA), examines the impact of these soaring expenses on consumers. Inspired by recent research linking car manufacturers’ monopolistic practices to inflated part prices and limited access to affordable alternatives, we illustrate how this situation leaves drivers with few repair options and forces them into difficult (sometimes even life-altering) financial situations. ### While this is beyond the scope of the ABLRAB, this report is cited for the Board’s reference. 26 High Costs, Hard Hits:The Consumer Struggle with Rising Collision Repair Prices. Accessed at: https://www.autobpa.com/abpa-consumer-research-report-2025/ ### **Observations and Recommendations** ### Consumers expect and need to access quality, safe, and timely repairs post-collision. Costs of these repairs have escalated due to motor vehicle complexity and the divergence from once relatively standardized features and material usage, which in turn requires investment in OEM tools, service information, training and OEM parts. While the effects of advanced motor vehicle designs and features have translated to improvements in vehicle safety for consumers, these benefits have resulted in an increased cost of ownership. ### It is clear from the above that it is not an exaggeration to say that collision repair shops and their technicians have to keep abreast of a staggering number changes related to what and how they repair. This requires proper training, tools and access to OEM repair information if they are expected to provide functionality and performance of vehicles that they are charged with fixing – and that consumers need and expect. ### What is less clear is why collision repair labor rates are being paid at a fraction of the rates paid for mechanical repairs. The continuation of this practice appears to threaten consumer access to timely, accessible and safe repairs. However, the significant increases that appear justified and necessary to support consumer’s needs will likely add even more costs that they will bear. ### Regardless, any increased labor rate costs does not necessarily require insurers to directly increase insurance premium rates to consumers. The ABLRAB does not have information about insurance company’s income from premiums and investments or their profit margins. (Similarly, the Board does not have labor costs - wages and benefits - parts costs, overhead, income, or profit margins for the repair shops; however, the submission by non-board member Bill Johnson, Pleasant St. Auto Body and Repair, provides some perspective.) ### Another likely negative outcome of increased body shop labor rates is that insurers are likely to designate more vehicles as a “total loss” and these vehicles will be given salvage titles. This presents yet another set of concerns that will affect consumers who own those vehicles, which include potentially purchasing a new vehicle which are at historically high average prices, or considering repairs that may sacrifice safety and quality. Currently, there are an increased number of car dealers willing to purchase vehicles that appear to have relative minor appearance damage but have been deemed a “total loss” because the cost of repairs exceeds its value. How these companies operate – even when there is transparency about the prior damage and disclosure of a salvage title – and make a profit appears to rest on their ability to perform repairs, or outsource those repairs, at a lower cost, creating an incentive to complete those repairs by cutting corners on quality and safety. ### In sum, there are many complex issues affecting the costs of collision repair that go well beyond the scope of this Board and the auto body labor rates that evaluating and any recommendation we provide. However, this should not forestall the Board’s efforts to address what is abundantly clear: auto body labor rates must be increased substantially. While this will provide some negative outcomes for consumers in the form of increased costs, without a substantial increase, the long-term harm will likely be greater. ### Thus, it is my recommendation this ABLRAB consider the prevailing rates for mechanical service as a baseline for auto body labor rates while also considering ways to minimize the impact on consumers. 90 ### APPENDIX I: 2008 SPECIAL COMMISSION REPORT