Behind closed doors at the Massachusetts state house representatives of the collision repair and

insurance industry have been meeting with a group of legislators appointed by the Chairman of the

Financial Services Committee, Ron Mariano (D-Quincy), for over two years now. The "Auto Body

Working Group" consist of representatives from Massachusetts based auto insurers, the Massachusetts

Auto Body Association (MABA), Central Mass Auto Rebuilders Association (CMARA), Association of Auto

Service Providers (AASP-MA/RI), and three legislators from the Financial Services Committee, which has

jurisdiction on insurance matters. State representative Bob Spellane (D-Worcester) is the Chairman.

The legislation they are working on would make dramatic changes to the current process in place that

consumers must endure after they are involved in an accident: A process that has not changed since

1988. If passed, it will affect how every one of their customers is treated when they are in an accident in

the future. Some say the changes will be just as important as the Governors proposal for auto insurance

reform in both establishing free market principles and cost savings to consumers.

Current Process

While there are still some disagreements between insurers and repairers all agree that current laws and

regulations handcuff all parties from working towards the goal of quicker repairs, which ultimately

benefits the consumer in time and money. Because of insurer involvement in payments of claims for

auto damage the process is highly regulated, and as stated before those laws and regulations have seen

little change since 1988.

One clear area of agreement is to allow the use of digital photography and the internet by repairers to

submit evidence of damage, rather than the current requirement that an insurer send a person to the

shop to assess the damage. This process can take days to complete and adds costs to the repair with

increased rental and appraiser fees. While this seems to benefit insurers it was in fact proposed by

MABA.

Another area of agreement would be a new requirement that collision repairers posses minimum

standards of equipment before they could obtain a license. Current law only requires a state EPA permit

and a licensed appraiser on the premises. The new proposed requirement would ensure that a repairer

posses certain equipment for painting, frame repairs, welding and other necessary tools for the safe and

appropriate repair of vehicles. This was also proposed by MABA.

Another part of the current process that both repairers and insurers agree needs to be addressed is the

process that takes place when a policyholder initially files a claim with their insurer. When a consumer

files a claim today they are provided with confusing, misleading, and in some cases wrong written

material and verbal information that is supposed to inform consumers of their rights under

Massachusetts law. This often results in consumers being "steered," and while both sides agree this

needs to be addressed, how to address it is still being debated.

What is Steering

Steering is the act (illegal in Massachusetts) of insurers, their representatives, and/or appraisers directly

or indirectly suggesting claimants go to or away any collision repair facility. It has been said by many that

if you can resolve the issue of steering, then many other problems (repairer-insurer friction, consumer

rights violations, etc.) could be resolved as well. Only then could you begin the process of establishing a

true free market system of collision repair that would benefit consumers, policyholders, and all parties

into the future.

Insurers content that they should have a right to tell their policyholders where they should get their car

repaired as matter of good customer policy and commercial free speech. Repairers, consumer groups,

and even a recent J.D Powers study contend that customers should be free from any insurer influence in

their choice of collision repair shop due to the fact that insurers are only willing to refer to shops they

have a financial agreement with (Referral Shops) to repair the car for less money, which may affect the

quality and safety of the repair.

"Steering is a very serious problem within the collision repair industry," said former MABA President Rob

DelGallo. "It violates a consumer's right to choose a collision repair facility and is done generally to avoid

the honest small businessman who demands that all necessary procedures are done to restore the car

to its pre-accident condition, which is what people are entitled to under their insurance policy," he

added. "Consumers have a right to freely choose their insurer, why shouldn't they have the same right

to choose a collision repair shop," DelGallo concluded.

Misleading Material Contributes to Steering

One of the biggest contributors to steering, intentional or not, are the pamphlets, brochures, and letters

by insurers that do not provide a clear picture of claimant's rights under their policy and the law as

required by Massachusetts regulations. Under the law insurers must provide a list of all registered repair

shops by county, but distribute a list that contains highlights and asterisks next to some shops and

nothing next to others. Often, there is a reference a "guarantee" by the insurer if they choose one of the

highlighted shops and an implication that if they choose one that is not highlighted they "may be"

responsible for part of the cost of the repair. These highlights, guarantees, and additional collateral

material given to a claimant when they contact the insurer to inform them of the accident are clearly

designed to direct claimants to shops participating in the referral program.

"If we are ever to be successful in establishing a free market system where repairers compete on their

ability to provide quality service at reasonable cost then we need to address the issue of misleading

information being provided to consumer by insurers," said Chad Sulkala, Chairman of MABA's Insurer

Relations Committee.

The Auto Body Working Group has made some progress on this issue by agreeing to disallow an insurer

from offering a "guarantee," since shops already provide their own guarantee, and eliminating any

highlights, bolding, italicizing or other identifiable features from the list of repair shops provided to

claimants. However, if insurers are successful in gaining an ability to verbally recommend a repair shop

then those changes would be moot.

The "Other Side "of Auto Insurance Reform

While much attention has been paid to the efforts of Governor Romney and legislative leaders over the

issue of automobile insurance reform, people need to understand that the legislature and others are

also hard at work trying to forge change for the "other side" of the automobile insurance equation.

While the Governor's initiative focuses on getting the state out of the business of setting insurance

premiums, change the manner in which high risk drivers are allocated to insurers, and address how

suburban drivers subsidize urban driver, this legislation is intended to reform the process that takes

place after you are in an accident.

"To have the same rules and regulations in place today that existed twenty years ago is clearly not in the

best interest of consumers, repairers, or insurers," said Peter Bourikas, a member of the Auto Body

Working Group. "To leave them in place, especially as the Governor is trying to lure new insurers to the

state, would be a huge mistake," he added.

In fact, some speculate that the collision repair legislation would do as much to cut cost for repairs (and

therefore overall insurance rates) and establish a free market system for collision repairers and

policyholders as the Governor's bill would do to lower insurance premiums and establish a free market

system for insurers. But what is certain is that current laws and regulations designed to mandate

insurers cut their cost has evolved into a system that gives insures too much control at the expense of

consumers and collision repairers.

Insurer Control of Repair Process

What began as an honest attempt in the late 1980's to control automobile insurance costs has evolved

into a system where insurers are allowed to control almost all facets of the collision repair process. The

combination of the Direct Pay statute passed in 1988, which established the Referral Repair Shop

program, and the subsequent Cost Containment statute have unfortunately become tools to establish

"control" of the repair process from the beginning to the end.

In fact, some feel these statutes are responsible for changing the business of collision repair from what

the policyholder is entitled to for their loss and what the individual repairer charged to what the insurer

decided they would pay. In addition to steering consumers to shops they favor, insurers routinely dictate

what they will pay for labor, parts, procedures, storage, sublet items, towing, and more. When

complaints are raised insurers say they are required to do this under cost control regulations and/or cite

the cry of higher rates if they have to pay more.

Something needs to be done to improve and/or restore consumer protections and protect the

consumers right to choose. In addition, we also need to do something to ensure a collision repairers

right to obtain fair payment for their services and conduct their businesses as they see fit. If not, there

soon may not be anyone left to repair consumers vehicles, because no business can survive in an

environment where they are paid less than their costs for their products and services.

Summary

While no one can be sure what the final bill will look like, or whether or not it will be enacted into law,

the process of allowing all interested parties to come together in one room and make their case to

legislators that was established by Chairman Mariano and headed by Representative Spellane should be

commended. Clearly, all sides have been impressed with how fairly Representative Spellane has

conducted these meetings and his commitment to the issue.

"Consumer choice and consumer protection is the motivation for moving forward with this legislation

and an important step towards an overall improvement of the Commonwealth's collision repair

industry," said Rep. Spellane. "This is a joint effort from insurers, auto body shop representatives, and

legislators to develop a system in which consumers will benefit and have clearer choices," he added.

If you would like more information about this issue, or have any questions about the collision repair

process, your rights or how to choose a collision repair shop, feel free to contact MABA directly at 1-

800-ITS-MABA or go to our web site at www.ITSMABA.com.