Massachusetts establishes auto body labor reimbursement rate advisory board

Under the approved Massachusetts fiscal year 2027 budget signed by Gov. Maura Healey, a permanent auto body labor reimbursement rate advisory board will be established.

The Massachusetts Auto Body Association (MABA) has pushed for updated labor rates in the state for years, citing 1988 as the last time the rate was increased.

Creation of the advisory board falls under Section 78 of the FY 2027 budget.

It states that the board will exist within the Division of Insurance “to address any issues related to auto body labor reimbursement rates.”

The advisory board will consist of:

• • One member appointed by the commissioner of insurance, who will serve as a co-chair;
  • One member appointed by the attorney general, who shall serve as a co-chair;
  • One member from the auto insurance industry, to be appointed by the Massachusetts Insurance Federation, or its successor;
  • One member from the auto repair industry, to be appointed by the Massachusetts Auto Body Association, or its successor; and
  • One member appointed by the Massachusetts State Automobile Dealers Association, or its successor.

Section 78 states that no board member can serve more than three consecutive two-year terms.

“The advisory board shall meet not less than one time per year,” it states. “The advisory board shall be responsible for creating, implementing, and overseeing a survey not more than once every four years that shall be given to relevant auto body shops and insurers as determined by the advisory board.”

Section 78 also states that every four years, the insurance commissioner will issue the labor reimbursement rate survey to auto body shops and insurers, as established by the auto body labor reimbursement rate advisory board under Section 231. Then, the board will review and analyze the results of each survey.

Data is to be compiled on contracted hourly labor reimbursement rates, posted hourly labor reimbursement rates, and any additional information the board deems relevant.

Industry data to be collected will include, but not be limited to:

• • Labor reimbursement rates in neighboring states
  • Total labor costs and total repair costs for repairs, including the total cost of repair
  • Inflation data
  • Workforce data
  • Vocational school trends
  • Automobile insurance premiums
  • Any additional information requested by the board

The August cover story of the New England Automotive Report states that a labor reimbursement rate adjustment is expected in 2027. In the article, MABA Executive Director Lucky Papageorg is quoted as calling the move “a tremendous victory.”

“[N]ot only for our industry,” he continued. “But more importantly, for every Massachusetts motorist.”

He also said: “Massachusetts consumers deserve safe, proper, manufacturer-compliant repairs, supported by fair and reasonable labor reimbursement.”

Section 78 states that if the insurance commissioner, through review of the labor reimbursement rate surveys and consideration of competition, concludes that a reasonable degree of competition doesn’t exist, then they can implement a full rate hearing, under Department of Insurance regulations, “to establish a minimum auto body labor reimbursement rate for the commonwealth or a region thereof.”

Guy Glodis, MABA’s legislative agent, states in the New England Automotive Report that, “The tide has definitely turned here in Massachusetts. The auto body industry has gone from long sustained defense to actively playing offense.”

Lastly, Section 78 states, “In addition to competition, in setting the auto body labor reimbursement rate, the commissioner shall consider: (i) the best available market data relative to auto body repairs and the resulting insurance claims; and (ii) the impact on coverage premiums, including, but not limited to, phasing in the labor rate over a period of not more than three years.”

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