Results of DOI Labor Rate Survey Reluctantly Released
It took the Freedom Of Information Act to pry from their hands the results of a labor rate survey conducted by the Connecticut Insurance Department, but I now have a copy. It was not me who requested the survey results but I am happy to share them with you, along with some commentary.
About three years ago the Auto Body Association of Connecticut, with the backing of the Attorney General asked the Connecticut Insurance Department to ask Insurers how they determined their pathetic “prevailing rates.” Like other requests to the DOI, this one was ignored for some time. I remember inquiring about the survey and being told that they had been mailed to each insurer and were awaiting the results so they could compile them. That was many months after the request. I guess the DOI wasÂ too busy enforcing Connecticut’s insurance laws.Â
Just imagine the legal departments of some of these large insurance companies trying to determine how to answer these questions. Wouldn’t you just love to be able to sit in on one of those meetings?
I had completely given up on the idea that the DOI would ever accomplish this monumental task of sending out a letter to insurance companies, but I got the surprise of my life the other day when I received a FAX with the survey results. It is titled “Labor Rate Survey 2004.” It appears the DOI did the work but just didn’t want to release it to the public. And after refusing to release it when asked nicely by interested parties, those parties had to resort to legal tactics by filing a Freedom of Information Act request.
Reading the survey results enlightens one to the possible reasons behind the DOI’s reluctance to release this information. It does not reflect well on their buddies in the insurance companies.
Before I give you the results, let me give a brief disclaimer. I do not have the raw data. I have what appears to be a spread sheet with information entered by DOI employees and the cryptic answers may not be the exact response of the insurance company surveyed. But I have faith in the extreme competence of the DOI staff to transpose this material properly.
Here are the questions asked, exactly as written,Â by the DOI. (Oh, and before anyone writes to me about poor grammar, misspellings and poor punctuation, I’m copying directly from the DOI’s paperwork. In some cases I had to make changes to make a word or sentence understandable.)
- How does company determine if the labor rate that you use is the usual & customary rate for body repairs, paint and mechanical done in a specific area of the state?
- How often do you conduct your market survey?
- What factors are considered in the labor rate determine i.e.
- geographic location of shop?
- size of shop?
- quality of shop equipment?
- skill level of shop employees?
- ability of shop to produce a quality end product?
- within the timelines established by the appraisal?
- Does company ever pay higher than what is considered the prevailing rates?
- body repair
The questions pertain to the Connecticut marketplace, but one can assume that a company will try to maintain uniform procedures and policies across the country.
MetLife uses “experience of appraisers,” and they “work with body shops to determine U&C” (usual & customary). That’s surprising considering their appraisers continually tell shops they aren’t allowed to pay any more than the rate determined by MetLife. They conduct a market survey “as often as necessary”.Â I’ve never been surveyed and don’t know anyone who has. Apparently, it’s never been “necessary.” Their answer to the question about their current labor rates in this area was “no base line.” Very interesting. I think every shop in Connecticut could tell the DOI MetLife’s base line labor rate. And so could their appraisers. Who’s lying, the appraisers or did MetLife lie to the DOI?
Progressive made no excuses for their behavior. They just gave a retarded answer. They use the “Marketplace but utilizes flat rate manuals (Mitchell)” That’s nice. If you’re afraid to answer the question honestly, just spew some gibberish. Kinda like when you ask a liberal how he would fight terrorism and he turns red and answers, “Nazi!!” Very convincing. Progressive had no problem with listing their ridiculously low labor rates. Hell, they think we’re making too much money!
Nationwide pays what the “majority of auto repair shops are willing to charge. Constant review of pref & non-pref shops.” Translated for those of you who don’t speak BS that means “what the browbeaten shops are willing to accept to stay open just one more day.” and “constant steering away from non-pref shops, and constant harassing reinspections of pref shops.”Â By the way they listed the lowest labor rates in the survey. They had a spread of $42 – $46. Maybe it’s their whore shops that are getting the $42.
The Hartford really stepped in it. Remember, Connecticut body shops have a class action lawsuit against The Hartford for steering, so their answers were priceless. They determine their labor rates “on a claim by claim basis in the field at the discretion of appraisers, (negotiated) no set rates.” I know a group of Hartford appraisers who will be so happy to hear that, all along, they could have been paying shops whatever they felt was fair. I can’t wait to get another Hartford job in my shop. It will probably be a while, though; I’ve already done one this year.
Allstate was completely honest. They get their rates “via field adjusters written estimates in body shops & agreed amounts.” They don’t negotiate or pay higher rates and they listed their rates for the entire state exactly as it is. See when you are as big and mighty as Allstate, you can break the law and then brag about it. “Na na na na, you can’t get me! My lawyers will beat up your lawyer!” Allstate determines what rates it will pay based on the rates it pays. How’s that for convoluted turd-speak? They tell their appraisers how much they can pay (and they’d be fired on the spot if they strayed from these rates by one penny), then they use all those estimates to determine how much to tell their appraisers to pay. In computer programming we call that an infinite loop. The computer locks up and crashes. Kind of makes you want to lock your hands around an Allstate executives neck.
Liberty Mutual didn’t know what to say. They answered like a schizophrenic squirrel in the middle of the street trying to decide which way to run to avoid an oncoming car. Question one was answered, “review of its appraisals and periodic surveys of independent shops in CT.” If periodic mean never, then they are telling the truth. Oops, I should have read further because the question, “what factors are considered in the labor rate determination” the answer was, “Yes. Direct Repair Shops.” I guess if I want to be surveyed I need to be one of their whores.
Did you know that Progressive does a formal market survey, “at least annually”? Yup, that’s what they told the DOI. But they also told me I was a crook because I needed to make a profit by marking up a tow bill. Go figure.
There are many more insurance companies listed in the survey. At some point I’ll see if I can get a copy posted on this site so you can study it yourself. It makes great reading in the can. And when you are finished, you can use it to do your paperwork. After all, it’s already full of **it.
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