Results of DOI Labor Rate Survey Reluctantly Released

September 29, 2006 by
Filed under: Collision Repair Industry 

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 was too busy enforcing Connecticut’s insurance laws. 

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, 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.)

  1. 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?
  2. How often do you conduct your market survey?
  3. 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?
  4. The Current hourly rate being used in this particular area for:
    • body repair
    • paint
    • mechanical

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”.  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.” 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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Comments

10 Comments on Results of DOI Labor Rate Survey Reluctantly Released

  1. Bob Isham on Fri, 29th Sep 2006 10:20 am
  2. This is just more proof that the insurance industry controls rates, not the market forces. Maybe someone should research the “insurance license department” and confirm that the actual license “empowers the insurer to lie, cheat and steal”. This entire load of BS only confirms that Connecticut, like the other 49 states, is firmly in the pocket of the insurance industry.

  3. Charlie Barone on Fri, 29th Sep 2006 10:28 am
  4. Once again it has become clear that insurers will pay whatever they have to pay in order to get their policyholders’ cars repaired. The fact that they try their best to shove these “prevailing rates” down the throats of body shop operators every day notwithstanding, it is a clear case of the tail wagging the dog. But for the shops’ acquiescence, the insurance companies would be forced to pay a reasonable rate.

  5. manhauserman on Fri, 29th Sep 2006 11:17 am
  6. THIS INDUSTRY IS ON THE BRINK OF COMING APART, IT IS SO WEAKLY CONSTUCTED AND ABUSED BY THE INSURERS WHO HAVE TAKEN ADVANTAGE OF UNDER EDUCATED INDUSTRY, I AM SAD TO SAY I AM PART OF. WITH STATE FARMS NEW PROGRAM READY TO TAKE PLACE WE NEED STATE ASSOCIATIONS TO DO THERE OWN LABOR RATE SURVEY, USING DATA FROM SHOPS WHO ARE NOT UNDER THE PRESURRE OF THE DRP/INS. CO WORLD. IN REALITY THE DEPT OF INS/FRAUD IN ALL STATES SHOULD BE EMBARESSED HAVING NOT ADDRESSED THE BIGGEST FRAUD OF ALL THE LABOR RATE. AS THINGS GET TIGHTER THIS WINTER FRAUD WILL RISE SO SHOPS CAN SURVIVEL. NOT ONE BODY SHOP IN THIS COUNTRY IS MORE THAN ONE PHONE CALL AWAY FROM BEING CLOSED FINANCIALLY, WE ALL ARE GUILTY OF SOME INFRACTION OF SOME SORT TO SURVIVE.
    TOGETHER LETS MAKE THE NECESSARY CHANGES IN 2007

    MANHAUSERMAN

  7. Ranger on Fri, 29th Sep 2006 12:33 pm
  8. I asked my local paint jobber to conduct a rate survey in our area and make the results available to everyone that participates. We’ll see what happens. Had a Farm adjuster tell me that only one shop showed up on the online survey for our area 06. I know for a fact that I submitted my rates. I along with many others have always felt the survey was bogus. Thanks for the info.

    Trying to stand my ground, Ranger

  9. hnestr on Fri, 29th Sep 2006 4:14 pm
  10. Well John, lets figure this one out: if we can? OK – Briefly, Has anyone had a complete market survey, Oh when I say anyone, I mean any collision repair facility, in any market area across this country, had a COMPLETE market survey? Other than State Farm’s survey. Because lets all face it- The only Insurance company that does at least anything close to a market survey is State Farm. Am I right or wrong? My take on actual surveys is GEE- Do you want to apply for our DRP program. – What are your rates? Oh and do you have a clean restroom because we will be spot checking? Doesn’t matter about your actual quality of work is? Probably doesn’t matter if you can produce any CSI results either. Just matters if your bathroom is clean or what your rate is. So what then do they look at? I personally think it is a travesty! What is it that they do? First: They lure the interest of DRP. OH MY! JOB REFERRALS! So, Ok any business wants to increase for growth, right! So I suppose your restroom can be primo or really nasty as long as your labor rate is in line. Ok, and then you have to face the consolidators in your area and get smacked by their attempt at undercutting the entire industry! So, lets face it, we either become as one as small business people, OH I think that could be a law breaker! Or we stand up and fight! I’m gonna tell you, I’m always gonna be a fighter. I am not going to let my livelihood die without a fight. I have a family to support and I will not let them suffer on account of big business!
    Sincerely,
    hnester

  11. DOYLE HALE on Fri, 29th Sep 2006 4:22 pm
  12. I AM GOING STRAIGHT TO MY DOI IN AZ AND GET A STATE LICENSE, TO BE A LICENSED APPRAISER. THEN I CAN TRUELY SET MY OWN RATES, AND WORK OFF MY ESTIMATE ONLY.THEN I TOO will LEGALLY HAVE A LICENSE TO STEAL!!

  13. john digilio on Fri, 17th Nov 2006 6:46 am
  14. if things don’t start to change for the better for the bodyshops we will have no more techs to to the repairs . how can we pay a tech with a family of four a decent salary, when our profit keeps declining and our cost to do business goes up up and up. shops can only pay a certain amount of salary and the new techs are seeing that and are getting out of the business. there are alot of jobs out there that offer alot more and don’t require any tools. thanks for time, john

  15. Russell Potosky on Tue, 20th Feb 2007 9:11 am
  16. We are a autobody – auto repair shop, we are paying one of our bodymen with over 20 years experince $25.00 witch he well deserves. We get anywhere from $42.00 to $46.00 per hour for his work he performs. We are paying one of our auto mechanics $16.00 per hour, he has about 7 years experance we get $83.00 per hour for the work he performs for us {not related from collision} Go to any Pepboys service center look threw the window see what thay have in the shop working on cars then asks what there labor is, you better set down before you fall down.
    Russ P
    Matawan NJ

  17. Brian on Thu, 22nd Apr 2010 6:12 am
  18. Can you post the results of this, or tell me where I can find it?

    Thanks.

  19. Edvar on Sat, 18th Sep 2010 12:01 pm
  20. Well here in Florida is much worst,our labor rate is $40.00 and if you don`t grease or better the insurance workers you will never get to the DRP or even be consider.
    We`ve been in business for five years and still nathing, This industry just suck.

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