Historic Meeting Planned to Discuss Proposed Senate Bill That Would Cap Labor Rates in Mississippi

Carlsbad, CA, February 24, 2016 (Newswire.com) - For the first time in history, Mississippi body shops will sit down with representatives from the insurance coalition in that state to discuss the issues surrounding labor rates. This is in response to Mississippi State Senator Videt Carmichael's recent introduction of Senate Bill 2187.

If passed, the bill would prohibit collision repair shops from charging labor rates higher than the national average. It also stipulates that shops that seek to charge above the average must have the approval of the Commissioner of Insurance.

"This bill is an obvious attempt by the insurance industry to suppress labor rates and reduce their average severity,"

Dan Risley, ASA President and Executive Director

John Morgan Hughes, the executive director of the Mississippi Collision Repair Association (MCRA), reached out to association members in early February requesting they contact their legislators in opposition to the bill. Within 72 hours of that call to action, the MCRA met with Carmichael who proposed setting up a meeting to discuss the issues and work out an equitable solution for both sides.

"This is the first time in Mississippi that has ever happened," said Hughes, who has a background in governmental affairs and lobbying. "He [Carmichael] has agreed to work out a compromise with us. We think this is really positive."

The meeting is expected to take place in late February/early March.

The Automotive Service Association (ASA), which opposes House Bill 2187, also encouraged Mississippi shops to contact their state legislators through the ASA's website www.TakingTheHill.com and voice their opposition to the bill.

"This bill is an obvious attempt by the insurance industry to suppress labor rates and reduce their average severity," said Dan Risley, ASA president and executive director. "Attempting to classify all collision shops as equal demonstrates a lack of understanding of the collision repair industry and the cost of running an actual business."  

Mississippi Code 83-11-501 currently states: "No insurer may require as a condition of payment of a claim that repairs to a damaged vehicle, including glass repairs or replacements, must be made by a particular contractor or motor vehicle repair shop; provided, however, the most an insurer shall be required to pay for the repair of the vehicle or repair or replacement of the glass is the lowest amount that such vehicle or glass could be properly and fairly repaired or replaced by a contractor or repair shop within a reasonable geographical or trade area of the insured."

The Senate bill would add the following: "In no event shall a motor vehicle repair shop charge labor rates above the average national rate charged for like-kind work, without the express approval of the Commissioner of Insurance."

Hughes told Autobody News that six representatives from the MCRA and six representatives from the insurance coalition will attend the meeting. Each side will come to the table with eight or 10 issues and share their perspective on such issues as labor rates, regionalism, emerging technologies and the cost of capital investment to repair new vehicles.

"It's a very different industry than it was 10 years ago or even 20-30 years ago, said Hughes. "We just want them to see what the financials look like from our side of the table. We also want to be good faith initiators and look at what they are facing. We think this is going to be a super productive meeting and we are really excited about it."

Hughes said the problem with the national labor rate is who defines it. "Not all shops are created equal," he said. "My cost of operation could be very different than your cost of operation because of the cost of employment, and the capital investments on type of vehicles that we work on. That's very concerning for our members. From top to bottom it's concerning for our small local guy and for some of our bigger metropolitan shops."

Hughes said he often hears from shops that the forces they go up against are much larger than they are and they don't feel like they can make a difference. He commended Mississippi shops for taking the time to contact 100 legislators in such a short time period, which resulted in a meeting that will benefit the entire industry. "When you get these calls to action, it's so important for the local shops to participate and contact their local legislators," he said.

For more information, contact John Morgan Hughes at jmhughes44@gmail.

To follow this story and other issues in the collision repair industry, visit www.autobodynews.com.