In Defense of Consumers

The collision repair industry is not just about fixing cars; it’s about advocating for and supporting consumers. With this indisputable fact in mind, 2021 will see the continuation of AASP/ MA’s work to dramatically reform the Auto Damage Appraiser Licensing Board (ADALB).

Previously known as Senate Bill 182 (with a new number to come in this upcoming session), AASP/MA’s legislation aims to move the ADALB from the Division of Insurance to the Division of Professional Licensure (where all other professional licenses in the state are maintained). The bill’s purpose aligns with Governor Baker’s executive order “to ensure proper review of the regulation of professional licensing by independent boards.” Additionally, the bill seeks to expand the size of the ADALB to include two consumer advocates, one appointed from the Attorney General’s Office and the other from a consumer advocacy group, and replace the current Board chairman, appointed by the Massachusetts Commissioner of Insurance, with one appointed by the Commissioner of the Division of Professional Licensure. Additionally, it will set term limits for all ADALB members. The current bill has been submitted by Representative Tackey Chan (D-2nd Norfolk), House chair of the Joint Committee on Consumer Protection and Professional Licensure, and has been assigned a docket number with a permanent House number to follow.

At its core, AASP/MA’s current ADALB-related legislation is a consumer-protection tool. It was created to better ensure that critical state regulations pertaining to repair and reimbursement are followed equally by all appraisers – whether they are independent, work for an insurer or represent a collision repair facility. Due to its experience overseeing a host of other trade industries (plumbing, hairdressing, electrical work, etc.), the Division of Professional Licensure has the power to investigate consumer-generated noncompliance issues and enforce licensing requirements – actions that are sorely lacking in the current ADALB structure. And at a time when virtually every facet of American life is financially impacted by COVID-19, there would be no additional costs incurred to enact the bill’s provisions.

Over the past several months, various AASP/MA members have brought a personal touch to the association’s goals by having direct conversations with area legislators on the ADALB/DPL bill and other matters of concern. Last fall, current AASP/MA Board member Paul Tuscano (Auto Body Builders; Middleton) and business partner Keith Ells demonstrated their commitment by hosting an in-shop meeting with Senator Bruce Tarr (R-1st Essex and Middlesex), AASP/MA Executive Director Evangelos “Lucky” Papageorg and current Board affiliate member Jeff White (North Andover Auto Body). Tuscano was pleased to have the opportunity

[COVER] STORY

to shine a stronger light on the issues this legislation aims to address. “Getting this bill passed will add strength in support of our cause, but the main thing is to support the consumers we all represent,” he explains. “Having a representative from the Attorney General’s Office and a consumer representative on the ADALB would definitely help. In many ways, we’re fighting an uphill battle with insurance companies with one hand tied behind our back In addition to welcoming Senator Keenan at Total Care right now. Having said that, it is the consumer who loses when Accident Repair, Bernard later attended a meeting with Senator repairs aren’t performed properly because a shop stood down to an Susan Moran (D-Plymouth and Barnstable) held at Cape insurance company’s request to use unsafe parts or do something Auto Body in Plymouth and joined his business partner, Jack else that would lead to an improper repair or perform required Lamborghini, on a Zoom call with Senator Marc Pacheco (D-1st repairs without proper reimbursement under the insurance policy’s Plymouth and Bristol). He is greatly encouraged by the response indemnification language. We want to provide excellent service so these gatherings received. that vehicles repaired at our shops will react as intended if they’re “The support was overwhelming at all three meetings. These involved in another accident.” conversations help to legitimize our industry and our needs. We For Brian Bernard, co-owner of Total Care Accident Repair are people who live in these communities, and we are voters. We in Raynham, welcoming Senator John Keenan (D-Norfolk and have jobs, we have families and we want to be professional in Plymouth) to his facility for a meeting on the bill last September everything we do. This gave the legislators an opportunity to see was time well spent. that and say, ‘Yes, these are real business people who are being “We have a Legislature that is very unfamiliar with our mishandled through our Licensing Board process, and we need to industry, so having face-to-face meetings allows us to communicate correct this.’ They really understand the kind of pains we’re going our issues and gives our legislators an opportunity to learn more through, and they recognize that we’re being wronged. They also about us.” 0420_NEAR Hyundai Group Ad.qxp_Layout 1 3/12/20 1:51 PM Page 1 know that consumers are being wronged by not getting the best opportunity to get their cars repaired by well-trained, well-equipped professionals in our industry. With this bill specifically, they see that there’s something not quite right [with] the way the ADALB is configured. This bill would improve that situation and make the ADALB a more objective board that is treated the same way as all the other boards in this state.” In addition to AASP/MA’s push for ADALB reform, the month ahead will see the association continue its efforts to ensure minimum reimbursement to claimants during the repair process. Information on this endeavor will be shared in the near future. Despite operating their businesses during an incredibly challenging 2020, AASP/MA members spent last year setting the stage for substantial progress in making the association’s ADALB/ DPL bill a reality. With such a critical consumer-protection endeavor still at stake, Bernard urges the entire Massachusetts automotive community to take a stand and get involved. “Our association needs a bigger voice from more people in our industry. We are all responsible for participating if we want something good to happen. If people decide not to participate, then obviously this will always be an uphill battle. But when we can get more people participating – and get more senators and representatives to visit shops and have those relationships – then these things will begin to happen.”

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[AASP/MA] FEATURE

not support an efficiency claim. My next article will address this question more directly.

The final article in this series will report on an economic test of these two arguments based on national Labor Rate data. The findings will be analyzed in an attempt to resolve the issue with a look at the geographical variability of Labor Rates. Auto insurers’ “efficiency argument” requires that prices (Labor Rates) align with costs (measured in some manner). Since costs in high-density urban areas tend to exceed those in rural regions, an “efficiency argument” means that Labor Rates will rise with population or shop density across different counties.

However, if Labor Rates do not align with the rising costs of higher-density areas (because the more shops that exist in a region, the greater the opportunity to play them off against each other), this would support a “market power interpretation” of this situation. Consequently, these two arguments can be tested against each other based on the regional distribution of Labor Rates. The results of such a test will be reported in my next and final report in this series.

Fred Jennings, Jr. of EconoLogistics (“Consultants to Business and Law”) can be contacted at (978) 356-2188 (for messages only), (617) 605-3150 (direct line) and econologistics@yahoo.com.

Correction: A passage in Fred’s first article in the January 2021 issue of New England Automotive Report was inadvertently changed during the editing/proofreading process prior to print. The intended passage was as follows:

“‘Monopsony’ may be an unfamiliar term. ‘Monopoly’ is market power used against buyers by a single seller, where sellers can take advantage of buyers with limited choices by jacking up prices.“Monopsony” is market power used against suppliers by buyers, who take advantage of suppliers with limited choices by squeezing payments. Both involve abuses at the expense of consumers and/or suppliers based on their limited options.”

1 Monopolies can result from exclusive patents, regulation or other means. They are usually temporary, unless protected by legal means against competitive entry. 2 A direct comparison of motor vehicle insurance premiums with body work, ignoring parts, means the former rises by 1.67 times the latter instead of 2.3 times. The difference in their rates of price increase remains significant. The previous assumption that labor and parts charges are approximately equal is not unrealistic as an approximation.

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