Labor Rate Surveys Not Written in Stone

by Scott Long

Finally, a win for the auto collision repair industry.

After persistent inquiries to the California Department of Insurance, the Collision Repair Association of California (CRA) has received a letter from the department's general counsel, Gary Cohen, concerning the subject of labor rate surveys in that state. Cohen writes that a labor rate survey conducted by an insurance company "does not create the presumption that these surveys accurately reflect the prevailing rates charged by auto body repair shops in a specific geographic area."

The letter, dated June 13, 2007, and addressed to CRA president Gene Crozat, adds, "Each survey and an insurer's use of a survey to settle automobile repair claims is evaluated based upon the particular claim being settled and the evidence received from shops, consumers, and other sources as to the validity of the survey results."

Cohen writes that in the event of a complaint, if an insurer indicates that it relied on a survey, the department will examine any evidence supplied by a shop, a consumer or a trade association that suggests the survey might be fraudulent.

"If the insurer cannot show that the survey results are reasonable and accurate, the department might disallow the use of the survey to settle auto insurance repair claims," write Cohen.

"The department's letter is a warning to insurers that their labor rate surveys will no longer be accepted as the weapon of choice in disputes over reasonable labor costs," said Allen Wood, CRA's director.

"The CRA has fought hard to put fairness in the labor rate survey process, and we thank the department for issuing this letter."

Scott Long, an editor for the CRASH Network in Washington, D.C., has been writing about the collision repair industry for 17 years.

© 2007 CRASH Network, reprinted with permission.