BILL NUMBER: S8350

SPONSOR: ADDABBO
 
TITLE OF BILL:

An act directing the department of financial services to conduct a study
on the fair market value of labor rates for services covered under motor
vehicle insurance policies

 
PURPOSE:

Directs the Department of Financial services to conduct a study of the
fair market value of labor rates for services covered under motor vehi-
cle insurance policies.

 
SUMMARY OF PROVISIONS:

Section one directs the Department of Financial Services to conduct a
study-and prepare a report on the fair market value of labor rates for
services covered under motor vehicle insurance policies.

Section two directs the Department of Financial Services, in consulta-
              

tion with the Department of Transportation, to issue a report on the
findings of the study along with any appropriate regulatory or legisla-
tive actions to the Governor, the Temporary President of the Senate, and
the Speaker of Assembly.

Section three establishes the effective date.

 
JUSTIFICATION:

Small automotive repair businesses are being unfairly treated, by the
predatory practices of big-name insurance companies, which deceptively
steer their members toward preferred shops that accept unreasonably low
labor rates. At the same time, they direct insured drivers away from
choosing a repair shop they know and trust. This is not a sustainable
system for small businesses, or for any auto body shop that takes pride
in providing high-quality work.

Notably, these deceptive tactics deployed by the insurance industry
silently prey on their own insured members, often forcing them to pay
out of pocket unless they use a "preferred" shop. These shops are
compelled to accept unreasonably low labor rates simply because the
insurance company dictates the rate, with no regard for whether it is
fair or reasonable.

There are no true negotiations between repair shops and insurance compa-
nies to determine these rates. Anecdotally, these rates are often far
below what many shops consider fair. In some cases, insurance companies
have even sent threatening letters to small auto body shops, warning
them not to discuss labor rates with other businesses, further limiting
transparency and fair competition.

Without transparency in how insurance companies determine "fair market
value" for labor, there is no way to assess whether the rates they offer
are equitable. Currently, New York State does not provide clear guidance
on how insurers are allowed to establish these labor rates.


This lack of meaningful oversight leads to financial hardship for small
repair shops when insurers can unilaterally decide what they are willing
to pay, regardless of whether that amount is fair. If these deceptive
practices are not addressed through legislation, they will have a devas-
tating impact on mom-and-pop auto body shops across New York.

The relationship between a customer and a trusted automobile repair shop
is built on loyalty and confidence. People should not be forced to take
their car elsewhere simply because their insurance company requires them
to do so.

This legislation will give New York State the tools it needs to confront
these deceptive practices by providing data and legislative recommenda-
tions on labor rates and what constitutes a fair market value for auto
repairs.

 
LEGISLATIVE HISTORY:

New Bill

 
FISCAL IMPLICATIONS:

Minimal

 
EFFECTIVE DATE:
This act shall take effect immediately.