R.I.’s Top Court to Hear Appeal of Auto Body Labor Rate Ruling

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October 21, 2008 Tuesday 03:29 PM EST

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R.I.'s Top Court to Hear Appeal of Auto Body Labor Rate Ruling

Sean P Carr

PROVIDENCE, R.I.

The Rhode Island Supreme Court will hear an appeal of a lower-court ruling that would require every automobile insurance company operating in the state to conduct a labor rate survey and use it as the sole factor in determining a prevailing auto body labor rate.

The Property Casualty Insurers Association of America has sued to block an August state Superior Court decision, it said would mandate a "badly flawed scheme" for calculating rates and could cause inflated rates and higher repair costs (BestWire, Aug. 15, 2008).

The Supreme Court also stayed the prior ruling in Auto Body Association of Rhode Island vs. State of Rhode Island Department of Business Regulation, pending the outcome of the appeal. The state had interpreted state law to mean that the labor survey should not be the only factor insurers should consider when determining rates. The ABARI is seeking to overturn the state's decision. PCI supports the DBR; the Supreme Court will hear a consolidated appeal from PCI and the state.

"ABARI wants to circumvent the role of competition in setting prices and force insurers to pay whatever amount is reported to them in the Auto Body Labor Rate Survey. We want to make sound decisions about repair claims and take into account the many factors that should be included in determining a fair labor rate," Frank O'Brien, vice president and regional manager for PCI, said in a statement.

In 2007, the top five writers of private-passenger auto in Rhode Island, according to A.M. Best Co state/line product information based on direct premiums written, were: Progressive Insurance Group, with a 17.5% market share; Allstate with 13.3%; Amica Mutual, with 9.5%; MetLife Auto & Home Group, with 9.2%; and Nationwide Group, with 8.7%.

(By Sean P. Carr, senior associate editor, BestWeek: [email protected])

October 22, 2008