Directs the department of financial services to conduct a study on the fair market value of labor rates for services covered under motor vehicle insurance…

• Democratic2

◆ The sponsor's argument

Why Joseph P. Addabbo Jr. says this is needed

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.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.