AASP/NJ Speaks Out on State Farm Labor Rate Recalculations

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State Farm has ceased use of its Auto Repair Facility Survey program to help determine auto body Labor Rates in areas of New Jersey, New York and Pennsylvania, the insurer said on Monday, December 5. As reported by Repairer Driven News, this change could potentially see shops receiving $15-$16 less per hour from the insurer, as State Farm will instead reportedly calculate its rates based on “analyzing the cost of vehicle repairs” in claims.
“Back in November of 2015, State Farm redefined prevailing competitive rates in certain areas to refine market boundaries,” said AASP/NJ Executive Director Charles Bryant in a statement. “This resulted in an increase in the Labor Rates that State Farm would voluntarily pay in several areas of New Jersey. At this time, it was reported that State Farm had also begun accepting the use of a paint and materials calculator to determine the cost of paint and materials. This past Monday, however, we started to receive reports that State Farm was not only no longer honoring those adjusted rates, but would also no longer honor the use of a paint and material calculator to determine the cost of paint and materials.”
“It’s incredibly disappointing,” notes AASP/NJ President Jeff McDowell. “It seemed like we were moving in the right direction following the rate increase late last year, but for whatever reason, it seems that State Farm has once again changed its mind in determining how it pays repairers. We’ll be working to find answers and will provide updates on this situation as we receive them.”

“At the present time, AASP/NJ is making a diligent effort to figure out what prompted this decision and why,” Bryant added. “We are intent on determining the best advice we can provide our members on how to deal with this change.”

“I honestly don’t get it,” says AASP/NJ Collision Chairman Jerry McNee. “State Farm determined the prevailing area rates based on the survey that they conducted themselves. With this change, there is no open market; it’s a dictatorship. We are continuously being repressed; every insurance company sat back and waited to see who was going to make the next move…and no one did. None of the other insurance companies can tell me how they came up with their current market rates because they haven’t done a survey. With most A technicians’ true costs running $50 to $55 per hour, how are we expected to keep up?”

To learn more about AASP/NJ’s NORTHEAST® Automotive Services Show, please visit aaspnjnortheast.com.