A California Department of Insurance (CDOI) attorney told insurers and collision repairers that the department is looking at adopting new rules for the application of insurer labor rate surveys in rate disputes between insurers and repairers, according to the Collision Repair Association of California (CRA).

A group of insurers and repairers have been working to find rules that will be fair and effective. The group's next meeting is Aug. 26 in Sacramento, Calif.

Bill Gausewitz, CDOI legal counsel, asked the group to propose rules that would serve as prohibitions. If an insurer conducted a survey that involved a prohibited action, it might be subject to an unfair claims practice violation under Section 790 of the Insurance Code. CRA lobbyist Richard Steffen said an obstacle to rulemaking is that the CDOI commissioner does not regulate the collision repair industry.

"The rules have to apply to insurers and that limits how we craft the prohibitions," Steffen says. "The CRA doesn't want surveys used in a way that will create average rates that fail to reflect the ingredients of quality repair work. We think the commissioner understands that not all shops are equal and that averages are not standards."

Steffen said that agreement between the two industries will be difficult to reach. The state’s three repair associations contend that discounted rates, including DRPs, should not be included in an insurer-conducted survey.

The insurers stated the following in a memo to the department and repairers: "The survey should not contain shop labor rates that have not somehow been verified and justified as being reasonable."

The CRA said that statement is unclear.