Ray Gunder, owner of Gunder’s Auto Center in Lakeland, Fla., increased his standard door labor rate from $42 to $48 per labor hour, a 12.5 percent increase.Like this article? Sign up to receive our weekly news blasts here.
Gunder, who has been in business 44 years, said he did this in June because the current labor rates being offered by insurers were insufficient to sustain profitability and continued growth.
“It had been almost six years since rates had moved; driving our net profit into a danger zone," Gunder said. "Our business and our techs struggling financially left me with no options. I felt that for my company and its team members to keep up with the rising costs of living and for us to keep abreast of ever increasing operational costs, raising our labor rates was necessary."
Gunder’s new rates were posted in the shop's reception area and each claims person and appraiser who Gunder’s dealt with were informed of the new rates. This increase, which Gunder considered minimum, was considered by many insurers to be substantial and was met with anticipated resistance.
Many insurance companies made their concerns and objections known but elected to pay the higher rate. Those insurers include MetLife, Kemper Services, Westfield Comp., Auto Owners, Acceptance Casualty, Liberty Mutual, Amica Mutual, Horace Mann, The Hartford and Direct General.
However, these six insurers have yet to pay the increased labor rate willingly: USAA, GEICO, State Farm, Allstate, Infinity and Travelers.
Gunder has proceeded to file lawsuits on behalf of his customers via an assignment of proceeds and/or power of attorney to resolve the rate dispute issue. He said he had to take this action to enable his customers to receive their entitlements necessary to allow them to get a thorough and quality repair.
“To date, two of these insurers have asked our attorney what his charges are to date, perhaps with the thought of conceding, paying our rates, and avoiding protracted litigation,” Gunder said. “With regard to the others, we have filed for discovery and scheduled depositions with their claims people and I am anxious to see what we find as it will no doubt lead to other issues to be used in future actions… if and when they should be required.
“I am sure all insurers are concerned with having to pay other shops in the area if they pay Gunder’s, but I have to say that I am stunned at how far we have come in getting fair and reasonable compensation for things like PMC-Logic material invoicing, mark-up on sublet, parts return fees and many other reasonable and necessary charges and have consistently heard that other local repairers don’t request such compensation, even though they know Gunder’s is getting paid for them. I’ve had appraisers tell me, 'Ray, I’d pay it if asked – but very few even ask.'"
