Rebuttal: Reform won’t make auto insurers leave
Michiganians pay among the highest auto insurance rates in America. According to a Wall Street Journal study, this has resulted in a staggering one-third of our motorists driving without insurance. At the same time, industry profits are at record levels. Last week the Michigan House of Representatives passed landmark legislation, on a bipartisan basis, to make premiums more affordable and companies more accountable.
These bills include prohibiting insurers from favoring the wealthy by banning the use of a policyholder’s education, occupation and credit history in setting rates, and stopping premium increases when policyholders file a claim, but are not at fault.
The News (”House Dems’ punitive proposals prompt three states to lobby for Michigan insurers’ employment,” Dec. 12) asserts these reforms are “punitive” and may cause insurers to leave for states like Ohio, Indiana, and Iowa. Not true.
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The respected Auto Insurance Report indicates that Michigan auto insurance companies have the second highest profit margin (13.2 percent) in the United States, just behind Hawaii (17.4 percent). AIR’s analysis of premium affordability ranks Iowa first, Ohio 12th and Indiana 14th. Michigan? No. 43.
Furthermore, Michigan restricts auto injury lawsuits more than any state. For every one such lawsuit filed here, Iowans file four, Indianans file six and Buckeyes file eight. Plus, unlike those other states, our no-fault system requires consumers to purchase the industry’s product.
High profits, low litigation, compulsory insurance and the nation’s weakest laws for industry oversight make Michigan an attractive market for insurers. Gov. Jennifer Granholm and Farmers Insurance Co. recently announced that Farmers will significantly expand its presence in the state.
No, the companies won’t leave. But residents just might, unless we enact the reforms moving through the Michigan House to lower punitive premiums.
Melvin Butch Hollowell
Automobile and Home Insurance Consumer
Advocate, State of Michigan, Lansing
Tags: AIR's analysis, Auto Insurance Report, driving without insurance, highest auto insurance rates, landmark legislation, Melvin Butch Hollowell