Priceless

In a bold and gutsy move in the face of an economy in downward spiral and unemployment levels approaching record highs, Michigan Governor Jennifer Granholm has called for a freeze on price increases by all hospitals, doctors, physical therapists, auto manufacturers, car dealers, auto mechanics, auto body shops, pharmaceutical companies, oil and gas suppliers, car part manufacturers, utility companies, tire makers, windshield installers, glass manufacturers, auto rental companies, upholsterers, GPS makers, radio installers, phone companies, emergency medical technicians, ambulance companies, tow trucks, paper manufacturers, printing companies, Internet providers, computer retailers, commercial landlords, advertising and marketing firms, forensic experts, accountants, information technology consultants, lobbyists, political fundraisers and lawyers.

She also asked all charities and nonprofits to refrain from requesting additional contributions from insurance companies serving their communities.

Oh wait, no she didn’t. Oops. She called for a freeze on auto insurance rate increases only. Just a cap on insurance premiums— no cap on the things auto insurance premiums pay for.

Granholm wants to buy some time, or rather wants insurance companies to pay for some time, until lawmakers can consider changes to the state’s costly auto insurance system.

Yet is auto insurance really a priority for Granholm or lawmakers? Is the cost of auto insurance really what is dragging down Michigan’s economy and driving up its unemployment figures?

According to the state itself, auto insurance rates in Michigan have gone up an average of 3.45 percent per year since 1989. That hardly seems like a crisis.

In fact, according to a National Association of Insurance Commissioner’s report for the two-year period of 2004-2006, Michigan’s average premium actually declined 6 percent.

Granholm criticized auto insurers for premium growth during the last 20 years. But as one industry representative pointed out, in 1989 the average price of a car was $15,350 while in 2008 it was $28,715 – an increase of 87 percent. Now if only those Detroit car makers would lower their costs.

It’s hard to take seriously the Governor’s reform drive when she runs over many of the people whose cooperation she will need just pulling out of the driveway. Governor, there’s still time to check your mirrors, back up and put your reform effort in forward all over again.

By the way, the higher car insurance premiums go, the more the state gets. Property casualty insurers pay more than $220 million a year in state premium taxes. Just a reminder in these difficult days of falling revenues and budget cuts.

Topics Auto Legislation Michigan Manufacturing