Mich. Group Debates State Advocate’s Charge That Auto Rates Too HIgh

A charge leveled on July 16 by Michigan’s insurance advocate that auto rates are too high fails to mention that the state’s auto insurance benefits are the best in the nation, one insurance trade group says.

The Insurance Institute of Michigan countered that mandates are unlimited, lifetime medical coverage for those injured in automobile accidents. No other state in the country comes close to such a high level of benefits. However, according to the National Association of Insurance Commissioner, Michigan’s premiums are 13th highest in the country.

“Michigan motorists are getting a good deal on their auto insurance. Insurance companies are providing the best benefits in the country at the 13th highest premium,” said Pete Kuhnmuench, executive director, Insurance Institute of Michigan (IIM).

Kuhnmuench said that the state insurance advocate also failed to mention that Michigan auto insurance premiums have been declining.

A study of rates filed by the top 10 insurance companies with the state show that auto insurance rates dropped an average of 2 percent last year, while homeowners insurance rates declined 1 percent. According to the most recent data available, Michigan homeowners premiums rank 21st in the nation and are below the national average.

“Michigan has hundreds of insurance companies writing personal insurance in Michigan,” said Kuhnmuench. “The competitive market, along with less frequency of claims, has resulted in savings for policyholders.

The Insurance Institute of Michigan also questions why the need for a $122,000 per year Michigan insurance advocate at a time when insurance rates and consumer complaints against auto and homeowners insurance are declining.

According to statistics from OFIS, complaints about insurance companies have declined, from 7,001 in 2006 to 3,636 in 2007. Of the insurance company complaints registered at OFIS, 22 percent concern auto insurance (down from 24 percent in 2006) and 10 percent are regarding homeowners (down from 11 percent in 2006). Health insurance represented 51 percent of all consumer complaints in 2007, up from 2,032 in 2006.

“In 2005, OFIS released a two-year study of insurance rates in Michigan conducted by Wayne State University which showed that insurance rates generally reflect the underlying costs of insurance,” Kuhnmuench said. “The insurance advocate’s role seems more like election year posturing than a real attempt to bring down rates for Michigan policyholders.”

In order to lower insurance costs for policyholders, IIM supports several legislative proposals that will address the underlying costs of insurance by allowing policyholders more flexibility in selecting the level of no-fault medical benefits that best fits their needs, tightening insurance fraud efforts and implementing a medical fee schedule similar to one used in the workers’ compensation system.

IIM is a government affairs and public information association that represents more than 90 property/casualty insurance companies and related organizations operating in Michigan.

Source: IIM

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Topics Auto Pricing Trends Homeowners Michigan