Debate on Repeal of Wisconsin Auto Insurance Changes Begins

Republicans in the Wisconsin Legislature are aiming to repeal most of the auto insurance coverage increases mandated by Democrats, which industry and state regulators blame for higher premiums.

Insurers are supporting the Republican’s rollback, while lawyers argue the mandates should be left intact.

In 2009, Wisconsin enacted legislation that raised the financial responsibility limits from $25,000 per person, $50,000 per accident to $50,000 per person and $100,000 per accident and made several other changes that increase insurance costs. With the new limits Wisconsin has joined Alaska and Maine with the highest financial responsibility limits in the nation.

Assembly Bill 4 and Senate Bill 7 would return the financial responsibility limits to $25,000 per person and $50,000 per accident, placing Wisconsin back among the majority of states – 46 – that require that amount or less for liability coverage.

The Property Casualty Insurers Association of America (PCI) testified Jan. 19 before a joint hearing of the Wisconsin Senate and Assembly Insurance Committees and urged lawmakers to support legislation (AB 4 and SB 7) that would restore the state’s financial responsibility requirements to pre-2009 levels of $25,000 per person and $50,000 per accident.

Robert Passmore, senior director, personal lines for PCI, said the Republican bills are “all about providing consumers with choices.”

He said drivers that can only afford the minimum limits are now being required to purchase more coverage than they may want or can afford.

“Instead of being able to purchase what they can afford, they now are forced to choose between having auto insurance, at higher prices, or no insurance at all,” Passmore said.

PCI estimates that the new limits could cost up to 42 percent more.

The 2009 legislation has its supporters, however. The Wisconsin Association for Justice says the Republican bills would repeal key consumer protections in Wisconsin’s “Truth in Auto Insurance” laws. These provisions help protect citizens injured by drunk drivers, and shield consumers from insurance companies that refuse to play it straight with auto insurance coverage, the group said in a news release.

The proposed laws allow drunk drivers to carry less automobile insurance, said Mike End, president of the Wisconsin Association for Justice. Repeal of the 2009 law would also return Wisconsin to a lower standard of accountability that would allow insurers to insert fine print into complex auto insurance contracts to deny the consumer the coverage they paid for and purchased in good faith.

The group says uninsured/underinsured motorist coverage would be affected. In addition, consumers will only be allowed to collect on one auto policy even if they have paid for coverage on multiple cars in one household, according to the lawyers’ group.

However, PCI argues that the new legislation not only restores consumer choice by returning financial responsibility, but it also returns medical payments and uninsured motorist minimum limits to their prior levels. Changes to the definition of underinsured motorist will help to temper loss costs that ultimately drive auto insurance premiums, PCI said.

Topics Auto Legislation Wisconsin