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Auto insurance prices increase by 10%

Michigan auto insurance rates jumped 10%, but where’s the scrutiny of insurance company profit margins?

auto insurance price increase, image

Auto insurance prices in Michigan are up … again. Specifically, they jumped 10% or $262 between 2015 and 2016, going from $2,476 to $2,738, according to Insure.com’s “2016 edition” of its annual “Car insurance rates by state” study.

Significantly, Insure.com ranks Michigan as having the “most expensive car insurance rates in the nation” for the third year in a row.

Other consumer-oriented organizations also reported price increases for Michigan auto insurance.

The average annual premium in the Great Lakes State went from $1,171.94 to $1,264.21 – an increase of 7.8% – according to data from the National Association of Insurance Commissioners (NAIC) and the Insurance Institute of Michigan (IIM). This made Michigan the state with the 5th highest auto insurance prices in the country – up from 7th previously

Similarly, the Insurance Information Institute (III) reports that auto insurance prices increased 7.8% from $1,048.87 to $1,131.40, making Michigan the 6th most expensive state – up from 7th previously.

Additionally, among the states with higher auto insurance prices than Michigan are two No Fault states (based on data from the NAIC, IIM and the III), New York and New Jersey, both of which have $50,000 and $15,000 caps on No Fault medical benefits – unlike Michigan, which has no No Fault medical benefit caps.

As close scrutiny is brought, yet again, to the spiking of Michigan auto insurance prices, it’s natural that consumers may be wondering where the scrutiny is of auto insurance company profit margins and the lack of transparency into how auto insurer profits affect auto insurance prices.

As I noted in my Detroit Free Press guest commentary, “Michigan auto insurance companies collected more than $2 billion more in auto premiums in 2011 than they paid out in claims.”

And, in “My response to Insurance Institute of Michigan director Pete Kuhnmuench on auto insurance company profits and how they affect Michigan drivers’ pocketbooks,” I pointed out that, not only has former state insurance commissioner Jay Angoff described Michigan auto insurers as “highly profitable” and being “significantly more profitable than the national average.”  But the Insurance Institute of Michigan, itself, has touted the “profitability” of Michigan’s auto insurance industry.

It’s time that Michigan catch up with the times – and with other states – and empower our Insurance Commissioner to regulate clearly excessive profit margins of Michigan No Fault auto insurers.

At a minimum, we need to amend the Insurance Code to grant the Insurance Commissioner “real” power to regulate auto insurance rates and to stop auto insurance companies from charging “excessive” prices to consumers. To learn more, please check out my blog post, “The power to stop ‘excessive’ auto insurance prices.”

Michigan auto insurance price trends

The chart below shows the Michigan auto insurance price trends based on the most current data available from the National Association of Insurance Commissioners (NAIC), the Insurance Institute of Michigan (IIM), the Insurance Information Institute (III) and Insure.com.

MI auto insurance price trends

Michigan versus other high-priced states

Michigan is one of 12 No Fault states in the country (more than 20% of the country operates No Fault auto insurance systems).

Even though Michigan offers auto accident victims the most generous medical benefits in the country, substantially higher medical benefits to auto accident victims than any other state, four other states (only two of which are No Fault jurisdictions) have higher auto insurance rates, according to data and statistics from the National Association of Insurance Commissioners (NAIC) and the Insurance Institute of Michigan (IIM).

M1 auto insurance versus high priced states1, image

Similarly, despite the fact that Michigan offers substantially higher medical benefits to auto accident victims than any other state, five other states (only three of which are No Fault jurisdictions) have higher auto insurance rates, according to data and statistics from the Insurance Information Institute (III).

MI auto insurance versus high priced states2, image

Sources:

  • National Association of Insurance Commissioners (NAIC) “Auto Insurance Database Report 2012/2013,” Page 29 (Released on January 11, 2016) Press release: http://www.insurance.naic.org/Releases/2016_docs/naic_auto_insurance_report.htm; Report: http://www.naic.org/documents/prod_serv_statistical_aut_pb.pdf)
  • “Average Auto [Insurance] Premium,” Insurance Institute of Michigan, “Updated: July 1, 2015” (based on data from the National Association of Insurance Commissioners): http://www.iiminfo.org/LinkClick.aspx?fileticket=yMxhM8glGvo%3d&tabid=1729
  • “National Study Shows Average Auto Insurance Premiums In Michigan Rising,” Insurance Institute of Michigan, January 13, 2016, press release: http://www.iiminfo.org/LinkClick.aspx?fileticket=kSyijRk0SnU%3d&tabid=2010
  • “Auto Insurance – Costs and Expenditures,” Insurance Information Institute (based on data from the National Association of Insurance Commissioners): http://www.iii.org/fact-statistic/auto-insurance
  • “Car insurance rates by state, 2016 edition,” Insure.com: http://www.insure.com/car-insurance/car-insurance-rates.html
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