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Why is my Car Insurance so High? Time for Insurance Reform in Michigan

October 30, 2007 by Steven M. Gursten

This letter to the Detroit Free Press was written by Wayne Miller, an excellent lawyer, friend and colleague practicing law in Southfield, Michigan. Wayne and I serve together on the Michigan Auto No-Fault Committee for the Michigan Association for Justice. In addition to teaching law at Wayne State University Law School in Detroit, Wayne handles large provider claims, where he and the other lawyers in his office represent hospitals and doctors around Michigan. This is what Wayne recently wrote:

I applaud the Free Press for its recent editorial on the high cost of auto insurance. This discussion is most timely. However, I’m troubled that the Free Press presented only the standard insurance solution to high insurance charges: cut benefits (i.e., fee schedules and optional coverages). Unfortunately, these simplistic solutions will not solve the problem. Consider just the following:

1. Medical benefits are a small portion of your auto insurance bill. Take a look at your auto insurance declaration page. You’ll see that your collision/comprehensive coverages are by far the biggest expenses on your auto insurance. These coverages are not affected in the slightest by the proposed reductions in your medical coverage.

2. Insurance companies have benefited by a series of reforms over the last 10 years, the most dramatic being the Kreiner decision by the Michigan Supreme Court in 2004. Premiums have not come down.

3. Why not? Because insurers use reforms to increase profits, not to reduce premiums. This is the conclusion of Jay Angoff, the former Insurance Commissioner of Missouri, who testified before the Michigan legislature earlier this year. As reported in the Detroit News earlier this year: “[Angoff] said AAA’s profit more than doubled to $104.2 million last year from $50.9 million in 2002. AAA’s surplus — money set aside to pay for future claims payments — swelled by 68 percent during that period, increasing to $1.53 billion from $915 million.” The study reviewed financial records from AAA, Allstate and State Farm, which combined provide auto insurance to about half of Michigan’s insured. “All three companies are making excessive profits,” Angoff said.

I would like to see the Free Press follow up on Mr. Angoff’s recommendations for insurance reform, rather than allowing insurers and their representatives to continue seeking to take our benefits away.

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