Insurance attorney asks insurance industry about its promises of savings for Michigan drivers in exchange for ravaging their No-Fault benefits and protections
This is a blog (or rant) I wrote in response to recent editorials by the Detroit News and Detroit Free Press promoting slashing No Fault benefits in exchange for vague promises of savings from the insurance industry. It goes beyond the fact that we’ve heard these promises before from the insurance industry – and the promised savings have never materialized (in fact, premiums have only gone up). It also goes beyond the fact that both Detroit newspapers are currently tilting “conservative” and leaning Republican in their latest reincarnations.
These editorials are about the pending Senate bills that would dismantle No-Fault insurance benefits for car accident victims, in exchange for supposedly saving drivers money with their insurance premiums. Before Michigan’s No-Fault insurance system, which the Insurance Institute of Michigan has actually called the “best auto insurance coverage in the country,” gets turned on its head, a lot more needs to be known about the proposed changes and whether they’re worth considering.
By saying they’re making Michigan auto insurance rates more affordable, the Michigan auto insurance industry, through its advocates in the Legislature, has chosen to demonize the crown jewel of Michigan’s No-Fault system: unlimited, lifetime medical benefits for seriously or catastrophically injured auto accident victims.
Michigan auto insurance industry and its “smoke and mirrors” game
Our auto insurance industry is playing a “smoke and mirrors” game with people of Michigan, trying to convince them the reason they’re paying so much for auto insurance is because of the medical benefits guarantee in the No-Fault law, which the same auto insurance industry lobbied, badgered and bullied the Michigan Legislature into passing more than 30 years ago.
The real reason Michigan drivers pay so much for auto insurance is because insurance companies force them to do so. No one is asking why Michigan’s insurance companies enjoy the highest profitability margins in the nation. If Michigan auto insurance rates are unacceptably high, that’s because auto insurance companies choose for them to be high. These companies – and the companies alone – determine the premium price they’re going to charge auto insurance customers.
If Michigan had an insurance commissioner who had the power to regulate the amount of profits insurance companies can make for selling a product that our law requires drivers to purchase, these rates would significantly drop. I don’t hear the insurance company lobbyists, or the Republicans they contribute so much money to in the Michigan Legislature, asking for expanded power for the Michigan insurance commissioner to regulate insurance company profits in this state.
So before the Michigan auto insurance industry gets away with gutting “the best auto insurance coverage in the country,” we need to know:
o More about why the insurance industry is charging Michigan drivers so much for auto insurance,
o Whether the proposed “gutting” of No-Fault benefits has any chance of actually saving Michigan drivers money,
o Or whether this is all about slashing expenses and boosting profits for Michigan’s deep-pocketed insurance industry.
Make the Insurance industry answer these questions before taking away our No-Fault protections
I propose that before anything more is done on their bills to dismantle Michigan’s No-Fault system, our auto insurance industry should provide answers to the following questions:
1. Are you willing to settle for less profits in order to make auto insurance more affordable for everyone? If so, how much less?
2. To keep Michigan auto insurance affordable for everyone and to protect Michigan drivers from ever-increasing insurance rates, are you willing to have your prices regulated by the insurance commissioner or capped (just as you are urging the Legislature to cap the fees that doctors can charge when treating Michigan auto accident victims)?
3. You insist that the cost of the average paid claim for No-Fault benefits (also called personal injury protection benefits (PIP) benefits) was $36,425 in 2010. But how many paid PIP claims were there in 2010? And how does the cost associated with those paid claims compare with the revenues from PIP premiums written and collected during 2010?
4. If the average paid claim for personal injury protection benefits is $36,425, then in how many years will it exceed the minimum PIP Choice limit of $50,000? (If your calculations are correct that the cost of the average paid PIP claim has tripled since 2000, then we can expect the average paid PIP claim to hit nearly $110,000 by 2020, right?)
5. Are you willing to guarantee in writing (perhaps as amendments to bills currently pending in the Michigan Senate) exactly how much Michigan drivers will save should your proposed No-Fault choice policy limits become law?
6. Even if Michigan drivers saved 10 percent to 30 percent on their auto insurance rates as a result of your proposed No-Fault changes, wouldn’t they still be paying some of the highest rates in the country? For instance, based on the figures released by Insure.com, a 10 percent savings would put Michigan just behind Louisiana with the country’s second highest rate. And a savings of 30 percent would put Michigan just after Connecticut with the country’s 12th highest rate.
7. If the goal is savings for drivers, why the huge recent bonuses to insurance company execs?
8. How will any of these proposals make any meaningful difference when vehicle damage is currently over 50 percent – and some say closer to 60 percent – of insurance payouts in this state? Wouldn’t this be a better place to make meaningful changes before taking away critical protections for victims of traumatic brain injury and spinal cord injury?
Once Michigan’s auto insurance industry provides answers to those questions, everyone will have the information we all need to have a meaningful discussion about the cause of Michigan’s high auto insurance prices and whether gutting “the best auto insurance coverage in the country” is really the best way to bring those prices down.
– Steven Gursten is recognized as one of the nation’s top insurance attorneys handling serious auto accident lawsuits. He writes about insurance company abuse and the Michigan No-Fault laws, and is available for comment.
Related information:
Show us the money from proposed changes to our No-Fault law
Three potential cases for Michigan auto accidents
Insurance attorney videos: No-Fault benefits and advice
Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights to better serve you. Call (248) 353-7575 for a free consultation with one of our No-Fault insurance attorneys.
Dear Mr. Gursten; Thank you so much for the informative information. My husband is quadriplegic and has been since 1996. It has been a rough road for him over the years and his insurance carrier has caused us much grief, even during our most trying times of medical crisis. It appears, most recently, they have become even less cooperative and more challenging regarding our care-giver benefit, diagnosis’ and denials of medical treatment that should be paid. I have heard rumor as well, our carrier has been taking steps to cut our care-giver benefit in half. That would be devastating at this conjuncture as the older my husband gets, the more fragile his health becomes. We have recently lost our house and now live in my daughter’s garage, which I converted as the carrier did not pay the care-giver benefit while my husband was hospitalized for over six months. I sold what ever I could to help pay what I could and put gas in the car for the more than one hour drive to see him. All of this has been quite a set back, of which his medical crisis has been the greatest. I do not know what we would do with out the no-fault benefits that you speak of as we are already experience pay cuts and denials, with no where to turn.