It’s interesting to read our state’s highest jurists equating a victims’ rights ruling with pending economic disaster — without any supporting facts or cases and of course completely neglecting to mention Michigan’s auto insurance companies’ record-breaking profit margins.
Last week I blogged about how our auto accident case law McCormick v. Carrier has survived in the Michigan Supreme Court... for now. But despite raking in the profits and charging excessive premiums, our auto insurance industry continues to have its bidding done by conservative Republican Michigan Supreme Court justices, and in particular, Chief Justice Robert Young.
Two of the court’s ultra-conservative, anti-consumer justices recommenced their unwarranted assault on the court’s months -old landmark ruling in McCormick v. Carrier, which accurately acknowledged the clear and unambiguous plain wording of the “pain and suffering” rights conferred by the Michigan Legislature on seriously injured Michigan auto accident victims.
In typical exaggerated fashion, the conservative justices in orders in Wiedyk v. Poisson, et al., and Brown v. Blouir, grossly exaggerated the scope of the rights recognized by the McCormick v. Carrier ruling, and then, based on that distortion, assailed McCormick for threatening “the long-term economic integrity of the present No-Fault (insurance) system in Michigan.”
Excessive Michigan auto insurance premiums and profits not mentioned by Michigan Supreme Court
Conspicuously absent from those predictions of doom and gloom, however, was any mention of the excessive premiums charged or the enormous profits collected by Michigan’s auto insurance companies for liability insurance to cover the pain and suffering compensation owed to auto accident victims.
If anything is threatening the “long-term economic integrity” of the Michigan No-Fault system or the drivers who are mandated by law to comply with it, it is the greedy auto insurance industry’s unregulated, unchecked strategy of price-gouging for never-ending profit-maximization.
For years, auto insurance companies have been charging excessive and unreasonable liability premiums to achieve excessive and unreasonable profits in Michigan. Liability insurance covers the pain and suffering compensation paid to a Michigan auto accident victim as result coverage pays the pain and suffering compensation.
According to an analysis of the profitability of the auto insurance market conducted by insurance industry expert and former Missouri Insurance Commissioner, Jay Angoff, Michigan’s three largest auto insurers “have been highly profitable” and “all appear to have been charging excessive liability … rates.”
This occurred, according to the Angoff study, because over a five-year period, each auto insurance company severely restricted what it paid out in liability coverage for pain and suffering claims from Michigan auto accident victims.
Allstate Insurance was the worst, paying out only $.41 for every premium dollar it collected. Auto Club Insurance Association and State Farm were only slightly less cheap, paying out $.54 and $.52 for every premium dollar collected, respectively.
Because the insurers paid out so little in claims relative to what they collected in premiums, the Angoff study concluded “definitively” that the insurers’ liability rates “have been excessive,” adding:
“For those rates not to be excessive, the companies should be paying out a greater percentage of the premium dollar in claims.”
How Michigan’s Insurance Code should apply to greedy auto insurance companies
Significantly, the Angoff study results are consistent with Michigan’s Insurance Code. Under Michigan law, an auto insurance company is prohibited from charging a premium rate that is “unreasonable in relation to the benefits provided …”
And an auto insurance company is charging an unreasonable premium rate if, as the insurance companies in the Angoff study did, it is paying out less than $.60 in claims for every premium dollar it collects. MCL 500.1615(5)
The conservative justices’ unwarranted condemnation of the McCormick ruling is just another in a long line of unchallenged, one-sided assaults on the rights of seriously injured auto accident victims.
Whether the attacks occur in the Michigan Supreme Court or in the Michigan Legislature (where bills to dismantle Michigan’s one-of-a-kind No Fault system are currently pending), too little is heard about the auto insurance industry. This is the auto insurance industry that the justices and the lawmakers are so dedicated to protecting. And it’s reaping enormous profits by charging excessive premium rates and paying fewer and fewer No-Fault insurance benefits.
It is unconscionable that a situation like this should have been allowed to develop, but what’s even worse is that the greedy auto insurance industry has been allowed to succeed in conniving the state’s most powerful public servants — Michigan Supreme Court justices — into doing its bidding.
– Steve Gursten is one of the nation’s top accident attorneys. He is head of Michigan Auto Law and has received the highest verdict or pain and suffering settlement in the state for a car accident or truck accident victim in 2008, 2009 and 2010, according to Michigan Lawyers Weekly.
– This blog was written by Steve Gursten and Todd Berg, esq.
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