Michigan’s auto insurance companies are still “highly profitable”
Michigan Millers Mutual Insurance Company has decided to enter the No Fault reform propaganda war. Too bad its claims are completely false.
Michigan’s auto insurance companies are “highly profitable,” contrary to the recent inaccurate and rather sensationalistic claims by Michigan Millers Mutual Insurance Company.
On its Facebook page on May 13, 2013, Michigan Millers Mutual made the following outlandish and unsubstantiated claim:
“In terms of the excessive profits made by insurance carriers, nothing could be further from the truth as Michigan has been THE most unprofitable state in the country for private passenger auto insurance and Michigan policyholders are paying the 8th highest rates in the country because of this provision. In 2011, A.M. Best, the primary financial rating organization for all insurance carriers, reported that for every $1 in no fault premium collected, $2.42 was paid out in claims.”
But here are the facts:
- Michigan auto insurers are “highly profitable,” according to a former state insurance commissioner.
- Michigan auto insurers’ profitability has not only been positive and comparable to other industries, but it has also allowed insurers to lower auto insurance prices, according to the Insurance Institute of Michigan.
- Nearly 80 auto insurers wrote $1 million or more in auto premiums and there are more than 700 auto insurers authorized to do business in Michigan, none of which would be the case if Michigan’s auto insurance market were as “unprofitable” as Michigan Millers Mutual would like people to believe.
- Michigan auto insurers collected more than $2 billion more in auto premiums than they paid out in claims in 2011.
- Michigan No Fault insurers collected more $673 million more in No Fault premiums than they paid out in No Fault claims in 2011.
To paraphrase MMM in terms of whether auto insurance companies are losing money: “nothing could be further from the truth.”
Michigan auto insurance companies are ‘highly profitable’
- Michigan auto insurance companies have been “highly profitable” and have been “significantly more profitable than the national average,” according to former state Insurance Commissioner Jay Angoff’s study, “An Analysis of the Profitability and Performance of the Michigan Auto Insurance Market.”
- The Insurance Institute of Michigan and its Executive Director Pete Kuhnmuench have been emphatic and unequivocal about Michigan auto insurers’ profitability: “Recent profitability has enabled companies to decrease auto insurance premiums over the past several years. … ‘The insurance industry’s profitability also has a positive impact on the state of Michigan. … Michigan profits are comparable to other industries. … ‘The competitive market is working in Michigan. Insurance companies are profitable which allows them to reduce premiums …’” (Insurance Institute of Michigan, “Insurance Industry Stability Benefits Michigan,” 6/7/2007 press release quoting Executive Director Pete Kuhnmuench)
- There were 78 auto insurance companies doing more than $1 million in business in Michigan in 2011, and State Farm Mutual Automobile Insurance Company, alone, took in more than $1 billion in auto premiums in 2011, according to data from the Michigan Department of Insurance and Financial Services.
- There are approximately 780 auto insurers authorized to do business in Michigan, according to April 10, 2013, “No Fault Certification List – Insurers That Are Certified Under Section 500.3163,” maintained by the Michigan Department of Insurance and Financial Services.
Billions of dollars in unused auto insurance premiums
Michigan auto insurers have more than $2 billion in used auto insurance premiums and nearly $700 million in unused No Fault premiums, according to data and statistics from the National Association of Insurance Commissioners (whom Gov. Rick Snyder, the Insurance Institute of Michigan, and Rep. Pete Lund rely on):
- “Michigan auto insurance companies collected more than $2 billion more in auto premiums in 2011 than they paid out in claims. They brought in about $6.8 billion in private passenger and commercial auto premiums and paid out some $4.7 billion in losses on private and commercial auto claims, according to data provided to Michigan Auto Law by the National Association of Insurance Commissioners and the Michigan Office of Financial and Insurance Regulation.” (“Steven M. Gursten: Profits, not medical claims, drive up cost of auto insurance in Michigan,” Detroit Free Press, April 11, 2013)
- Michigan No Fault auto insurance companies collected more than $673 million more in No Fault premiums in 2011 than they paid out on No Fault claims. In 2011, Michigan No Fault auto insurers collected a total of $2,898,293,000 in private and commercial “no-fault (personal injury protection)” premiums and paid out $2,224,535,000 on “no-fault (personal injury protection)” claims, according to the National Association of Insurance Commissioners’ (NAIC) “Statistical Compilation of Annual Statement Information” for 2011.