Hidden taxes, fees and assessments and increases after two years will make promised “savings” disappear like a mirage in the desert
Yesterday, I explained how House Speaker Jase Bolger’s No Fault insurance “reform” plans are a raw deal for consumers. People with catastrophic injuries from automobile accidents, the medical community and medical providers who provide treatment, and the families of the catastrophically injured would all be giving up quite a bit under Bolger’s plan.
All this for only two years of promised savings of $110 per year.
Today, let’s take a deeper look into that promise of savings. Turns out, that raw deal I was writing about yesterday looks even worse when we look at the “savings” that Bolger is promising.
Speaker Bolger is claiming that, under his No Fault plan, auto insurance consumers will experience the a two-year 10% auto insurance premium reduction.
But these proposed “savings” from are not all that they appear to be — because hidden taxes, fees and assessments may eat away and undermine the amount that auto insurance consumers actually save.
And if the insurance industry decides to keep raising rates in two years, there is no one to stop them.
That last point is especially important.
People need only look at the history of this state’s auto law (including during the Kreiner and Cassidy case law eras), when the insurance industry succeeded in enacting incredibly draconian injury threshold laws that threw out thousands of car accident cases. Innocent people with fractures and surgeries who were told they had no case under our law. And the insurance companies saved untold millions in payouts on otherwise legitimate accident claims.
What did the insurance companies do, despite these massive savings? Rates for auto insurance consumers throughout the state kept going up. As did insurance company profits.
Speaker Bolger’s own “fuzzy math:” When $110 in savings isn’t what it seems
On its face, consumers will save approximately $110 per year for two years. This number is based on Michigan’s average auto insurance premium of $1,100, according to the Insurance Institute of Michigan and the most recent data from the National Association of Insurance Commissioners.
However, going much further into Speaker Bolger’s plan, $110 per year is not a real $110 in savings.
At best, it’s more like $85 in savings.
That’s because the $25 annual Health Insurance Claims Assessment (HICA) tax that Speaker Bolger is proposing will eat into consumers’ savings, eroding their $110 in savings and leaving them with only $85.
Significantly, it appears (based on the fact that Speaker Bolger has not said otherwise) that the $25 HICA tax, unlike the promised No Fault savings, will not expire after two years and thus will continue to be charged to consumers indefinitely. After two years, the insurance companies start raising rates again, and this HICA tax will keep being assessed as well.
Additionally, until Speaker Bolger releases to the public a detailed, written version of his plan to change No Fault, we won’t know if his plan includes any other hidden fees and assessments that will eat away at consumers’ savings in the short-run, while permanently increasing their financial burdens for auto insurance.
For instance, Speaker Bolger’s plan may include some or all of the following hidden fees and assessments that were part of last year’s so-called No Fault “reform” proposal in HB 4612:
- Continued Michigan Catastrophic Claims Association (MCCA) assessments.
- New assessments for “a new subset of the MCCA,” as MLive’s Jonathan Oosting reported.
- $21 million annual assessment for an automobile insurance fraud authority and an automobile theft prevention authority.
In tomorrow’s installment in the blog post series, I will discuss why No Fault reform of any kind cannot proceed unless and until the Michigan Catastrophic Claims Association releases to the public its claims and assessment data.