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State Farm just lowered insurance premiums. Why isn’t every other insurance company?

March 4, 2019 by Steven M. Gursten

Reasons to pump the brakes on the auto insurance industry’s No-Fault reform propaganda machine

State Farm’s recent decision to reduce rates on insurance premiums by 6.5% highlights just how dangerous and potentially unnecessary many of the suggested auto No-Fault reforms are in this state.

I’m certainly no fan of State Farm. The giant auto insurance company has consistently topped my list of the Worst Auto Insurance Companies in Michigan.

But State Farm unilaterally dropping its prices for Michigan consumers comes BEFORE all of these supposedly vital auto No-Fault insurance reforms have come to pass.

And let’s not overlook the fact that the average car insurance premium in Michigan has dropped nearly $500 over the last three years, according to Insure.com.

Add all that up and we have some very compelling reasons to pump the brakes on the auto insurance industry’s No-Fault reform propaganda machine.

Is auto insurance too expensive in Michigan? Absolutely!

But before we start to take away critically necessary medical care and benefits from people who have been terribly hurt in car accidents, maybe we need to look at the other side of the equation? Before we take away the benefits that critically injured people need most, we should be looking at the profit margins of the companies that are selling No-Fault insurance.

The only difference is that people who are critically injured in car crashes don’t have the same political power as the insurance industry. They certainly don’t have politicians like Sen. Lana Theis at their disposal to carry their water for them like the insurance companies do.

Maybe insurance industry profits on No-Fault insurance premiums are just too high?

The recent trends in auto No-Fault insurance premiums in Michigan clearly demonstrate that many more questions need to be answered first.  We should be able to get answers from the insurance industry about:

  • Just how high were State Farm’s profit margins that State Farm was able to cut prices by 6.5%?
  • Was it implementation of its own cost containment measures that led State Farm to charge less for auto insurance?
  • What’s stopping other auto insurers from doing the same right now?
  • How do the insurance industry propaganda machine, Mayor Duggan and the Republicans in Lansing reconcile State Farm cutting insurance premiums while at the same time claiming there is a need to take away from the injured and people who need care after a serious car accident?
  • If State Farm can implement an across-the-board, statewide reduction in auto insurance rates for its more than one million Michigan consumers, then what does that say about the insurance industry’s claim that the reason different regions of the state pay such widely different insurance premiums is because rates are driven by the claims history in those areas?
  • Doesn’t this more now than ever before make the case for long-overdue, much-needed transparency into the insurance industry’s process for setting insurance premiums and rates for a product that Michigan drivers are forced by law to purchase?

Falling auto insurance premiums in Michigan

Insure.com’s annual “Car insurance rates by state” study shows that the average car insurance premium in Michigan has dropped nearly $500 over the last three years:

  • 2018: $2,239
  • 2017: $2,394
  • 2016: $2,738

State Farm cuts its insurance premiums for drivers in Michigan

In his February 17, 2019, Crain’s Detroit Business story, “State Farm cuts auto insurance rates in Michigan for second time in 9 months,” Chad Livengood reported:

“State Farm Mutual Automobile Insurance Cos. plans to reduce its personal auto insurance premiums by 3.5 percent across the board in late March . . . for all 1.1 million  of its customers in Michigan for insurance plans that are renewed after March 25 . . . Last July, State Farm said it reduced its premiums by 3 percent . . .”

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