In Crain’s Detroit Business, insurance industry lobbyist Tricia Kinley of the Insurance Alliance of Michigan reveals that car insurance companies began hiking rates long before new No-Fault law
Thank you to Tricia Kinley of the Insurance Alliance of Michigan for confirming what I told Crain’s Detroit Business. In my own Crain’s Detroit Business column, “Insurance companies are making Michigan drivers pay for savings,” I took Michigan’s No-Fault auto insurance companies to task for jacking up drivers’ premiums now before the new auto No-Fault law kicks in.
I’m sure she didn’t intend to, but Tricia Kinley confirmed what astonished drivers all over Michigan are discovering to their dismay: that not only are Michigan car insurance companies jacking up drivers’ premiums now at renewal time, but that they started doing this well before the new Michigan No-Fault law took effect earlier this year in June of 2019.
As I explained, here’s the reality of what’s happening now:
- “Whether you agree or disagree with the provisions of Michigan’s new auto no-fault law, the promise of providing beleaguered drivers with ‘significant savings’ was at the very heart of it.”
- Yet, the car “insurance companies are raising your premiums now before the required savings take effect” after July 1, 2020 “so they can keep profits high in the future.”
- Auto insurance companies “are making drivers pay now for the savings that these same insurers are supposed to be providing to drivers in the future.”
Apparently I touched a nerve. Two days later, Tricia Kinley, the insurance industry’s chief lobbyist, wrote her own column about the recent wave of drastic premium hikes by the auto insurance companies.
Tricia Kinley of the Insurance Alliance of Michigan didn’t deny anything I wrote. Instead, she took more of a “Yeah, but . . .” approach where she acknowledged the rate increases, but tried to minimize their significance with excuses, rationalizations and deflections.
Below are some of the key points that Ms. Kinley made.
Tricia Kinley of the Insurance Alliance of Michigan says auto insurance companies started raising rates long before the new Michigan auto No-Fault law
Significantly, Tricia Kinley doesn’t deny that Michigan auto insurance companies have drastically jacked up drivers’ premiums (she can’t).
Instead, not only does she not deny the obvious, but she reveals that the auto insurance companies’ scheme for keeping profits high through increased premiums began well before the new auto law was passed.
Ms. Kinley’s words: “Rates in effect now were filed in the spring before a vote on auto no-fault reform legislation.”
That plan was always going to be a win-win bet for auto insurance companies:
- If the new No-Fault law with its guaranteed savings became the law (which it ultimately did as of June 11, 2019), then the insurers would be ready because they would have built up a nice cushion of profits by increasing premiums to prepare for mandatory rate reductions they are now required to offer drivers.
- If on the other hand the new No-Fault law failed to pass, then they would have created a windfall of even higher profits for themselves.
Tricia Kinley of the Insurance Alliance of Michigan ignores how the auto insurance companies continue to exploit discriminatory non-driving factors after new auto law passes
Please take special note that Tricia Kinley of the Insurance Alliance of Michigan conspicuously fails to address how the auto insurance companies are continuing to exploit discriminatory non-driving rating factors.
As I wrote in my column in Crain’s Detroit Business:
“Michigan’s insurance companies are also still exploiting non-driving rating factors such as gender (charging women more than men), marital status (charging widows more than widowers), zip codes (redlining), credit scores, and even home ownership, education level attained, occupation to charge some people more than others for car insurance. This is discriminatory. It has nothing to do with whether someone is a safe driver or not. It is also something that the politicians who voted for this new auto law promised us would be stopped. This was supposed to be one of the “big wins” for consumers that Gov. Whitmer touted when she signed this bill into law on May 30, 2019.”
Tricia Kinley of the Insurance Alliance of Michigan also fails to address any of the loopholes that the auto insurance companies put into the new auto No-Fault law to get around the new auto law’s intentions to stop some of the more awful and discriminatory non-driving rating factors that they have been using to unfairly drive up premiums for minorities, the poor, and for people who live in cities like Detroit:
- “[I]nsurance companies can now create de-facto zip codes using their own ‘territorial ratings’ so they can still charge people more who live in places like Detroit.”
- “[I]nsurance companies can create their own credit scores by using credit information, credit reports, and creating their own ‘insurance scores’ to charge these drivers more as well.”
- Auto insurance can continue to increase car insurance premiums for drivers by using “price optimization,” which is not prohibited under the existing law or under the new No-Fault law. Price optimization is the process by which car insurance companies (and other businesses) determine the maximum price they can charge a customer before he or she will take his or her business elsewhere.
Finally, since she fails to address any of these loopholes in her own column and fails to address discriminatory non-driving factors still being used at all, Ms. Kinley instead chooses to blame drivers. She says another cause for the big premium hikes that drivers are seeing now is because of – wait for it – the drivers themselves. She blames drivers for causing their own rate increases by adding a driver, buying a new car, moving or being involved in a car crash. Ms. Kinley chooses not to provide any facts or explanation to support this statement, or to try to explain how adding drivers, moving, buying a new car, or being involved in a car accident would mysteriously all spike after the new auto law was signed compared to before under the old auto law in Michigan.
Here’s the truth: car insurance rates are going through the roof now, and there has been NO CHANGE in circumstances.
To borrow a phrase from Ms. Kinley, until the new No-Fault law’s restriction on these unfair non-driving rating factors kicks in on July 1, 2020, auto insurance companies will be able to continue exploiting them and “to continue dramatically overcharging” for car insurance.
Tricia Kinley of the Insurance Alliance of Michigan knows new auto No-Fault law won’t save drivers money
Tricia Kinley of the Insurance Alliance of Michigan knows darn well that Michigan drivers are not going to see any meaningful savings (if they see any at all) from the new No-Fault law that her industry wrote and fed to insurance-industry backed politicians.
To say that the insurance industry has a tenuous relationship with the truth would be kind.
But on the issue of savings under the new auto law, they lie like most people breathe:
- First, drivers have seen no savings since the new law was passed.
- Second, Michigan drivers have only experienced significant premium increases – a trend that, according to Ms. Kinley’s own admission to Crain’s, was set in motion preemptively by the insurance industry in anticipation of the new auto No-Fault law being passed.
- Third, jacking up drivers’ rates for no good reason other than to increase profit margins seems like a very strange way of (as Tricia Kinley states) “Michigan’s auto insurance companies . . . getting to work to implement this new law and deliver the savings drivers have been clamoring for and deserve.”
- Fourth, Tricia Kinley of the Insurance Alliance of Michigan has already gone on record that drivers should not expect savings under the new auto law. Note how Ms. Kinley has changed her tune completely about the promise of savings that drivers should expect under the new No-Fault law. When she talked to the Detroit Free Press in a June 11, 2019, article, “Insurance official: No guaranteed savings under new Michigan auto law,” Tricia Kinley said she didn’t know how car insurance premiums “will shake out” and that due to liability increases “this part of the policy will undoubtedly go up due to this risk, but we cannot speculate by how much at this time.” Similarly, in a statement she provided to WXYZ for the May 29, 2019, story, “Insurance industry warns no-fault reform bill will not save as much as promised,” Tricia Kinley stated: “[S]ome aspects of the bill increasing liability on consumers will actually increase, as opposed to decrease, auto insurance premiums in Michigan, raising real questions whether this proposal can live up to the savings the governor and lawmakers have promised, and consumers deserve.”
I’ll end here with how I ended in my piece for Crain’s:
“None of this was how the new auto no-fault law was supposed to work. These Wild West, the intent of-the-law-be-damned actions by the auto insurers are causing substantial harm for Michigan drivers. There is also nothing that we can do about it. No one – not the governor, the Legislature, the insurance commissioner or the courts – has the power to slam the brakes on the insurance industry’s deliberate exploitation of the new auto law because all of this is in the law. It is all perfectly legal. Unconscionable, but legal.”