The vehicle owners of Michigan have been scrimping economically due for a long time to the unfriendly policies of auto insurers, and the situation is ‘only getting worse.’
This is according to an enjoinder by Michigan State Rep. Barb Byrum and Michael Dabbs, president of the Brain Injury Association of Michigan and spokesperson for the Coalition Protecting Auto No-Fault.
The new law compels Michigan residence to purchase auto insurance at rates which rank ‘among the highest’ in the US.
The state’s rates have spiked by as much as 70 from 1989 to 2005. Wage drops and a rising unemployment rate have contributed to heavier burdens for residents.
The enjoinder said that the auto insurers are actually putting the blame on the state’s drivers for causing the rate hikes. They may have a point as Michigan car owners have a reputation of being among the safest drivers in the nation. The 97.2% of seat-belt use is the highest rate in the country. Deaths due to vehicular accidents are at all-time low levels since 1925. Moreover, since 1986, cases of stolen cars have decreased by 42%.
Insurance rate increases continue to persist and both Byrum and Dabbs accuse the insurance companies of wielding control over setting rates with the use of ‘secret formulas’ which look into their clients’ personal information (education and work related) and credit records as the basis for hikes.
Due to the lack of accountability of rate standard setting, even good drivers who may not earn as much as other drivers or who may have only gone as far as completing high school will have to contend with the arbitrary prices dictated by the companies. Both Byrum and Dabbs said that premiums should be ‘based on driving records, not education or income level.’
The enjoinder highlights the need for consumer protections, specifically spear headed by Byrum and Dabbs, so that reforms would come about to promote more transparence and accountability in the auto insurance sector.
The Michigan insurance consumer advocate’s Annual Report enumerated some specific reforms which include: compelling companies to solicit approval prior to any effectual rate hikes, preventing non-necessary rate increases, the halting of hikes imposed on drivers with good track records, the criminalization of insurers who use ‘irrelevant factors’ other than good driving records; and banning companies from making a profit out of the personal information of their clients.
The enjoinder said that these suggestions have already been enacted in the District of Columbia and 15 other US states which aim to work towards the benefit of consumers.