According to insurance trade groups, there is a possible threat to the current costs of auto insurance, economic condition, and job market situation in Michigan as the state’s House of Representatives passed a bill that may affect the state’s legal mandates on auto policies.
The Property Casualty Insurers Association of America recently said that the House of Representatives approved a portion of a bill package that contains certain provisions including a ruling that will prohibit insurance scoring and premium computation systems that are credit-based. The group calls the bills “misguided reforms”.
Property Casualty Insurers Association of America vice president Ann Weber said in her announcement released by the group that House members have let the legislation go through without performing proper debate or any deliberation. Weber said that the insurance industry has made a number offers to participate in a workgroup that would agree to the suitable consideration of real ways to reduce car insurance costs in Michigan, but in a way, state lawmakers still passed the bill on their own. Reports say that the bill package was introduced to the insurance industry during the earlier weeks of December and it was immediately approved the House Insurance Committee. According to Democratic legislators who back up the proposals, they will make the needed efforts to car auto insurance more affordable and reinforce consumer protections in the state.
On the other hand, trade groups maintain a firm stand that supporters of the proposed car insurance reforms have misrepresented to a great extent numerous significant facts about Michigan’s car insurance marketplace. As per the Property Casualty Insurers Association of America, state lawmakers should be made aware that insurance scoring based on credit has been proven to benefit motorists because it allows them to receive lower premium prices. In Michigan, the practice of credit-based scoring is used only to determine discounts for insurance clients. When it comes to determining a person’s eligibility to be insured by a company and in applying surcharges, scoring based on credit is not practiced. The group adds that credit scores remain stable amid the current situation of the economy.
Also, Michigan insurance providers give thousands of stable, much-needed employment opportunities in the state. Back in 2007, insurance companies paid out more than $8.7 billion worth of claims and paid approximately $200 million worth of state premium taxes, providing important tax dollars for developing the community and the state. Industry groups fear that the legislation could drive businesses out of the state which can result to a further decline of Michigan’s economy.