Much like a magnet, efforts of legislators to put together a proposition on the Michigan ballot that will amend auto insurance regulation have both positive and negative charges as it continues to attract both strong negative and positive reactions from various interest groups. Automobile and Home Insurance Consumer Advocate Melvin Hollowell together with Michigan House and Senate Democrats announced that they will do whatever it takes to push a set of insurance reform bills with the end goal of making auto premium rates more affordable and insurance providers more accountable.
Sources indicate that the issue at hand is the proposed Fair Affordable Insurance Rates (FAIR) act that is set to reduce auto policy rates by 20% and will establish a very stringent and aggressive review process for rates and pricing practice of insurance providers.
While this concept drew strong support from the Consumer Watchdog and the Consumer Federation of America, this concept attracted massive negative reviews from industry players and insurance providers. One of those against this initiative is the conservative Heartland Institute which apparently released a statement last November 22 saying that this legislative act will only increase rates and destroy jobs.
On the other hand, local consumer organizations said that reforms included in the legislative measure can be said to have been lifted from Proposition 103 in California which was approved and finalized in 1988. Consumer Watchdog, Douglas Heller, said that the 1988 legislation made the California insurance market highly competitive and has kept rates from increasing for two decades while premium costs skyrocketed in other states. California’s Proposition 103 has been said to save drivers in California an average of $3 billion worth of insurance expenses per year. According to local groups, Michigan’s current planned reforms can be compared by the action done by California as both have successfully created a competitive car insurance market that has low rates and protects motorists from abusive practices of corrupt insurance providers.
The office of State Sen. Hansen Clarke, who is known as a prime mover of this legislative act, released a statement saying that before legislation gets a chance in the November 2010 ballot, its backers will need to acquire 305,000 signatures and these must be presented to the House of Representative by May 26 next year. According to Senator Clarke’s staff, both groups either pro or anti-legislation have all the time they need to lobby for the advocacy they believe it. True enough; a final decision will not be made until May 2010 if there are enough signatures to make the reforms possible for Michigan.