Private insurance companies in Michigan are defending their stand of being against any planned changes to be made regarding state car insurance. According to reports, more than helping consumers cut back on premium costs, the proposed changes can do serious damage to insurance providers.
According to the Property Casualty Insurers Association of America, the much publicized information about Michigan’s insurance premium rankings, business profits, market share and competition position have all been misrepresented. Insurance Consumer Advocate Melvin Hollowell said in an interview that the “so-called car insurance improvements” have extreme tendencies of damaging insurance companies in Michigan. Hollowell released a report explaining how the current no-fault system followed in the state ranks as 12th highest when it comes to costs in the US.
Hollowell explains how insurance providers in Michigan are not earning huge profits at all. According to records, companies in the state experienced long years of underwriting loss due to approximately 19.2% earned premiums. The underwriting and operating profits in Michigan have been significantly lower as compared to US averages. Hollowell fears that implementing the planned changes in auto insurance can threaten business, and the worse effect is the closing down of some small and medium scale insurance providers.
According to the state lawmakers, the proposed changes to be made in the state’s vehicle insurance policy will require insurance companies to get the consent of the Michigan insurance commissioner before they will be authorized to premium rate hikes. Also, in calculating for premium rates, providers will not be allowed to use education level and credit history. Factors that can be used by companies will be limited to a car owner’s driving record and factors such as marital status or ZIP code, which presently dictates the price computations of many providers, will be banned. Legislators who are lobbying for the said changes believe that once implemented the new state insurance policies can produce more competitive rates and can protect motorists from abusive companies.
Those who lobby for the changes to be implanted argue that it’s time for Michigan driver’s to be spared from carrying the burden of paying too expensive insurance premiums. A study conducted by consumer advocacy groups reveals that the proposed changes can lessen the rates charged by insurance companies by roughly 20%. In addition, the said amendments will not only make car insurance, it will also provide a stronger protection and better security for consumer.
While insurance companies watch closely on whether the changes will happen, experts say that it may take more or less a month of debates before any final changes can be made.