Auto insurance

How has the auto insurance reform impacted premiums?

HOWELL, Mich. (WXYZ) — In 2019, lawmakers in Michigan’s Republican-controlled state legislature and Democratic Governor Gretchen Whitmer passed an auto insurance reform bill that they say will would save drivers money.

But did he? A report just released indicates that while drivers may be paying less to the Michigan Catastrophic Claims Association fund, they may be paying their insurer more for premiums.

Consumer Federation of America Director of Insurance Douglas Heller said he reviewed Citizens Insurance’s filings with the state.

“Citizens charge their customers, the premium they keep, that premium has increased by $90 for the average coverage,” Heller said.

Heller is also a consultant for the Coalition Protecting Auto No-Fault, or CPAN, which lobbied against the 2019 law. He says his research found that the law reduced the costs of bodily injury protection coverage, but that other hedging costs have increased at Citizens.

“You don’t hold insurance companies responsible for this law. What you’re doing is shifting costs,” Heller said.

Legislation passed in 2019 also promised to end postcode-based pricing. Citizens’ statements to the state show in response that it uses the Census Tract Block Group locations. The result is the same. Consumers will see a big price difference depending on where they live. Heller says he found an inhabitant of Troy

“This is more than unacceptable. It shows that we have not solved the problem. Instead, what has happened is that you are creating a second-class population of people who benefit from less coverage for significantly higher premiums,” Heller said.

Heller pointed out that profits have also increased within the insurance company.

The relatively high rates are not just a citizens’ problem. The Zebra found that Michigan is the second most expensive country in the nation for insurance rates. 7 Action News asked the Insurance Alliance of Michigan about it last week as we cover cuts in long-term care coverage for accident survivors under the 2019 law. The law reduced catastrophic injury care coverage by 45% across the board.

“We are seeing new entrants into the market. You’re going to continue to see changes in rates because things have had time to work out,” said Erin McDonough, executive director of the Insurance Alliance of Michigan.

7 Action News contacted Citizens Insurance for a response. He released a statement that said:

“This is the first time we’ve heard of the purported report and we haven’t seen a copy of the study, and none of the underlying data has been shared with us. Also, we don’t know anything. assumptions, methodology or third-party sources that may have been used in place of actual rate data.

Based on the limited information you have shared, the statistics provided appear to be materially misleading.

Our rates have been reviewed and approved by the Department of Insurance and Financial Services. These rates are fully in line with the mandatory PIP rate reductions under the no-fault reform.

That said, Citizens continues to compete effectively in a highly competitive and regulated marketplace, providing comprehensive insurance solutions for Michigan individuals and families.

And like the rest of the industry, we are working diligently under Department guidelines to process millions of dollars in reimbursements to Michigan auto insurance consumers on behalf of the MCCA. It is unclear whether the purported report accounts for these refunds.

– Citizens Insurance

There has been a decrease in fees paid to the Michigan Catastrophic Claims Association, which administers a fund created to provide care for people with catastrophic injuries. The current fee is now optional and is $86 per vehicle. The annual fee was $220 per vehicle in 2019 before the law was passed. The fund was also found to be overfunded due to the law change and care reductions, resulting in a $400 rebate per insured vehicle that is currently being processed and/or sent to drivers.