Governor Working To Fix High Car Insurance Rates

By: Brian Johnson Email
By: Brian Johnson Email

Michigan's unique no fault law, which covers medical benefits for an unlimited amount, has drivers upset about the costs they have to pay for their monthly premiums.

"Well it's tough, you know, everybody's trying to make ends meet and more money in your car insurance definitely doesn't help," said Jordan Leaming, a driver in Lansing. "It definitely hurts to pay extra just because you live in a specific region."

According to Insure.com Michigan drivers pay $575 more per year for auto insurance than the national average. They pay $1,124 more than Maine, where car insurance is the lowest in the country. That's an i-pad, a new computer, or a trip to New York that every driver in Michigan could have had if they didn't need to put the money toward car insurance.

"We need to reduce the cost of auto insurance it's hurting our economy," said Kevin Clinton, the Commissioner of the Office of Insurance and Financial Regulation.

The high numbers are getting the attention of Governor Snyder.

"It's time for some reforms folks," said Governor Snyder addressing auto insurance in his State of the State address. "We far exceed every other state in how expensive our claims are. The average claim in Michigan is $44,000. The next two states are $17,000 and $10,000 dollars."

Those claims are paid out by every driver on the road. The same insurance in Ohio would run about $900 less each year, according to Insure.com.

The number of accidents in Michigan is not causing the problem. Michigan is actually at a ten year low, with about 30 percent fewer accidents than in 2002.

The Governor wants thoughtful reform to the state's no fault law medical pay-outs as well as insurance fraud.

"But I would say we are not going to stop at those two," said Governor Snyder. "I want to look at the whole question of auto insurance to see where we can be more proactive, particularly when you have cities--Detroit is number one on the most expensive list, Novi is number six, and I think Muskegon is number nine. That's not a good set of circumstances."

To look for a solution to the high costs of insurance the Governor signed an executive order creating the Department of Insurance and Financial Services.

Kevin Clinton said he has to wait about 55 days or so till he is approved to be the new director of that department.

"I think we have a real problem. We have probably 20 percent of the state that is uninsured right now, and that percent is even larger in the big cities," said Clinton. "Michigan has the highest benefits in the nation. We have unlimited medical benefits for the rest of your life. The next closest state in terms of a no fault state is New York, they require $50,000."

The Michigan Insurance Coalition says one cost of no fault----the fee paid per vehicle to the MCCA---is up tremendously. It was about $6 per vehicle in 1998. That fee paid by every driver per vehicle per year is now $175.

Insurance fraud is another issue.

"You know fraud is estimated to be upwards of almost 10 percent of the premium volume. In Michigan that can equate to almost 400 million dollars," said Peter Kuhnmuench, the Executive Director of the Insurance Institute of Michigan. "We save because we don't have to sue for benefits because you are self-insured and you collect from your own insurer, and it's a good system fundamentally. Unfortunately in Michigan it's designed without sufficient costs restraints to keep it healthy."

Some drivers are also frustrated with high vehicle registration fees. According to the Federal Highway Administration, Michigan is 9th in the country for the most expensive vehicle registration fees. The average cost is $58 per vehicle, but range from $29 to $211.

"If the legislature can move quickly I am sure we could have this done let's say within 9 months. So anytime [people] renew after let's say mid-September they could start to see some savings," said Clinton.


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  • by William veselsky Location: Lansing on Feb 1, 2013 at 11:42 AM
    Did did Gov Synder sigh in the bill then to increase the money for that non profit. I heard. Some one please tell me.
  • by Name Location: Location on Jan 30, 2013 at 07:15 AM
    Hey Elaine, which fossil fuels caused the end of the last glacial period over 10,000 years ago? I'm sure Al Gore is proud of you for carrying on his lunatic rantings.
  • by Tom Location: Lansing on Jan 30, 2013 at 06:43 AM
    My favorite line in this article: "That's an i-pad, a new computer, or a trip to New York that every driver in Michigan could have had if they didn't need to put the money toward car insurance." So, let me get this straight, having an iPad or new computer trumps having money to rehab yourself back to a normal life if you are in a bad car accident. How about "saves money so people can actually buy health insurance, food, clothes, etc". The problem is, that too many people without enough money to have a splurge item such as an iPad, have an iPad. And that 20% aren't buying insurance no matter what the cost is.
  • by Elaine Location: Location on Jan 30, 2013 at 04:56 AM
    Kelly it is a lot more complicated. Health insurance carriers have contracts with health care providers and take a discount off the top of the bill. Car insurance carriers do not have contracts with health care providers so they don't get the discount. Also the number of cars that have been ruined by climate change due to floods, wind, etc. are covered by the auto insurance and that is also passed along to the consumer. So encourage your auto insurance carriers to have contracts with the health system and encourage the politicians do work with the world wide organizations to reduce the use of fossil fuels and address the issue of climate change.
  • by Anonymous on Jan 28, 2013 at 10:04 PM
    If you want to lower insurance rates, start improving public transportation between cities. If there was a regional bus system, we would go down to one vehicle instead of three.
  • by Name Location: Location on Jan 28, 2013 at 06:25 AM
    about time when will it happen?
  • by Deborah Location: NY on Jan 28, 2013 at 02:00 AM
    These days when almost no one feels secured car insurance is a necessity. But economic times are really tough and everybody is trying to save money and cut expenses, so it’s definitely not the time to make interest rates higher. Plenty of American consumers are struggling with paying bills and covering expenses, they try to make end meet and just can’t afford to spend more money on car insurance. I understand that everything becomes more and more expensive but it’s important to understand that most consumers just can not afford to pay so much money. Extremely high rates just will make them to take out no fax payday loans and make debts and it’s no good because for lots of people financial situation is already very bad.
  • by jane.dough Location: Location on Jan 25, 2013 at 03:02 PM
    its the blood sucking lawsuit happy lawyers that make this all come to light. Stop the lawsuuits and your rates will come down.
  • by Anonymous on Jan 25, 2013 at 10:31 AM
    With the cost of the car insurance, it's no wounder that there will be more & more un insured drivers. People have to make a choice, put food on the table or pay for an insurance that they hopefully won't need.
  • by RT on Jan 25, 2013 at 07:53 AM
    @Kelly...I can't go into details but I can assure you that is EXACTLY how the system works.
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