Guest column: Eight steps that will lower auto insurance rates

By Steven Gursten/Motor Vehicle Trial Lawyers

If the goal of reforming Michigan’s “No Fault” system is to lower auto insurance prices for Michigan drivers, then we need to focus on “reform” proposals that will truly help Michigan drivers save money on car insurance.

The insurance industry has wanted to push ideas that would slash drivers’ legal protections and No Fault insurance benefits, but that would guarantee drivers nothing in the way of savings.

But we can do both. We can dramatically lower our auto insurance rates and keep the nation’s best insurance system in the nation intact. In light of Gov. Rick Snyder’s recent call for “a thoughtful way” to reduce “the high auto insurance costs,” here are my suggestions, based upon my experience as an insurance lawyer in this state for nearly 20 years:

1. Bring back the “Buyers’ Guide to Auto Insurance.”

It’s been more than four years since the Office of Financial and Insurance Regulation published its “Buyers’ Guide to Auto Insurance,” which provides auto insurance consumers with extensive, detailed rate information for approximately 60 Michigan auto insurers in 16 major Michigan cities. Michigan’s No Fault Law should be amended to require the guide’s annual publication.

2. Michigan’s insurance commissioner should do an updated “excessiveness” study of Michigan’s auto insurance prices.

It’s been more than seven years since Michigan’s insurance commissioner conducted an “excessiveness” study of Michigan’s auto insurance prices. Michigan’s No Fault Law should be amended to require regular “excessiveness” studies.

3. Give Michigan auto insurance consumers a “money back” guarantee.

If Michigan auto insurance consumers don’t spend at least 80 percent of their insureds’ premium dollars on No Fault insurance benefits for their insureds, then those insureds should get their money back. A No Fault 80/20 loss ratio rule could be modeled on the federal Affordable Care Act’s 80/20 Medical Loss Ratio Rule.

4. Alternatively, Michigan’s No Fault Law should require No Fault auto insurers to disclose annually the percentage of each premium dollar that is returned to customers in the form of payouts on No Fault claims.

5. Michigan’s No Fault Law should require annual disclosure and publication of No Fault claims trends.

In addition to the average Michigan No Fault claim cost, the public should know about the trends for the number of premium-paying insureds, the frequency of claims and the frequency and amount of claims payouts

6. Restore the usefulness of the Michigan Consumer Protection Act (MCPA) to deter anti-consumer claims-practices by auto insurance companies.

Under existing Michigan law, auto insurers are exempt from the MCPA’s prohibitions against “[u]nfair, unconscionable or deceptive” business practices.

7. Michigan’s No Fault Law should be amended to prohibit auto insurer “Bad Faith.”

For No Fault auto insurers who fail to deal fairly and in good faith with insureds claiming No Fault benefits, they should be subject to compensatory, consequential and exemplary damages, including litigation costs and attorney fees.

8. Michigan’s No Fault Law should be amended to allow “Punitive Damages” against wrongdoing auto insurers.

Michigan is only one of five states in the country that does not allow punitive damages.

These suggestions offer the path to real reform.

Steve Gursten is head of Michigan Auto Law and president of the Motor Vehicle Trial Lawyers Association.

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Joe Zurawski
Thu, 02/21/2013 - 8:53am
Your suggestions neglect the largest contributor to high "No-Fault" insurance premiums - the MCCA (Michigan Catastrophic Claims Association). I own two vehicles. One is a Ford Five Hundred for which I carry "Full Coverage" for which I pay almost exactly $800 per year of which approximately 25% goes to the MCCA. My other vehicle is a 25 year old Silverado pick up truck which is used only occasionally. I pay almost exactly $400 per year for basic "No-Fault" coverage of which almost exactly HALF goes to the MCCA.
Tony Ettwein
Thu, 02/21/2013 - 9:23am
Under Michigan law, "auto insurers are exempt from the MCPA’s prohibitions against “[u]nfair, unconscionable or deceptive” business practices"? That says a lot all by itself. Why would any industry or any individual want to be exempt from such a law? Such an exemption hurts the reputation of the insurance industry in our state.
Jerry Grubb
Thu, 02/21/2013 - 10:47am
Why no mention of tort reform? This is only a trial lawyers point of view. You have a vested interest.
Thu, 02/21/2013 - 2:35pm
MORE for cars..hmmmm time we all started useing the ZIP CARS and the bus.someday a increaseing all this ia lot of poeple giving UP ...driving or owning cars..quiet being greedy rember the TRUTLE won the RACE..
Thu, 02/21/2013 - 4:44pm
I don't understand your post. Or any of them for that matter.
Thu, 02/21/2013 - 4:59pm
The good lawyer is so short on how his proposals will save us money. I have been in the industry for 18 yrs and trust you dont want to see those claim numbers. It is outrageous and will serve no purpose. what we need is a market base no mandate approach like new hampshire or new brunswick .
Mike R
Sat, 02/23/2013 - 9:03am
I have been an attorney in Michigan for more than 30 years. I have represented both insurance companies and claimants (but mostly insurance companies), and I have sat for many years as Case Evaluator for the Wayne County Circuit Court (Mediation Tribunal Association). Although I am typically on the other side of his and other plaintiff firm's cases, I agree with all of Mr. Gursten's suggestions. Despite the public misperception to the contrary, there have been enormous "reforms" in our tort and auto insurance legal process over the past 20 years, nearly all of them to the benefit of the insurers. For decades, 3rd Party claims (where one person sues another for injuries resulting from an auto accident) were standard operating procedure after an accident, with hundreds of lawsuits filed each week in Wayne County alone. For over fifteen years now, however, when I'm evaluating cases for the Court, I rarely see a 3rd Party claim; nearly all of them are 1st Party, with the insured suing his/her own insurer for medical expenses, attendant care, replacement services, etc. It is very clear to me that the insurers have reaped an enormous benefit from these changes, but still have managed to convince the public that they're laboring under a crushing burden of fraudulent claims. Mr. Gursten's suggested changes would go a long way toward providing factual support both for a reasoned discussion of insurance industry profits vs. the cost of insurance in Michigan. In fairness to the industry, I would certainly agree that we could realize additional savings by finding a better way of weeding out marginal or exaggerated 1st Party claims, but I believe this should be done in exchange for strengthening the existing requirements that insurers engage in good faith dealing and make prompt payment of properly submitted claims.
Tue, 04/07/2015 - 12:16pm
Why can't we use these funds to fix the roads instead of a sales tax increase? Also, shouldn't these funds go into a government fund instead of an association? Food for Thought!!