Featured

Industry Blasts Granholm’s Rate Freeze, Advocate’s Report

Loading...

Thanks! Share it with your friends!

You disliked this video. Thanks for the feedback!

Source " />
Loading...
Added by admin
0 Views
Insurance trade groups have come out swinging against Michigan Gov. Jennifer Granholm’s call for auto insurers to freeze rates until lawmakers can enact some of the reforms in a report by the state’s insurance consumer advocate, Melvin Hollowell.The trade groups have also taken swipes at Hollowell’s report that calls for requiring prior approval of rates, banning the use of credit scoring and imposing other restrictions on carriers.Despite the trade groups’ opposition, within a week after Granholm’s call for the rate freeze, five insurers had said they would comply. According to the Michigan Office of Insurance Regulation, these companies had pledged to freeze rates for a 12-month period: American International South Insurance, Electric Insurance, IDS Property Casualty Insurance, Merchants Mutual Insurance and Wolverine Mutual Insurance.Hollowell’s report claims statistics used by the industry are inherently tainted and contrived.But Erin Collins, state affairs manager for the industry’s National Association of Mutual Insurance Companies, called Hollowell’s report “highly questionable” and “unscientific” and cautioned officials to tread carefully regarding its recommendations. “In such a tenuous economic time, the governor’s recommendations would make Michigan one of the most arduous and least attractive insurance markets in the country and could threaten the future existence of insurance jobs,” she said.NAMIC said these officials criticize the industry for premium growth during the last 20 years without considering the rise in costs of vehicles, accidents and other factors insurance premiums must pay for. According to NAMIC, in 1989, the average price of a car was $15,350 while in 2008 it was $28,715 — an increase of 87 percent. Milk was $2.62 per gallon in 1989 and today is $3.38.“Does the governor want to freeze these prices, too? ” asked Collins, who also disputed that the average premium increase in Michigan has been 3.45 percent a year since 1989 but suggested that even if true, the hike is “hardly staggering.” A National Association of Insurance Commissioner’s report for 2004-2006, found the average declined 6 percent.David Snyder, assistant general counsel for the American Insurance Association, said rising medical costs are partly to blame for any increase in the state’s premiums. He said that in 2007, the average PIP claim in Michigan had increased more than 290 percent since the mid-1990’s to $29,392 compared to $8,458 in all other no-fault states. “This is an unsustainable trend resulting from fast rising medical costs — a major component of PIP benefits, possible fraudulent claims padding and a lack of benefit level choices. Yet, despite these strains, the average price of auto insurance in Michigan is relatively affordable – 13th nationally – and reflects significant competition among insurers,” said Snyder.Snyder also dismissed the call for prior approval of pricing, arguing that creating “a more restrictive business environment will not serve consumers as well as promoting competition and providing fair, balanced regulation,” said Snyder.Joining NAMIC and AIA in attacking was the Property Casualty Insurers Association of America. Ann Weber, PCI regional manager, claimed Michigan’s premiums reflect the fact that the state’s insurance law offers some of the most generous benefits in the nation. It is the only state that offers unlimited first-party medical benefits to claimants, she said.In addition, while Michigan has the second highest collision insurance premium in the nation, due in part to the state’s broadened collision coverage. The collision loss per insured vehicle in Michigan is highest in the nation, according to Weber. “The reality is that medical and repair costs continue to increase, and auto insurers need the ability to assess and adjust rates so they have the reserves available to pay policyholders when they have a claim,” said Weber.
Source
Category
Misc

Post your comment