Michigan Auto Insurance Battle Continues
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Fresh off her State of the State address this week, Michigan’s Governor Jennifer Granholm appears to have her sights set on auto insurance companies. Melvin Hollowell, the governor’s insurance advocate and a strong critic of insurance company practices, has renewed his efforts to lower auto insurance rates in Michigan.
According to Mr. Hollowell, the cost of auto insurance in Michigan is much too high and the industry lacks sufficient regulatory oversight. Citing fewer accidents and decreased travel, Mr. Hollowell states that insurance rates should be going down. Michigan ranks twelfth in the nation in total auto insurance premiums. Governor Granholm has called for a year-long freeze in auto insurance rate increases while the legislature considers measures to reform the industry.
Mr. Hollowell, who accuses the insurance industry of excessive lobbying, recommends using different factors when determining insurance premiums. Currently, insurance companies are permitted to use one’s address, level of education, and credit score to set the premium level. Arguably, none of these factors are suggestive of an applicant’s ability to drive a car safely. Instead, the recommendations call for the use of more relevant factors such as type of car insured and accident history. The auto insurance industry denies that such measures will reduce premiums, claiming that decreasing auto thefts and reducing medical benefits available to injured people is the only way to reduce rates.
The citizens of Michigan face a tough economy these days. Between increased health insurance rates and above-average auto insurance premiums, Michiganians face a financial crunch unlike any previously experienced. Any measure that keeps these expenditures down would be a welcome reprieve for many Michigan families.