Detroit Democrats unveil plan to make auto insurance more affordable
http://www.michronicleonline.com/articlelive/articles/1979/1/Detroit-Democrats-unveil-plan-to-make-auto-insurance-more-affordable/Page1.html
CHRONICLE STAFF REPORTS
By CHRONICLE STAFF REPORTS
Published on 11/8/2007
House Democrats recently unveiled consumer protection legislation to combat excessive insurance rates; eliminate credit scoring, the unfair practice of basing a person’s auto insurance rate on their credit rating; and open the Michigan Catastrophic Claims Association (MCCA) to public scrutiny.
Shanelle Jackson
House Democrats recently unveiled consumer protection legislation to combat excessive insurance rates; eliminate credit scoring, the unfair practice of basing a person’s auto insurance rate on their credit rating; and open the Michigan Catastrophic Claims Association (MCCA) to public scrutiny.
Under current Michigan law, citizens have no recourse against abusive insurance companies that charge them excessive rates under the state insurance code. In fact, not even the Commissioner of the state Office of Financial and Insurance Services (OFIS) can order a refund of excessive rates.
“Too many residents – especially those in Detroit – are being held hostage by the giant insurance companies,” said State Rep. Bert Johnson (D-Detroit). “We need to stand up for consumers and change the law so it protects them, not the insurance companies. Your insurance rate should be based on how you drive, period. Credit scoring is a form of economic injustice that must end.”
House Democrats introduced a package of bills that will:
• Eliminate the use of credit scoring in setting auto insurance rates.
• Give OFIS the authority to order refunds when customers are overcharged. (Currently, the Commissioner has no authority to require an insurance company to issue a refund when there is a determination of excessive rates).
• Provide Michigan citizens the ability to take insurance companies to court for various violations of the insurance code. This bill will allow residents to take matters into their own hands if insurers overcharge them and the state refuses to act.
• Require the Michigan Catastrophic Claims Association (MCCA), an independent insurance fund that pays for the care of severely injured motorists, to comply with the Open Meetings Act, add public members to the board and open its records to annual audits.
• Eliminate the practice of using a time gap in coverage as a reason for denying someone auto insurance.
Change the definition of “excessive rates” so that violations are based solely on the costs of providing insurance.
“Credit scoring is just another excuse to charge excessive insurance rates and another burden on our working families during tough times,” said State Rep. Coleman A. Young II (D-Detroit). “What makes it even worse is that people have no recourse when they are being overcharged and that is hitting Detroiters especially hard. Forcing insurers to stop this unfair practice and forcing the MCCA to open its books will protect people who are responsible drivers from having to pay exorbitant rates.”
The MCCA, which requires all auto insurance companies in Michigan to pay a certain amount into the fund, raised its annual rates imposed on all drivers from $14.41 in 2001 to $123 in 2007. Those charges are in turn passed on to consumers.
Michigan’s average auto insurance rate remains one of the highest in the Midwest. Though the insurance industry receives several tax breaks, insurance rates continue to climb dramatically. Since 1999, auto insurance rates increased between 45 and 90 percent, according to OFIS.
“The citizens of Detroit have been burdened for too long with excessive and unfair insurance rates,” said State Rep. Shanelle Jackson (D-Detroit). “Since state law requires all residents to have auto insurance, it is the state’s responsibility to ensure that they have access to affordable rates. The shameful practice of credit scoring is taking away precious dollars from struggling families in urban areas like Detroit. Our plan will end this exploitation and hold insurance companies accountable for their actions.”
Consumer protection package will eliminate credit scoring, increase accountability
Shanelle Jackson
House Democrats recently unveiled consumer protection legislation to combat excessive insurance rates; eliminate credit scoring, the unfair practice of basing a person’s auto insurance rate on their credit rating; and open the Michigan Catastrophic Claims Association (MCCA) to public scrutiny.
Under current Michigan law, citizens have no recourse against abusive insurance companies that charge them excessive rates under the state insurance code. In fact, not even the Commissioner of the state Office of Financial and Insurance Services (OFIS) can order a refund of excessive rates.
“Too many residents – especially those in Detroit – are being held hostage by the giant insurance companies,” said State Rep. Bert Johnson (D-Detroit). “We need to stand up for consumers and change the law so it protects them, not the insurance companies. Your insurance rate should be based on how you drive, period. Credit scoring is a form of economic injustice that must end.”
House Democrats introduced a package of bills that will:
• Eliminate the use of credit scoring in setting auto insurance rates.
• Give OFIS the authority to order refunds when customers are overcharged. (Currently, the Commissioner has no authority to require an insurance company to issue a refund when there is a determination of excessive rates).
• Provide Michigan citizens the ability to take insurance companies to court for various violations of the insurance code. This bill will allow residents to take matters into their own hands if insurers overcharge them and the state refuses to act.
• Require the Michigan Catastrophic Claims Association (MCCA), an independent insurance fund that pays for the care of severely injured motorists, to comply with the Open Meetings Act, add public members to the board and open its records to annual audits.
• Eliminate the practice of using a time gap in coverage as a reason for denying someone auto insurance.
Change the definition of “excessive rates” so that violations are based solely on the costs of providing insurance.
“Credit scoring is just another excuse to charge excessive insurance rates and another burden on our working families during tough times,” said State Rep. Coleman A. Young II (D-Detroit). “What makes it even worse is that people have no recourse when they are being overcharged and that is hitting Detroiters especially hard. Forcing insurers to stop this unfair practice and forcing the MCCA to open its books will protect people who are responsible drivers from having to pay exorbitant rates.”
The MCCA, which requires all auto insurance companies in Michigan to pay a certain amount into the fund, raised its annual rates imposed on all drivers from $14.41 in 2001 to $123 in 2007. Those charges are in turn passed on to consumers.
Michigan’s average auto insurance rate remains one of the highest in the Midwest. Though the insurance industry receives several tax breaks, insurance rates continue to climb dramatically. Since 1999, auto insurance rates increased between 45 and 90 percent, according to OFIS.
“The citizens of Detroit have been burdened for too long with excessive and unfair insurance rates,” said State Rep. Shanelle Jackson (D-Detroit). “Since state law requires all residents to have auto insurance, it is the state’s responsibility to ensure that they have access to affordable rates. The shameful practice of credit scoring is taking away precious dollars from struggling families in urban areas like Detroit. Our plan will end this exploitation and hold insurance companies accountable for their actions.”