State's high insurance rates hurt consumers

In 1973, Michigan adopted a no-fault law, where a claim is filed with one's own insurer instead of suing "the other guy." No fault promised quick service, generous benefits and lower rates. In exchange, you gave up the right to sue, and you were required to have insurance.

But there was a hitch. Rates didn't go down. They went up.

So, in 1978, the Michigan Supreme Court struck down the no-fault law as unconstitutional, ruling the state can't require people to have insurance without some guarantee that rates will be affordable. The Supreme Court ordered the Legislature to develop a definition for affordability that ensures "fair and equitable" rates for consumers. But in a twist, the Legislature defined affordability from the insurance industry's perspective, not the consumer's.

The Legislature's confusing, loophole-riddled definition says rates are affordable if insurers are "reasonably competing" with one another, regardless of whether premiums exceed the consumer's ability to pay.

Since 1989, Michigan's rates have skyrocketed 69 percent -- the fastest rate of increase in the nation. Our $1,000 average premium is approaching New Jersey's $1,100, the country's highest. And Michigan's $436 collision premium is the priciest in the country.

Ironically, Michigan drivers are rated safest in the nation, according to Allstate's 2008 "America's Best Drivers" report. Michigan had 9,000 fewer accidents between 1996 and 2006.


Source