House Committee Plans to Move Forward on Auto Insurance Bills
More news! News in Michigan, as it relates to auto insurance, has been fast and furious. Below is an article from the Associated Press (AP) outlining yet another plan aimed at Michigan’s auto insurance coverage.–Marty O’Neill, Insurance Agent
By TIM MARTIN
The Associated Press
LANSING, Mich. (AP) — House Democrats plan to take another stab at changing Michigan’s auto insurance rules in an effort they say could make rates more affordable for those who need a break most.
The bills would eliminate the use of credit scoring in setting insurance rates. Democrats who support the legislation say allowing credit history to influence insurance rates is unfair and that rates should be based only on driving history — not on whether motorists have paid their bills on time. Democrats say the practice of using credit scoring as a factor in rates hurts low-income people the most.
“We need to rewrite Michigan law so it protects consumers,” said Rep. Bettie Cook Scott, a Democrat from Detroit.
The bills are scheduled to be taken up in the House Insurance Committee House on Thursday. While the legislation possibly could pass the Democratic-led House, it would face more resistance in the Senate, where Republicans hold the majority.
Rep. Virgil Smith, D-Detroit and chairman of the House Insurance Committee, acknowledged Tuesday that the Senate votes aren’t there to pass the bills at this point. But Smith said “anything could happen” late this year as the 2007-08 legislative session comes to a close during the so-called lame duck session.
The Insurance Institute of Michigan opposes the legislation. The organization says that the use of credit scoring benefits two-thirds of the state’s motorists and helps provide a more accurate reflection of risk when rates are set.
“If it’s designed to reduce insurance rates, it does just the opposite, frankly,” Insurance Institute of Michigan executive director Peter Kuhnmuench said of the legislation.
The legislation would give the state insurance commissioner more power to approve auto insurance rate increases before they take effect. Refunds could be ordered if it is determined consumers are overcharged or were discriminated against.
The legislation also would give policyholders more leeway to sue insurance companies for various violations of the state’s insurance code.
Auto insurers would have to report to the state how many claims are filed and how much money they pay out in several different categories. Insurers also would have to report how much they spend related to settling and defending themselves against lawsuits.
Rate increases could be made 90 days after those filings are made, unless those rates are challenged by the state insurance commissioner. Public hearings would be set on rate increases that are questioned.
The auto insurance bills are House Bills 4412, 4993, 5420, 5558 and 5559.