Which Special Interest Is Raking In Big Profits On Michigan Auto Insurance?

The Michigan Health and Hospital Association recently released two video advertisements aimed at drivers, encouraging them to contact their state representatives to oppose an auto insurance reform bill currently pushed by House leaders and Detroit Mayor Mike Duggan.

One of the ads generally addresses the potential effects of auto insurance reform for all drivers, while the other focuses on its potential effects on seniors.

Both ads claim that House Bill 5013 would result in higher profits for insurance companies while threatening drivers’ access to health care.

“Call your state representative. Tell them to protect care for accident victims, not profits for insurers,” one of the ads says.

ForTheRecord says: The ads imply that Michigan auto insurers make big profits, which does not appear to be the case.

According to an analysis by Crain’s Detroit Business and Bridge Magazine, the insurance industry in Michigan has averaged a loss of 2.9 percent on auto insurance over a 10-year period. Auto insurance has only been profitable for only three of the 10 years between 2005 and 2014, and the profits were low.

The current reform bill being proposed by House Republicans and Mayor Duggan contains no secret provisions that would be overly favorable to insurance companies. In fact, the legislation would require insurers to reduce the price of the personal injury protection portion of car insurance bills for at least five years.

Insurance providers support a measure in the legislation that would allow them to provide personal injury coverage of $250,000 and $500,000 as well as an unlimited amount. Under current law, all personal injury protection coverage must give unlimited protection. Despite what is implied in the ads, drivers would still have the option to purchase policies with unlimited personal injury protection.

Other provisions in the bill would limit how much hospitals, doctors and other medical service providers could charge when they treat crash victims. The same Crain’s/Bridge Magazine analysis reported that the lack of limits on these charges as well as court rulings that have made it easier to sue have driven the cost of the average crash injury claim in Michigan to more than $75,000. That is more than five times higher than the price in the next most expensive state.