Auto Insurance in Michigan

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Auto insurance has been subject of public dispute in Michigan repeatedly over the last years. This year’s statistics show the results of the insurance policy applied by the insurance companies which have highly affected in negative terms their profits as well as the drivers’ budget.

Zero profitability for insurers and too expensive premiums for drivers have made the public dialogue about car insurance, a Michigan arena. During the last 12 years, the average profit percentage for insurance companies in Michigan providing private passenger car insurance was 1.2% negative, while Michigan’s average annual premiums ranked second-highest in the nation with the value of $2,520, which was defeated only by Louisiana ($2,699).

At the same time, the national average premium in all states was estimated to $1.510.

According to Michigan no-fault law all drivers have to purchase unlimited medical coverage for a lifetime included to their auto insurance costs. This cost is not only high valued but also unique since it’s applied as obligatory auto insurance policy term specifically in Michigan.

Under no-fault, all drivers’ claims are paid by their own insurance company except cases involving death which might lead to lawsuits, permanent disfigurement or serious impairment of body function.
In turn, that’s one-way for insurers since they have to reinsure their services to Michigan Catastrophic Claims Association (MCCA), a state-chartered reinsurer responsible for accident-related medical claims, in order to be able to cover large car accident losses, paying more than $1 billion during 2012.

And that’s not the end. The MCCA fee is set to rise up from $175 which is the current value to $186 on July 1 2013.

MCCA’s reliability is strongly contested due to the fact that since four decades it hasn’t provided enough public information to justify its calculations yet. And people definitely want to know what they pay for.

Numbers say that there was a 80% raise of claim costs during the last eight years and that expense can’t be afforded by the insurance companies no matter what they earn. In fact it has been estimated that for every dollar that insurers collect from premiums, more than one dollar have to pay for their service insurance and operating expenses.

Furthermore insures deal with several other costs such as attorneys, employees and broker costs which pass on to consumers through more expensive auto insurance premiums. The bottom line is that Michigan citizens can’t afford such costs for auto insurance and that means that something has to change. Apparently the no-fault insurance law which went into effect in October 1973 might have been a good idea during that time, but in 2013 it definitely needs a reformation, so people can be happy and pay their auto-related bills easier. Rick Snyder, Michigan Government has announced his willing to review the relevant legislation in order to give a solution to this significant matter by ending this specific requirement concerning lifetime auto insurance. As he stated," It has been 40 years since the no-fault system has been implemented, and it's long overdue for review. These changes will create a policy that continues to cover accident victims far better than any other state and will create cost controls that stem the tide of rising insurance premiums while also providing immediate relief for families."

In fact, people support Snyder’s latest endorsed plan which suggests among others the replacing of MCCA with a nonprofit entity, the limitation of mandatory benefits under the state’s no-fault personal injury protection system to $1 million and the abolishing of the medical provider’ policy charging higher prices to auto injured victims. That way, drivers would save $125 for every car they own, enough amount to cover other bills while staying insured and insurers would pay less for their reinsurance either it’s total or partial.