Michigan: Your Action Needed – Critical Vote Tomorrow
NAMIC and trade partners have been working for weeks in Michigan to combat the House Democrats’ package of bills attacking the insurance industry. Despite the existing consumer protections in place in Michigan through the insurance commissioner, House Democrats have issued 12 proposed measures that create new causes of action and a new system of fines and penalties apart from the Insurance Code. The cause: allegations of widespread denial of legitimate claims.
We have learned this morning that Chairperson Barb Byrum plans to hold an Insurance Committee meeting tomorrow morning at 9 a.m. to vote on the package. NAMIC is asking you and your company to contact the members of the House Insurance Committee today to issue your opposition to this package of bills.
Please visit the opposition’s website to see messages that are currently being used to justify this attack on our industry.
Our friends at the Insurance Institute of Michigan released some excellent talking points that will be of use as you and your company contact the House Insurance Committee to argue against this 12-measure assault:
- Michigan’s property/casualty insurance carriers continue to be committed to providing quality coverage to Michigan consumers. Insurance company employees work hard to make sure that their customers are treated both professionally and fairly.
- The package of legislation does not help consumers resolve any issues with insurance companies; it merely provides incentives for more lawsuits and will drive up the cost of insurance for all policyholders.
- The Michigan insurance commissioner already has the tools necessary to penalize carriers for potential acts of bad faith or unfairly denying claims. Chapter 20 of the Michigan Insurance Code provides for a 12-percent interest penalty on claims not settled in a timely manner, up to $25,000 in fines, suspension or revocation of an insurance company’s license, and the authority to order refunds.
- Michigan insurance carriers pay out more dollars for claims to policyholders than any other state. In 2007, Michigan auto insurance companies had a 71.9-percent loss ratio, which means that 72 cents of every dollar was paid to policyholders for claims. It was the highest pay out in the country.
- Statistics don’t support the allegations. The Michigan Office of Financial and Insurance Regulation just issued complaint statistics that demonstrate a downward trend over the past several years in complaints against the insurance industry. The report showed that there were 1,506 claim-handling complaints out of the approximately 1 million claims filed in Michigan in 2008, which is .0015 percent.
- Instead of spending time on duplicative and costly proposals singling out one particular industry, lawmakers are urged to concentrate on the major issue in this state … creating jobs to help grow Michigan’s economy.
In addition to these excellent points, NAMIC would also encourage you to focus on the effects bad-faith-type measures have on your company’s ability to conduct business efficiently. One of the obvious effects of creating new causes of action is to create increased frivolous claims and insurance fraud in efforts to garner settlements. This point, however, often is not emphasized enough. So make sure you focus on the protections already in place through the Michigan insurance commissioner and Chapter 20 of the Insurance Code.
Direct questions to NAMIC State Affairs Manager Erin Collins.