Assault on Insurance Industry Continues in Michigan
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, the 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.
NAMIC is asking you and your companies to help us fight back on behalf of the industry and the 55,000 Michigan citizens that make their hard-earned living in the insurance industry. 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 on Friday that will be of use as you and your companies 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 during the past several years in 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.