LANSING – House and Senate Democrats and Gov. Jennifer M. Granholm announced legislation that will strengthen consumer protection and hold insurance companies accountable for charging excessive rates.
"Insurance companies have been charging these excessive rates for too long without being held accountable," said Rep. Virgil Smith (D-Detroit). "We need a plan that would fight for affordable rates and this legislation would do that."
House and Senate Democrats introduced a package of bills that among other things would:
- Require insurance companies to roll back rates 20 percent.
- Establish an Office of Insurance Ratepayer Advocate to represent and protect the interests of consumers and ensure affordable rates when Michigan companies seek changes in how much they charge customers.
- Force the Michigan Catastrophic Claims Association, an independent insurance fund that pays for the care of severely injured motorists, to comply with the Open Meetings Act and to hold public meetings, add public members to the board and open its records.
The MCCA, which requires all auto insurance companies in Michigan to pay a certain amount into the fund, raised its rates from $14.41 in 2001 to $141.70 this year. Those charges are passed on to the consumer.
In addition, Michigan's average auto and homeowners' insurance rates remain the highest in the Midwest. Though the insurance industry receives several tax breaks, their rates continue to climb dramatically. Since 1999, auto insurance rates increased between 45 and 90 percent, according to the Office of Financial and Insurance Services. The average homeowner insurance costs in the state rose 85 percent from 2000 to 2004, according to the Insurance Institute of Michigan.
"We need a strategy to make sure the insurance industry is held accountable for its rates," said Rep. Tupac Hunter (D-Detroit). "Rates are increasing more and more and it's hard for the consumer to meet those costs."
Rep. Steve Tobocman (D-Detroit) agreed.
"This legislation gives us the power needed to fight these unscrupulous practices by the insurance industry," Tobocman said. "Consumers deserve a 20 percent roll back and a watchdog group because the insurance industry has had a lack of accountability for far too long."
Additional comments:
"Insurance companies must be held accountable for the outrageous rates they charge," said Rep. Gabe Leland (D-Detroit), a sponsor of one of the bills. "Insurance companies work behind closed doors when they set their rates and they refuse to open themselves up to public scrutiny. Our package brings much needed accountability."
"Consumers had enough," said Rep. Marsha Cheeks (D-Detroit). "The 20 percent rollback we're proposing is a mere beginning to change what the insurers charge in Detroit. I look forward to working closely with the insurance industry and the administration to create fair insurance rates across the state."
Representatives LaMar Lemmons Jr. and LaMar Lemmons III said that cracking down on the insurance industry for their excessive prices is long overdue.
"We have been battling insurance companies for years on their unfair practices," Lemmons III said. "Residents in our urban cities and throughout the state are unfairly charged higher rates. This legislation will fight for residents and give them a chance to buy quality and affordable insurance."