Proposed reforms could increase insurance costs for Michigan consumers – study
Proposed reforms could increase insurance costs for Michigan consumers – study | Insurance Business America
Insurance News
Proposed reforms could increase insurance costs for Michigan consumers – study
Coalition highlights potential economic impact of “bad faith” legislation
Insurance News
By
Mika Pangilinan
Insurance reforms under consideration in the Michigan legislature could significantly increase costs for consumers, according to a new study from the American Property Casualty Insurance Association (APCIA).
Proposed changes in House Bill 4681 and Senate Bill 329 introduce 35 new legal avenues for action against insurance companies, which the report by APCIA said could lead to an 11-21% increase across all types of insurance policies.
This translates to a cost ranging between $2.4 billion and $4.7 billion, according to APCIA. The impact on the state’s 7.2 million drivers is also expected to be particularly pronounced, as auto insurance premiums could surge by nearly 40% if the reforms are passed.
ACPIA released its study as a member of a coalition pushing against the two bills. It is joined by several local businesses, trade associations, and nonprofit organizations that have characterized the proposed reforms as “bad faith” legislation.
It would “open the litigation floodgates and force unnecessarily high settlements,” the Don’t Touch MI Rates coalition said on its website, allowing the trial bar to increase profits at the expense of consumers.
Dawn Crandall, executive vice president of coalition member Home Builders Association of Michigan, said the higher costs could disproportionately impact low-income residents.
“Being unable to afford insurance would leave more low-income people vulnerable to financial ruin in the event of a car accident, house fire, or other emergency,” he said.
Tim Daman, president & CEO of the Lansing Regional Chamber of Commerce, also cautioned against the potential consequences of the two bills, especially with consumers already facing higher costs due to inflation.
“This is the last thing consumers need,” said Daman.
In addition to impacting consumers, Jared Burkhart, CEO of Big I Michigan, noted how the proposed changes could burden small business owners.
“This study notes that these proposed bills could lead to escalated costs for consumers and businesses across the state, increase fraud, and open the litigation floodgates, creating detrimental consequences for all Michiganders, particularly small business owners,” said Burkhart.
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