Michigan auto insurance rates rise more than 7% in 2022 following no-fault reform to lower rates

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Michigan drivers are seeing an average 7.2% increase in their insurance rates in 2022, according to a Consumer Federation of America analysis of approved rate increases for 35 auto insurance companies in the state.

The total increase to date is $498,977,294, with additional increases of approximately $68 million pending approval by the Department of Insurance and Financial Services, the regulator of the insurance industry.

Doug Heller, who compiled the data, is director of insurance for the consumer federation. He says the increases show that any rate reduction resulting from the 2019 no-fault law was temporary.

“It’s staggering the amount of rate increases Michigan drivers will see on their bills over the next few months,” he said.

Heller said the increases are due to sleight of hand calculations under the 2019 No-Fault Motoring Act, which requires car insurance companies to reduce the damage protection component by a certain amount. personal injury (PIP) insurance policies. But the rates on other parts of the policies may increase.

Two companies increased the PIP portion of their rates in 2022, though the others kept it about the same, Heller said. But most companies have also increased the prices of two other parts of driver policies: bodily injury and comprehensive. Collision coverage rates have also increased at most companies.

The result was total rate increases for most drivers.

“It doesn’t make sense for most of us to be told that part of our insurance bill has gone down, but overall we know we’re paying a higher rate.” he declared. “We don’t pay six bills – we pay one, and that bill goes up.”

Heller said the 2019 No-Fault Automobile Act did not examine the role of insurance company practices in driving up rates, so it’s no surprise, he said, to see drivers not benefit from significant rate relief. He also criticized the Department of Insurance and Financial Services for approving the rates, after insurance companies posted record profits during the pandemic when driving broke down, as did accidents.

“When insurers feel a spike in inflation, they come so quickly to the regulator, and the regulator seems very quick to approve these rate hikes. So for the insurance companies, it’s heads up, tails that we lose”. Insurance and financial services should intervene more aggressively on behalf of Michigan consumers.”

The ministry has not yet responded to a request for comment on the criticism.

Erin McDonough, executive director of the industry group Insurance Alliance of Michigan, said in a statement that insurance companies were exceeding rate reductions for personal injury protection coverage required by the 2019 no-fault reforms.

She said price increases in other coverage areas could be attributed to inflation.

“Inflation can affect auto insurance rates, like every other aspect of life, as the cost of repairing damaged vehicles and the cost of new and used vehicles to replace total vehicles increase,” McDonough said. “As a result, drivers may see inflation-induced increases in their comprehensive and collision coverages.”

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