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Jennifer M. Granholm, Governor                                                                               

Stanley “Skip” Pruss, Director                                                                    

State Insurance Advocate Releases Annual Report, Outlines Plan for

Affordability and Industry Oversight

February 4, 2009 – Michigan’s Automobile and Home Insurance Consumer Advocate Melvin Butch Hollowell today released his 2008 annual report, “Affordable Insurance for All.  A Plan to Protect Michigan Consumers.”

The 328-page report contains 10 recommendations for addressing Michigan’s highest-in-the-country auto insurance rates by expanding the coverage choices offered to consumers and by strengthening industry oversight.

“Michigan consumers pay the highest auto insurance rates in the country when they can least afford it.  The insurance industry has raised rates 69 percent since 1991 while enjoying virtually no regulation for 30 years,” Hollowell said.  “I’m pleased the governor is taking swift action by calling on the insurance industry to freeze rates while the Legislature works to enact comprehensive insurance reform.”

At a media roundtable today in Lansing, Hollowell presented the report and outlined his analysis and recommendations which will form the basis for administrative, legislative or other auto insurance reform.

Hollowell said the recommendations were developed from input provided by national insurance experts and testimony from the public given at four auto insurance affordability hearings held around the state last November.

Some of the recommendations contained in the report include:

• Requiring insurance companies to obtain the OFIR Commissioner’s approval prior to raising their rates; 
• Banning the use of credit scoring, occupation and education level in determining rates;
• Giving consumers with collision insurance the right to recover actual repair costs to the vehicle from the at-fault party in an accident; 
• Strengthening the OFIR Commissioner’s authority to award refunds to consumers, upon a finding that a company has overcharged policyholders. 

Other highlights of the report include a “De-Regulation Timeline” that depicts a year-by-year weakening of regulatory oversight of the insurance industry and a 50-state “Best Practices” review, a comprehensive study of insurance reforms that have been implemented by insurance commissioners around the country.

In her State of the State address, Governor Jennifer M. Granholm has called on every auto insurance company to freeze their rates for 12 months while the Legislature works to enact comprehensive insurance reform along the lines of the recommendations set forth in the advocate’s report.

Governor Granholm said the report provides smart, specific proposals to assure that Michigan drivers are paying fair and affordable rates for their automobile insurance.

“When I established the Office of the Automobile and Home Insurance Consumer Advocate, it was my goal to find solutions to the skyrocketing cost of insurance,” Granholm said.  “This report will be the blueprint for achieving my longstanding goal of affordable, reliable and fair rates for Michigan citizens.”

Last year, Governor Granholm announced the creation of a new automobile and home insurance consumer advocate position to fight for affordable, reliable, and fair auto and home insurance in Michigan.  In March, the governor appointed Hollowell as the State Automobile and Home Insurance Consumer Advocate, charging him with conducting hearings, receiving testimony from consumers and submitting to the governor an annual report on his findings and recommendations for administrative, legislative, or other corrective actions that would positively affect the interests of automobile insurance and home insurance consumers. 
 

Hollowell works to educate consumers on how to protect themselves against predatory or illegal insurance practices and coordinate advocacy and educational efforts with non-governmental consumer advocacy entities and other organizations.

The entire report is available on the Insurance Advocate website, www.michigan.gov/lowerratesnow.