Whenever the Michigan insurance industry loses a court case or whenever legislation is passed that doesn’t go its way, industry representatives immediately issue dire warnings of hefty rate increases and job losses. But before policymakers and the public buy into these bullying scare tactics they need to look at the facts.
Case in point: The Michigan Supreme Court’s recent decision on McCormick v. Carrier. The court overturned the 2004 Kreiner decision and returned Michigan’s auto no-fault law to what the legislature intended when it passed a 1995 law outlining Michigan drivers’ rights to sue for quality of life damages.
The Kreiner decision made it nearly impossible for accident victims to receive quality of life compensation for severe injuries caused by drunk and negligent drivers. Predictably, the insurance industry claims that McCormick will result in more lawsuits, which will mean increased costs to insurance companies and higher rates for consumers. Before we reach for our torches and pitch forks and storm the Supreme Court for raising our rates, Michigan citizens need to understand the following:
- In the six years since Kreiner was decided there have been over 250 Court of Appeals decisions, compared to less than 10 cases in nine years prior to Kreiner! Why? Because insurance companies forced victims to file suit with the full knowledge that the courts would deny the claim, citing the draconian legal standard that Kreiner imposed. Insurers will no longer be able to hide behind Kreiner and will be under pressure to deal fairly with innocent victims outside of court.
- During the repressive six years the Kreiner ruling was in effect, insurance companies pocketed obscene profits because they escaped paying legitimate bodily injury claims. Yet during this time insurance companies never significantly decreased rates to reflect their increased profits. Thanks to McCormick, instead of piling up staggering profits, the insurers will have to compensate innocent victims of drunk and careless drivers.
- Finally, the state Supreme Court’s latest decision correctly returns our no-fault injury threshold to the standard approved by the Legislature – which was fully supported by the insurance industry – in 1995, not the judge-made law that was the Kreiner decision.
Policymakers should absolutely do everything they can to ensure Michigan maintains a strong insurance industry while also keeping rates affordable and our auto no-fault system intact. However, the insurance industry knee-jerk, my way or the highway attitude doesn’t add to the discussion. It’s childish, bullying behavior and it’s offensive.
Instead, we should be discussing the real cost of auto insurance rates – collision and comprehensive coverage, which accounts for 50-60 percent of the typical auto insurance premium (compared to 20 percent for liability), and the skyrocketing profits that insurance companies are earning in this state. Unless something is done to solve those problems meaningful rate reduction will never happen.
John Cornack is president of the Coalition Protecting Auto No-Fault
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