Protecting Michigan's Auto Insurance Promise

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CPAN urges DIFS Director Fox to follow steps taken in California, Washington to determine if Michigan drivers are owed bigger insurance refunds

CPAN urges DIFS Director Fox to follow steps taken in California, Washington to determine if Michigan drivers are owed bigger insurance refunds

Call comes on the heels of documented excessive profits enjoyed by auto insurers due to decrease in driving during COVID pandemic

 

LANSING, Mich.—(Oct. 14, 2021)— CPAN, the consumer advocacy group fighting for fairer insurance policies, is calling on Michigan Department of Insurance and Financial Services Director Anita Fox to investigate whether auto insurance premium refunds are owed to Michigan drivers. The COVID pandemic resulted in a substantial decrease in driving, reaping substantial savings for auto insurers — but without better data collection, Michigan leaders will not know if drivers have been adequately refunded.

“As the chief line of defense for Michigan auto insurance policyholders, we urge you to use your authority to review the pandemic data and ensure that insurance companies return any excess premium they captured when Michiganders were forced to dramatically change their driving behavior to confront a global health emergency,” the CPAN executive committee wrote to DIFS Director Fox in a letter sent Oct. 13.

Consumers continue to adjust their work and personal lives due to the continued effects of the delta variant of the coronavirus, including dealing with the impact of inflation and supply chain-driven shortages. Meanwhile, auto insurers in recent months have publicly shared how well they have fared financially during the pandemic.

Progressive, for example, reported a national 14 percent income gain over the prior June and a 111 percent income gain in July 2020 over the prior year, while noting to its investors: “During June, we continued to see a significant decrease in auto accident frequency due to restrictions put in place to help slow and/or stop the spread of the novel coronavirus, or COVID-19, which contributed to our companywide loss/LAE ratio for the month being 8.2 points lower than the ratio reported in June last year.”

What Progressive told the state of Michigan, however, was this: “At this time, given that June and July of 2020 both show monthly incurred frequencies compared to prior year within a normal range of variance, and given that Progressive Personal Auto financial results for June and July show either an inadequate profit or an underwriting loss, we do not see a case for additional premium credits at this time. 

With the start of the fourth quarter of 2021, there has now been more than enough time to thoroughly analyze the actual exposure relative to the premiums that were charged during the first year of this pandemic. “As such, we believe it is incumbent on DIFS to urgently return to the question of whether rates were excessive during the pandemic and then determine if more refunds are needed to ensure Michiganders did not overpay for auto insurance during the pandemic,” the CPAN executive committee members wrote.

The letter noted that both the Washington and California Departments of Insurance have undertaken similar efforts and reviewed data from insurance companies to assess whether consumers were owed additional premiums. California’s Department of Insurance recently announced actions focused on three large insurance companies that did not provide sufficient refunds over the course of the pandemic, as indicated by the collected data. 

The letter sent to DIFS referenced research prepared by Douglas Heller, an independent auto insurance expert who is frequently asked to analyze insurance data in states around the country. A recent report co-authored by Heller found that auto insurance companies overcharged Michigan policyholders by $1.2 billion in 2020. 

"Auto insurers employ teams of professionals whose responsibilities are focused on extracting every dollar of profit possible. Comparable resources are not available to the individual driver to demand what they are rightfully owed," Heller said. "As the agency appointed to defend Michigan auto insurance policyholders, it is incumbent upon DIFS to use its authority to ensure that Michigan drivers did not overpay for auto insurance during the pandemic.” 

The letter also calls on DIFS to require more information about severe accident claims covered by the Michigan Catastrophic Claims Association (MCCA), the secretive entity controlled by the auto insurance industry that covers care for catastrophic injuries. The MCCA has refused to negotiate with providers and their patients since a 45% reimbursement slash for catastrophic care went into effect in July, effectively denying necessary care to hundreds of vulnerable residents.  

Download the letter.

Scott Swanson