Michigan private auto insurance coverage affordability improved markedly after enacting substantial auto insurance coverage reform in 2019, in keeping with a brand new report by the Insurance coverage Analysis Council (IRC) – just like the Triple-I, a division of The Institutes
The research, Private Auto Insurance coverage Affordability in Michigan, discovered that non-public auto insurance coverage expenditures accounted for 1.9 p.c of the median family earnings in Michigan in 2022 (the final 12 months the information is out there), a decline of half-a-percent from the pre-reform peak. Michigan’s expenditure share stays increased than the proportion within the general U.S. and forty-four different states.
Different key findings from the report embody:
- Earlier than the reforms, Michigan drivers have been required to buy limitless private harm safety (PIP) protection; compared, the second highest mandated quantity of PIP protection was $50,000 in New York. The limitless medical advantages and different options, comparable to attendant care advantages and no medical payment schedule, led to Michigan’s extraordinarily excessive common auto harm declare severity, which has been the first price driver within the state.
- In 2022, Michigan households spent $1,319 to insure every car, practically 20 p.c above the nationwide common. Nonetheless, within the years since reform, expenditures have fallen in Michigan whereas growing in nearly each different state. From 2019 to 2022, the typical expenditure for auto insurance coverage in Michigan fell 12 p.c in contrast with a rise of 5 p.c within the U.S. general.
- Uninsured and underinsured motorists are each a symptom and reason behind affordability points. In 2019, Michigan had the best fee of uninsured drivers within the nation, with a couple of in 4 motorists missing the required legal responsibility protection. The uninsured motorist fee in Michigan dropped by 5 p.c between 2020 and 2022.
“Efforts to enhance auto insurance coverage affordability in Michigan should start with the underlying price drivers: harm declare severity and litigation,” mentioned Dale Porfilio, FCAS, MAAA, president of the IRC. “The typical quantity paid per auto declare for auto harm insurance coverage is dramatically increased in Michigan, greater than double the U.S. common and one and a half instances the second highest state.”
Porfilio, who can be Chief Insurance coverage Officer of the Insurance coverage Info Institute (Triple-I), famous that the 2022 affordability information doesn’t absolutely replicate many current countrywide challenges to affordability, comparable to financial inflation, increased substitute prices, authorized system abuse, and deteriorating driving conduct. “Nonetheless, the motion of a number of key indicators illustrate the constructive impact of the Michigan policymakers’ efforts to enhance affordability of their state.”