Michigan private auto insurance coverage affordability improved markedly after enacting substantial auto insurance coverage reform in 2019, in response to a brand new report by the Insurance coverage Analysis Council (IRC) – just like the Triple-I, a division of The Institutes
The examine, Private Auto Insurance coverage Affordability in Michigan, discovered that private auto insurance coverage expenditures accounted for 1.9 % of the median family revenue in Michigan in 2022 (the final 12 months the info is accessible), a decline of half-a-percent from the pre-reform peak. Michigan’s expenditure share stays increased than the proportion within the total U.S. and forty-four different states.
Different key findings from the report embrace:
- Earlier than the reforms, Michigan drivers have been required to buy limitless private damage safety (PIP) protection; as compared, the second highest mandated quantity of PIP protection was $50,000 in New York. The limitless medical advantages and different options, akin to attendant care advantages and no medical price schedule, led to Michigan’s extraordinarily excessive common auto damage declare severity, which has been the first price driver within the state.
- In 2022, Michigan households spent $1,319 to insure every automobile, practically 20 % above the nationwide common. Nevertheless, 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 % in contrast with a rise of 5 % within the U.S. total.
- Uninsured and underinsured motorists are each a symptom and explanation for affordability points. In 2019, Michigan had the very best price of uninsured drivers within the nation, with a couple of in 4 motorists missing the required legal responsibility protection. The uninsured motorist price in Michigan dropped by 5 % between 2020 and 2022.
“Efforts to enhance auto insurance coverage affordability in Michigan should start with the underlying price drivers: damage declare severity and litigation,” stated Dale Porfilio, FCAS, MAAA, president of the IRC. “The common quantity paid per auto declare for auto damage 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 also be Chief Insurance coverage Officer of the Insurance coverage Info Institute (Triple-I), famous that the 2022 affordability information doesn’t absolutely mirror many latest countrywide challenges to affordability, akin to financial inflation, increased alternative prices, authorized system abuse, and deteriorating driving habits. “Nevertheless, the motion of a number of key indicators illustrate the optimistic impact of the Michigan policymakers’ efforts to enhance affordability of their state.”
