Proposed Insurance Overhaul Under Fire in Michigan

Posted November 15th, 2009
by HomeownersInsurance.org Staff (no comments)

MichiganMapMichigan, which has had more than its fair share of economic woes and crisis over the past decade, is finding that its insurance industry is now in the sights of state government. There is new legislation in Michigan that insurance industry employees are upset about, and that lawmakers find themselves trying to defend in the midst of these troubling times.

The homeowners, property and casualty insurance carriers in the state of Michigan provide more than 55,000 jobs, most of which are both knowledge based and high wage. These employees are committed to helping Michigan consumers have the kinds of coverage they need.

Democrats in the Michigan house now allege that employees in Michigan’s insurance industry are mistreating their customers. They suggest that the claims handling process is set up to mistreat customers and to avoid having to follow through on the company’s promises. They have introduced a package of bills that will make it easier for consumers to file lawsuits against the employees of the insurance industry and insurance companies in order to try to solve this perceived problem.

Employees of the insurance industry, however, argue that this legislation will not solve any problem, real or imagined. In fact, they argue, the legislation will only serve to drive up insurance costs as industry employees struggle to handle lawsuits.

Statistically speaking, most insurance policy holders in the state of Michigan are satisfied with the claims process. The number of calls to the state insurance hotline as well as a hotline offered by the Insurance Institute of Michigan have steadily dropped over the last several years. According to a study by J.D. Power, customer satisfaction in the insurance industry has risen steadily over the past five years, rising by 25 points on a 1000 point scale since the studies began in 2004.

Insurance industry experts argue, as well, that there are already important components to Michigan law that can address problems with the way an insurance company handles its claims. As it stands today, state law in Michigan gives a 12 percent penalty in interest when the company doesn’t settle a claim in a timely manner. In addition, the insurance company may be held liable for as much as $25,000 in fines. They can also have their license suspended or even revoked. If a company denied claims in an unfair manner, they’d likely be forced out of business in relatively short order.

The insurance industry argues that this legislation would only ultimately serve to increase premium costs to policyholders. It would increase the number of trial lawyers who are encouraged to file suit, and drive up costs all around.

Categories: News

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