Michigan's Gov. Rick Snyder is putting auto insurance on his radar by elevating the department of insurance to cabinet level and calling for the reform of the state's no-fault insurance system.
In his State of the State address late last week, Snyder announced an executive order creating the Department of Insurance and Financial Services, to be headed by Insurance Commissioner Kevin Clinton.
The new department would replace the current Office of Financial and Insurance Regulation and remove it from under the Department of Licensing and Regulatory Affairs. As part of the reshuffling, several other boards and commissions would be placed under the new department's control.
In Snyder's address, he notes that Michigan is the 10th most expensive state for auto insurance and costs far exceed many other states in some of its major cities.
“It is time to reform no-fault in a thoughtful way,” says Snyder in a statement.
The Property Casualty Insurance Association of America's Jeffrey Junkas, regional manager, praised the governor for his actions, calling it “an important next step toward addressing skyrocketing costs.”
The governor also called for the creation of an insurance-fraud department to help fight skyrocketing costs.
PCI says that Michigan is the only state that mandates unlimited, lifetime medical benefits for auto-accident injuries.
“This 'one size fits all' system is expensive, has few cost controls and does not provide any incentives for thrift,” Junkas says. “As a result Michigan drivers pay 20-30 percent more than in neighboring states.”
The governor points out that the insurance and financial services industries have become a very important component of the state's economy. He says the industry employees more than 150,000 residents and generates in excess of $9 billion in payroll.
The state has 149 insurance companies and over 300 state banks and credit unions. The state also serves as an entry point for five Canadian insurance companies and nearly 1,500 out-of-state insurance companies do businesses in the state.
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