Wednesday, May 13, 2015

Detroit Wants Its Own Auto Insurance Company? At What Cost To Michigan Taxpayers?

Yesterday on the Mitch Albom show on WJR 760 am in Detroit, Detroit Mayor Mike Duggan continued his push for the City of Detroit's alternative automobile insurance option "D Insurance".   

There is no doubt that there is serious auto problem insurance problem in Detroit where auto insurance premiums are just about unaffordable for most.   According to study's and Mayor Duggan's comments on the radio last evening, 1 out of every 5 Detroiters are currently driving without insurance compounding the problem. 

Mayor Duggan stated on Mitch Albom's show that it is the medical claims that are causing such high auto insurance rates and something needs to be done to bring those down.  He implied that many are using their auto insurance for medical assistance.

Mayor Duggan's plan is to offer an alternative auto insurance plan that caps medical coverage at $250,000.  The question is though is that legal?  Currently in Michigan the medical coverage cap for all auto insurer's is $530,000 after that point is reached then the Michigan Catastrophic Claims Association reimburses the auto insurance company.  

There are many questions as to the legal operation of the "D Insurance Company." 

The City of Detroit's "D Insurance Company" will pay up to $250,000 for medical expenses and then your health provider would pay.  In a typical auto policy your health provider would pay first followed your auto insurance company once your health limits were exhausted then followed by the Michigan Catastrophic Claims association.  This is why you have the option of medical coverage being primary on your auto policy or secondary as excess.  Medicaid and Medicare do NOT cover auto injury expenses.  What happens to those with out proper medical insurance that covers auto accidents?

With the City of Detroit's "D Insurance Company" if people who have this policy need more coverage beyond $250,000 will they get it from the Michigan Catastrophic Claims Association?  

Will those insured with the City of Detroit's "D Insurance Company" pay into the Michigan Catastrophic Claims Association as all other drivers in Michigan have to?  What will happen to the Michigan Catastrophic Claims Association fund rates when a pool of people stop contributing ?

Why must other insurance companies operate at an unfair advantage by having to pay up to $530,000 before being reimbursed by the Michigan Catastrophic Claims Association?  

Isn't offering one product in one City considered redlining?

How can the City of Detroit, still in debt after bankruptcy afford to operate an insurance company?

Is the "D Insurance Company" going to be considered an admitted insurance company (standard market) or will it be considered a non-admitted insurance company (sub standard)?    Admitted companies are the responsibility of the state and taxpayers should they become insolvent, while non-admitted companies are not.

Is the recent rush to change Michigan's no-fault system really not to save consumers money across the state but to help Detroit set up their own Auto Insurance Company potentially on the backs of Michigan Taxpayers?

If the only guarantee coming from Lansing is that with No-Fault reform you will save $100 or less a year, and most reports say less at $64, for only 2 years then this reform is not worth putting through.

Michiganders pay twice as much as the national insurance average on their insurance premiums.  If there is to be reform, real reform must be put into place.  The best way to start with reform is to not so much reduce coverage but put in better safeguards to reduce auto medical fraud.

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