Viewpoint: Proposed insurance 'bill of rights' will lead to higher rates, frivolous lawsuits
At a time when Michiganders are grappling with the pressures of inflation, and small businesses are still trying to regain ground lost during the COVID pandemic, the last thing they need are massive increases in the basic insurance they must purchase.
Yet, if new legislation under consideration in Lansing becomes law, the cost of auto, homeowners, business and other basic insurance coverage will see double-digit increases, just as they did in the states of California and Florida where similar legislation was enacted.
The legislation, named “Insurance Policyholder Bill of Rights,” sounds like a good idea. Supporters claim it will “level the playing field” and make insurance claims easier for consumers to file and collect. The legislation is avidly supported by Michigan’s trial lawyer advocates, which is not a surprise when the legislation is closely examined, because it bakes into the bill language hefty lawyer fees for suing insurance companies.
Michigan law already provides safeguards and protections for consumers that ensure the timely payment of properly filed claims. The vast majority of insurance claims in Michigan are paid promptly and the claimants are satisfied with the settlement they receive. The Michigan Department of Insurance and Financial Services is well-equipped to investigate complaints and conduct rigorous oversight of the insurance industry and has done so for many years.
The proposed legislation, which provides powerful incentives for fraudulent claims and frivolous lawsuits against insurance companies, will result in higher insurance premiums for individuals and small businesses across our state.
In Florida, similar legislation greatly reduced insurance options for its residents while attorneys profited at the expense of Floridians. Over a 10-year period, Florida insurers paid out a staggering $51 billion, with 71% going towards attorneys' fees and third-party adjusters, while a 8% reached the claimants. In fact, Florida passed legislation this spring to undo the very law Michigan is considering because of the inability of residents to obtain insurance at a reasonable cost.
Transparency and efficiency in Michigan’s insurance industry are essential, but these bills are not the answer. In fact, they are a solution in search of a problem. If lawmakers insist on moving forward with this legislation, they should at least rename it to better reflect what it really is: “A Trial Lawyers Bill of Rights.”
Amanda Fisher is the Michigan State Director of the National Federation of Independent Business (NFIB).
This article originally appeared on Lansing State Journal: Viewpoint: Proposed insurance 'bill of rights' will lead to higher rates
