Rules to increase Michigan auto insurance competition would slash prices, nonprofits say

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  • Rules to increase Michigan auto insurance competition would slash prices, nonprofits say

Two consumer groups point to the California auto insurance market as a success story

Aggressive regulation of auto insurance is almost certain to cut Michiganders' auto insurance costs, two consumer watchdog groups claim.

Consumer Watchdog and the Consumer Federation of America cite California as an example of insurance reform done right. Following regulatory reform in 1988, the cost of auto insurance in the Golden State fell from 36 percent above the national average to 2 percent higher than the average.

Consumer Watchdog and the CFA suggest that Proposition 103, which forces insurers to justify their rates publicly, brought costs down and increased competition. Prop 103 "made the California market extremely competitive and has kept rates from growing for two decades while premiums skyrocketed everywhere else," said Douglas Heller, executive director of Consumer Watchdog.

Michigan's insurance industry has been the target of reform in recent weeks. In response to costs that are 12 percent higher than the national average, Democrats in Michigan's Senate proposed an immediate 20 percent reduction in auto insurance premiums.

And auto insurance companies would be prohibited from calculating premiums based on ZIP code, income or other personal data.

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Posted: December 2, 2009

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