Michigan auto insurance coverage business income hit “record-smashing” highs in 2020 through the first full 12 months of No-Fault reform. A current study exhibits that Progressive, State Farm, Allstate and Citizens – which make up almost 50% of Michigan’s auto insurance coverage market – “reported windfall profits in 2020.”
Michigan-based Auto-Owners Insurance Company additionally had a banner 12 months in 2020, touting “a record ninth consecutive year with . . . more than $1.1 billion in new business.”
In different phrases, Michigan’s new auto No-Fault regulation has been actually good for the insurance coverage firms, however not so good but for customers and Michigan drivers.
This is strictly what I predicted would occur when Michigan enacted it’s new auto No-Fault regulation in 2019. I predicted that the big winners from No-Fault reform wouldn’t be Michigan customers however the auto insurance coverage firms who have been going to money in by making a system that under guarantee them even higher profits than they have been already having fun with beforehand with the introduction of a medical payment schedule and new PIP protection degree caps.
More and extra, we’re seeing what a boondoggle No-Fault reform is for the auto insurance coverage firms.
Drivers have seen no meaningful savings on their auto insurance coverage payments. They by no means might. The math was clear from the start as a result of financial savings was restricted to the PIP portion of your No-Fault insurance coverage, which makes up roughly 35% of your whole auto insurance coverage premium. Therefore, even if you happen to selected the very lowest PIP protection ranges of $50,000 (which I do NOT suggest) for a most doable financial savings of 45%, that was solely going to be 45% of the 35% of your invoice that represents PIP. The remaining 65% of your premium was by no means going to be affected by the brand new auto regulation. That’s why at the moment, 2 years after the brand new auto No-Fault regulation was enacted in 2019, Michigan nonetheless has the second highest automotive insurance coverage premiums within the U.S.
These income, and the turbo-boost to income that insurance coverage firms are going to reap with the medical fee schedule that takes full impact on July 1, 2021, come on the expense of Michigan’s most catastrophically injured automotive accident victims, who will lose entry to very important medical care and therapy under No-Fault reform’s new medical payment schedule. Quality of medical care can even be diminished as lots of the specialised TBI and spinal wire medical amenities are pressured to close their doorways and hundreds of specialised care suppliers will discover themselves now out of labor, impacted by the brand new payment schedule as well.
So whereas everybody else is getting cashed out by No-Fault reform, auto insurance coverage firms are cashing in.
In different phrases, it’s enterprise as regular for Michigan’s auto insurance coverage trade.
And enterprise is a boomin’ . . .
Auto insurance coverage business income at “record-smashing” highs is previous information
Auto insurance coverage business income hitting “record-smashing” highs in 2020 – or in any 12 months for that matter – is previous information in Michigan. In my Detroit Free Press guest-column in 2013, I uncovered the truth that Michigan auto insurers collected greater than $2 billion extra in auto insurance coverage premiums than they paid out in claims.
Michigan auto insurance coverage firms “brought in about $6.8 billion in private passenger and commercial auto premiums and paid out some $4.7 billion in losses on private and commercial auto claims . . . Michigan auto insurers pocketed the difference. That’s more than $2 billion in unused premiums . . . for the trouble of selling a product (auto no-fault insurance) that consumers in this state are required by law to purchase. . . . When premiums outpace payouts by more than $2 billion, it’s clear that it’s not the costs of Michigan’s auto no-fault insurance system that is driving up high auto insurance rates. It’s profits.”
Study exhibits auto insurance coverage business income have been record-smashing in 2020
Four of Michigan’s largest auto insurance coverage firms – Progressive, State Farm, Allstate and Citizens – which dominate almost half of Michigan’s market earned “record-smashing” income in 2020, “reporting billions in auto insurance profits nationwide,” in response to a research by insurance coverage knowledgeable Douglas Heller.
Progressive in 2020
The “record-smashing” auto insurance coverage business income for Progressive in 2020, which has almost 18% of the Michigan market, amounted to a “44% increase in profits nationwide, netting $5.7 billion income,” in response to the research. Auto insurance coverage represents roughly two-thirds of all Progressive insurance policies.
State Farm in 2020
The “record-smashing” auto insurance coverage business income for State Farm in 2020, which has greater than 16% of the Michigan market, amounted to “a national auto insurance ‘underwriting gain’ of $1.7 billion,” in response to the research. “This profit is 50% higher than the next best” throughout the final 10 years.
Allstate in 2020
The “record-smashing” auto insurance coverage business income for Allstate in 2020, which has almost 8% of the Michigan market, resulted in “[m]ore than doubl[ing] its auto insurance ‘underwriting income’ to $3.4 billion,” in response to the research. Allstate had its “highest companywide net income in at least 20 years.”
Citizens in 2020
The “record-smashing” auto insurance coverage business income for Citizens in 2020, which has almost 6.5% of the Michigan market, resulted in its mother or father business “report[ing] a 47% increase in 2020 personal lines insurance income,” in response to the research. Auto insurance coverage is “two-thirds of [the] personal lines business.”
Auto-Owners in 2020
The “record-smashing” auto insurance coverage business income for Auto-Owners in 2020, which has 10.65% of the Michigan market, meant that in 2020 Auto-Owners had “a record ninth consecutive year with an underwriting profit” and “more than $1.1 billion in new business,” in response to the research.
Auto insurance coverage business income make insurers extremely worthwhile
A profitability evaluation of Michigan’s auto insurance coverage market by a former state Insurance Commissioner confirmed that “leading Michigan auto insurers . . . have been highly profitable.” They “were significantly more profitable than the national average,” the evaluation stated, quoting an insurance coverage trade commerce journal.
The evaluation additionally famous that “one of the three leading carriers whose business consists predominantly of Michigan business, more than doubled its profits in five years . . .”
Have questions on why auto insurance coverage business income hit record-smashing highs in 2020?
If you might have questions on how and why auto insurance coverage business income are so excessive whereas drivers are nonetheless paying the second excessive premiums within the nation and shedding entry to very important medical care and therapy due to No-Fault reform, please learn the links to the blogs I’ve included on this put up. Also, please call your state Representative, state senator, the Speaker of the House, the Senate Majority Leader and the Governor to allow them to know what you assume.
If you have been injured in an accident and wish to converse with an skilled auto accident lawyer, call toll free anytime 24/7 at (800) 777-0028 for a free one on one with certainly one of our attorneys. You may also get assist from an skilled accident lawyer by emailing [email protected] or you should utilize the chat characteristic on our web site. We are additionally joyful to suggest an impartial insurance coverage company so that you can comparability store and get quotes to guard you and your loved ones.