State insurance advocate: Ban credit scoring for car coverage

LANSING -- Auto insurance companies would have to receive state approval before raising rates and be prohibited from using credit scores, occupations or educational attainment levels to set policy costs, under recommendations outlined this morning by the state's insurance advocate.
"Michigan consumers pay the highest auto insurance rates in the country when they can least afford it. The insurance industry has raised rates 69 percent since 1991 while enjoying virtually no regulation for 30 years," said Butch Hollowell, who was appointed last year by Gov. Jennifer Granholm to review the state's insurance climate and see what changes could be made to provide fairer, more affordable insurance.
The long-awaited report is certain to set off vigorous debate in the Legislature.
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The governor, in her State of the State speech Tuesday, urged auto insurers to voluntarily freeze rates for 12 months to allow time for the Legislature to consider comprehensive insurance reforms. Of particular concern to Granholm is the skyrocketing cost of insurance in Detroit and other urban areas which has contributed to the decision by many drivers to simply go without insurance.
Another recommendation in the 328-page report: Allowing consumers with collision coverage to recover repair costs from at-fault drivers who collide with them, and require insurers to get insurance commissioner approval before raising rates.
"This report will be a blueprint for achieving my longstanding goal of affordable, reliable and fair rates for Michigan citizens," Granholm said in a statement.
For their part, insurance companies say part of the reason for higher insurance costs here is because Michigan provides the nation's highest level of benefits. Michigan's no-fault law requires insurances to provide unlimited, lifetime medical benefits to a crash victim. They point to a report from the National Association of Insurance Commissioners that found Michigan's average auto insurance premium ranks 12th highest among the states -- and that the 11 states with higher premiums provide fewer benefits than those provided in Michigan