By Nick Smith
Gongwer News Service
Michigan needs to strengthen penalties against insurers engaging in practices that keep policyholders from successfully obtaining their claims or receiving needed services, lawyers and those who have battled their insurance companies told a Senate panel.
Criticism of insurance companies, as well as allegations of a lack of teeth in state law to hold insurers accountable, dominated testimony last week before the Senate Finance, Insurance and Consumer Protection Committee .
Joseph Sullivan, director of the Office of Innovation and Research with the Department of Insurance and Financial Services, said auto insurance rates have increased 56% nationally since January 2020, including 6% in the last year.
Reasons for rising costs, he said, include a spike in fraud, the coronavirus pandemic, supply chain issues, expensive vehicle technology and increased costs for vehicle repair and replacement.
According to the Coalition Against Insurance Fraud, there is about $300 billion in fraudulent insurance claims resulting in losses in recent years. This, Sullivan said, leads to an increase of policyholder premiums of $400 to $700 per year.
Jennie Gies, legislative liaison manager with DIFS, said there are several ways that lawmakers can consider strengthening consumer protection and rein in bad business practices involving insurance.
These include increasing post claim underwriting transparency, increasing fines for misconduct, beefing up data security protections and requiring insurers to file more specifics of their rules manuals.
Some of the suggestions listed by Gies were among the proposals included in a bill package introduced by Senate Democrats earlier Wednesday.
The testimony from DIFS officials focused on information and suggestions for improvements following implementation of the state’s 2019 auto no-fault law changes.
Those who followed the department officials expressed frustration and anger with the existing state insurance laws.
Jamie Harris, a Detroit businessperson, described her experience with New Jersey-based CURE Auto Insurance in which she outlined in an August story by The Detroit News.
Harris told committee members how she filed a claim following damage to her 2023 Land Rover Ranger Rover in a crash near Grand Rapids in August 2024.
The insurer declared the vehicle a total loss, told her the process for transferring her vehicle title to CURE, and later denied her claim, alleging inaccurate information in her insurance application. The vehicle was later placed for sale on an online auction website.
She has been unable to restore ownership of the vehicle, which has been sitting at an impound lot near Grand Rapids while her claim is being fought in court.
“I’ve been paying on my Land Rover since the loss in August 2024 and another vehicle, plus the cost of insurance,” Harris said. “I did think it was my duty to come here to strengthen the protection so insurance companies … don’t keep doing this to Michigan residents.”
Attorney Phil Serafini, who is representing Harris, acknowledged there is fraud in the insurance system, but he said a large portion of it is being done by out-of-state, large-scale operators and not everyday people.
“You need to level the playing field for your constituents,” Serafini said. “What’s become increasingly alarming to me is that over the past couple of years, the insurance company, the rate at which the insurance companies are not only willing but actively seeking to paint ordinary behavior and ordinary people, your constituents, as fraudulent, without any proof.”
Serafini said it is an intimidation tactic to force most people to walk away from their claims because they cannot afford a lawsuit.
Carmen Burgie, who was struck by a vehicle and paralyzed at Michigan State University in 2001, also testified.
Burgie said her insurer cut numerous services she had under her policy, including physical therapy and massage therapy.
She said the reason for the cutoff in her services was that her condition was not going to improve. Burgie said the treatment is necessary to maintain her remaining range of motion.
A Michigan Supreme Court decision issued in July 2023 struck down the retroactive portion of the 2019 law’s medical fee schedule that set limits on reimbursements in the system.
In Andary v. USAA Casualty Insurance Company (MSC Docket No. 164772) the high court upheld a Court of Appeals opinion that those changes do not apply to those injured and receiving
benefits prior to the law’s effective date (See Gongwer Michigan Report, July 31, 2023).
Her insurer, Auto-Owners Insurance, stopped paying her caregivers following the 2019 law changes until the Supreme Court ruling. She eventually had to be reimbursed. Months later, her most recent lawsuit, over the loss of physical therapy and massage therapy, was filed.
Insurance Alliance of Michigan Executive Director Erin McDonough in a statement following Wednesday’s hearing said the group does not condone the practices outlined in the Detroit News coverage on CURE. She said those with problems with their insurance company to contact DIFS.
As to possible changes to the 2019 no-fault law, she urged the Legislature to be cautious in any consideration of amending the law.
“Any proposed rollbacks to the 2019 bipartisan reforms must be reviewed with an eye toward the impact on everyday ratepayers and Michigan families who are struggling to make ends meet,” McDonough said.
Gongwer News Service
Michigan needs to strengthen penalties against insurers engaging in practices that keep policyholders from successfully obtaining their claims or receiving needed services, lawyers and those who have battled their insurance companies told a Senate panel.
Criticism of insurance companies, as well as allegations of a lack of teeth in state law to hold insurers accountable, dominated testimony last week before the Senate Finance, Insurance and Consumer Protection Committee .
Joseph Sullivan, director of the Office of Innovation and Research with the Department of Insurance and Financial Services, said auto insurance rates have increased 56% nationally since January 2020, including 6% in the last year.
Reasons for rising costs, he said, include a spike in fraud, the coronavirus pandemic, supply chain issues, expensive vehicle technology and increased costs for vehicle repair and replacement.
According to the Coalition Against Insurance Fraud, there is about $300 billion in fraudulent insurance claims resulting in losses in recent years. This, Sullivan said, leads to an increase of policyholder premiums of $400 to $700 per year.
Jennie Gies, legislative liaison manager with DIFS, said there are several ways that lawmakers can consider strengthening consumer protection and rein in bad business practices involving insurance.
These include increasing post claim underwriting transparency, increasing fines for misconduct, beefing up data security protections and requiring insurers to file more specifics of their rules manuals.
Some of the suggestions listed by Gies were among the proposals included in a bill package introduced by Senate Democrats earlier Wednesday.
The testimony from DIFS officials focused on information and suggestions for improvements following implementation of the state’s 2019 auto no-fault law changes.
Those who followed the department officials expressed frustration and anger with the existing state insurance laws.
Jamie Harris, a Detroit businessperson, described her experience with New Jersey-based CURE Auto Insurance in which she outlined in an August story by The Detroit News.
Harris told committee members how she filed a claim following damage to her 2023 Land Rover Ranger Rover in a crash near Grand Rapids in August 2024.
The insurer declared the vehicle a total loss, told her the process for transferring her vehicle title to CURE, and later denied her claim, alleging inaccurate information in her insurance application. The vehicle was later placed for sale on an online auction website.
She has been unable to restore ownership of the vehicle, which has been sitting at an impound lot near Grand Rapids while her claim is being fought in court.
“I’ve been paying on my Land Rover since the loss in August 2024 and another vehicle, plus the cost of insurance,” Harris said. “I did think it was my duty to come here to strengthen the protection so insurance companies … don’t keep doing this to Michigan residents.”
Attorney Phil Serafini, who is representing Harris, acknowledged there is fraud in the insurance system, but he said a large portion of it is being done by out-of-state, large-scale operators and not everyday people.
“You need to level the playing field for your constituents,” Serafini said. “What’s become increasingly alarming to me is that over the past couple of years, the insurance company, the rate at which the insurance companies are not only willing but actively seeking to paint ordinary behavior and ordinary people, your constituents, as fraudulent, without any proof.”
Serafini said it is an intimidation tactic to force most people to walk away from their claims because they cannot afford a lawsuit.
Carmen Burgie, who was struck by a vehicle and paralyzed at Michigan State University in 2001, also testified.
Burgie said her insurer cut numerous services she had under her policy, including physical therapy and massage therapy.
She said the reason for the cutoff in her services was that her condition was not going to improve. Burgie said the treatment is necessary to maintain her remaining range of motion.
A Michigan Supreme Court decision issued in July 2023 struck down the retroactive portion of the 2019 law’s medical fee schedule that set limits on reimbursements in the system.
In Andary v. USAA Casualty Insurance Company (MSC Docket No. 164772) the high court upheld a Court of Appeals opinion that those changes do not apply to those injured and receiving
benefits prior to the law’s effective date (See Gongwer Michigan Report, July 31, 2023).
Her insurer, Auto-Owners Insurance, stopped paying her caregivers following the 2019 law changes until the Supreme Court ruling. She eventually had to be reimbursed. Months later, her most recent lawsuit, over the loss of physical therapy and massage therapy, was filed.
Insurance Alliance of Michigan Executive Director Erin McDonough in a statement following Wednesday’s hearing said the group does not condone the practices outlined in the Detroit News coverage on CURE. She said those with problems with their insurance company to contact DIFS.
As to possible changes to the 2019 no-fault law, she urged the Legislature to be cautious in any consideration of amending the law.
“Any proposed rollbacks to the 2019 bipartisan reforms must be reviewed with an eye toward the impact on everyday ratepayers and Michigan families who are struggling to make ends meet,” McDonough said.
––––––––––––––––––––
Subscribe to the Legal News!
https://www.legalnews.com/Home/Subscription
Full access to public notices, articles, columns, archives, statistics, calendar and more
Day Pass Only $4.95!
One-County $80/year
Three-County & Full Pass also available
