Saund
r
DWliSIODCI'. .
wI uld require uniform
rating territories: Saunders
ide "We ould require the
mium be based upon the ac
tual costs in any given territory
ofthc e.W
Under the current system in
surance companies assign low
rates to areas with little popula
tion and charge higher rates for
heavily populated urban areas,
Saunder said.
"The way that rating is done
is subjective. It's not based on
objective data," Sunders said.
"Insurance companies feel that
they would rather insure people
in other areas of the state than
in m urban areas. But there
is no objective data to justify
that."
Saun . insurance ter-
ritories ould be based on traf
fic patterns and no smaller than
one county. He said traffic pat
terns in Macomb and Oakland
counties have a significant im
pact upon insurance rates in
Detroit even though t.ho e
drivers pay le in auto in
surance.
But Thom Freel, public
relations manager of AAA
Michigan, said rates are based
OIl marketp ce conditioas.
"Insurance rates are set upon
on a community's or territorYs
experience in the marketplace,
. ch takes into consideration
the population size, W Freel said.
Saunders said his bill would
require insurance companies to
justify their premiums based OIl
actual losses in a particular ter
ritory.
Another insurance bill call
ing a 30 percent rollback on
rates has been passed by the
House and is being considered
in the Senate. _
Sponsored by Rep. Joseph
Maynard, D-St.Clair Shore »
the bill proposes to keep rates
down by making companie
eliminate excessWe profits,' ad
ministrative expenses, and ex
cessive estimates of future
losses.
The plan also would protect
the benefits of policyholders
without cutting their rights,
Maynard said.
"Much of the problem with
rates can be handled in the in-
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Citizen
Lobby
1
agencies, contends the
economic policy director of the
Michigan Citizens Lobby.
Brian Johnson said collusion
and coDStaDt attempts by agen
cies to reduce consumers' rights
and benefits are two issues hurt
ing citizens.
·We believe strongly that
much of the problems with rates
can be handled in company
surance company board room,
first," say Brian Johnson,
economic policy director of the
Michigan Citizens Lobby.
"We believe that their profits
are higher than what they say
they are because they're over
stating their losses. We also
believe that their operating ex
penses are too high .•
Johnson said Maynard's
plan, aloag with regulatio of
the insurance industry, would
help save consumers money in
the loog run.
But Freel said the Maynard
plan would be disastrous for
consumers, because it doesn't
lower rates and overestimates
the profit-making abilities of
the insur lice companies. He
said the bill mirror California's
Proposition 103, which called
for a 20 percent rollbaclc in in
. surance rates.
WIt' an irresponsible bill,"
Freel said. Freel said that AAA
MicbJgan supports a plan spon
sored by Sen. Dick Posthumus,
R-Lowell, and Paul Wartner,
R-Portage, which bars cuts in
insur nce premiums without
control on costs for lawsuits.
The Posthumus, called Cut
Auto Rates Effectively
(CARE), . seeks to strengthen
the language under the state's
current No-Fault plan so that it
would allow lawsuits for serious
injuries- while eliminating them
for minor injuries. It also would
coordinate a fee schedule for
health-care providers.
"The doctor and the hospi
tals are forcing auto insurers to
pay more than their fair share
for patient care co ts. Hospitals
are charging no-fault insurers in
exec of 30 percent more than
the cost of the tre tment which
offsets the low cost of
Medicaid," Freel sid. "Legal . .
costs have skyrocketed from 30
percent in 1981 to 79 percent in
1988." .
But Johnson and Saunders
contend the Posthumus plan
will hurt consumers because un
limited medical coverage would
become too expe . v� for the
average consumer to afford.
"Fee chedules drive doctors
I away. Doctors are no accep ing
Medicaid patients becau they
are no getting their money �or
their services," Saunders said.
"Those that do (accept
Medicaid), bill for a lot of ser
vices that are not necessary to
try to boost what they ultimate
ly get from Medicaid."
from A tOn 01 0V'ef 200 S60n
___ ... .. ... -: . ....1
board rooms first," Johnson
said. .
Johnson said some
companies' profits are hi�er
than they admit because com
panies overstate their loss s.
He also said insurance co .r
panies operating expenses e
"too¥."
"They fight claims they do 't
need to fight," Johnson sa d.
• And yet' people cannot reco r
their legal fees if they have 0
. sue.an insurance company."
The Citizens Lobby 'sup
ported the bill of Rep. John
Maynard, D-St. Clair Shores, to
cut auto insurance rates _ by 30
percent. The measure pass d
the House 105-0. The sm I
would allow a rate rollba k
without cutting rights and
benefits of the consumers.
·Rates are a real proble , "
Johnson said. "There are ma y
people in the state who cannot
afford insurance no ."
Insurance companies say t e
reason rates have gone up is be
cause the price of paying claims
MICHIGAN CI11ZEN 13
has went up. They also cite law
suits, and the enormous cost of
medical insurance reason fo
the rapid rise. All forms of in
suranee help to pay health in
surance.
. John on said while many
agencies do a good job for their
consumers, the insurance in
dustry is still "privileged.
"They can get away with a lot
that other industries cannot,"
Johnson said He noted that
five i surance companies,
Triple A, State Farm, Citizens,
All-State and Auto Owners,
control two-thirds of the auto
insurance market in the state.
Johnson said insurance
agencies are exempt from anti
, trust laws.
"That is why they do the
things they do," Johnson said.
"That is wlty the rates are so
high."
Johnson said the Citizens
lobby is fighting an "industry
backed" plan proposed by Sen.
Dick Posthumus, R-A1to, and
Rep. Paul Wartner, R-Portage,
which he said would roll back
rights and benefits as ell as
rates.
Rights
10
Co tiDued from Pel
life ordinarily," Ferency said.
"They report to work every day
and they raise their family and I
don't see why we have to chas
. them with a gun, a b dge and a
club."
Ferency said legislation that
would permit police to enter
homes without knocking, and a
separate measure and to allow
wiretapping of uspectcd
criminals infringe constitution
al rights.
"That [no-knoc legislation]
was never allowed even in
England under King George
III,· he said.
Both no-knock and wiretap
ping legislation would, allow
police to break down the door
without first knocking and an
nouncing themselves. A hear
ing on the bill is scheduled for
May 1.
Howard Simon, executive
director of the American Civil .
Liberties Union of Michigan,
called no-mock "a death war
rant for police." He said drug
dealers might open fire on
police thinking they were rivals
trying to t e their profits.
"I think the' police h ve all the
authority they need right now to
deal with emergency situa
tions," Simon said.
REISIG SAID no-k ock
legislation would let the police
decide what course to take. He
said no one would prevent
police from announcing them
selve if they thought it would be
safer.
"Why should this be an op
tion of the bad guys? he said
Reisig also contends no
knoc and wiretapping are con
stitutional.
"Both no-moe and wiretap
ping are within constitutional
parameters. We're not asking
for a change in the constitution,"
Reisig said.
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