NCPA - National Center for Policy Analysis


December 14, 2009

Before we listen to politicians who claim greedy insurance companies over-charge Michigan residents, perhaps we should look at how much it costs to write insurance in the state, says Michelle Minton, Director of Insurance Studies at the Competitive Enterprise Institute.


  • Michigan residents pay on average $150 more than the typical U.S. driver for insurance.
  • During the last 10 years Michigan insurers made profits of just 2.1 percent compared with the national average return on profit of 8.4 percent.

The real reason for Michigan's exorbitant insurance premiums is not unrestrained greed from insurers, but the unrestrained costs of writing insurance in the state, explains Minton:

  • Michigan is the only state in the nation that allows for unlimited payout of no-fault claims.
  • This means the costs are unlimited as well, which might explain why the average claim in Michigan rose 250 percent the past 10 years.

Clamping down on the factors companies use to write insurance rates will simply raise the cost of insurance and thus raise the premiums in the state.  If legislators truly want to reduce the rates, they should focus on reducing the costs instead of focusing on looking good in order to get re-elected, says Minton.

Source: Michelle Minton, "Rebuttal: Michigan's auto insurers make only a small profit," Detroit News, December 10, 2009.


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