Fraudsters and Scamsters, oh my!

It doesn't take long for eyes to glaze when detailed talk about no-fault insurance gets rolling.  It's not a surprise, really.  We all get insurance because we hope to never need it, so talking about it a lot is never a very attractive proposition.

I'm not gonna tell you this article is a great vacation-time read to take-in while drinking a Corona on a beach.  But it does shed important light on why insurance costs in Michigan are higher than most other states and why the Drivers for Savings solution is important.

Dennis Handley is an auto insurance fraud investigator in Michigan. For the most part, he is the insurance fraud investigator in Michigan—the other investigator is just part-time.

Handley investigates “questionable claims”—insurance claims that do not seem entirely valid—for the National Insurance Crime Bureau. The NICB is a not-for-profit organization funded by property/casualty insurance companies, which, in its words, “partners with insurers and law enforcement agencies to facilitate the identification, detection and prosecution of insurance criminals.” It’s a partnership that does not always come easily.

As you might expect from someone who spends his day investigating fraud in Michigan’s auto insurance system, Handley tends to think there is a lot of it to be found: fraud that’s driving up premium rates and should be stopped with major reforms to Michigan’s unique auto insurance system.

Read the rest.  Join the Drivers for Savings community. Then, enjoy a nice beverage.

RAND Corp. releases look at no-fault insurance

The Rand Corp. recently released a look at the popularity - or lack thereof - and costs of no-fault insurance across the country.

The study gives an overview of the United States' experience with no-fault systems, in which automobile accident victims seek recovery from their own insurer instead of from another driver.

In the 1970s, many policymakers and analysts believed that no-fault automobile insurance would displace conventional, tort-based automobile insurance policies. Today, however, no-fault has lost much of its popularity among insurers and consumer groups, according to the report. Currently, 29 states have tort-based policies, three states allow drivers to choose between less expensive "limited tort" insurance or more expensive "full tort" insurance, and the remaining states have some form of no-fault insurance. These numbers have remained fairly steady over the past decade.

No-fault insurance has three components: a restriction on the right to sue other drivers for being at fault for an automobile accident; a restriction on receiving payment for pain and suffering or other non-economic damages; and mandatory insurance so anyone involved in an accident can recover his or her economic losses, including medical costs, from their own insurance company.

Policymakers believed no-fault insurance would minimize litigation and administrative costs, more fairly compensate victims of automobile accidents and be less expensive than tort-based insurance. In practice, however, premium cost reductions never materialized, in large part because of increased medical costs.

Injury costs under no-fault were only 12 percent higher in 1987 relative to tort-based insurance, but by 2004 costs were 73 percent more expensive under no-fault plans. In addition, those states that restricted lawsuits against other drivers actually had higher claim costs than states that permitted lawsuits.

Read the whole article.

No fault debate

The Lansing State Journal ran an interesting side-by-side of two op eds debating the pros and cons of Michigan's no fault auto insurance policy... ok, even I couldn't get through that sentence with a straight face.

Interesting, maybe not.   Informative, yes, especially considering the potential savings that could result from the DFS plan.  Take a look here and here.