Michigan House hears insurer complaints; considers reforms
The Detroit Free Press reported on July 14 that the State House was conducting hearings on a series of bills that would punish insurance companies or executives who encourage the wrongful denial of claims. The bills would authorize the Insurance Commissioner to levy fines and civil penalties and even provide criminal penalties for wrongful conduct. The bill will go nowhere, however, since the State Senate is controlled by a Republican majority that will never reform insurance law in Michigan to favor consumers.
Despite record profits by insurers, the Republican majority in the Senate has treated the insurance industry as a "favored child" because of its special interest lobbying wealth. For a simple example, the no fault maximum limit for domestic replacement services payable to accident victims under the no fault act remains at $20.00 per day as established in 1974; the minimum statutory no fault liability coverage has not been increased from $20,000.00 as written in the same original bill. It goes without saying that if $20,000.00 dollars was a reasonable potential level of compensation for "death, permanent serious disfigurement or serious impairment of bodily function" in the 70s, it is grossly inadequate today, but Michigan insurers and their Republican toadies have battled any inflationary up-date to a standstill on several occasions.
It will not surprise experienced attorneys to learn that Jo Anne Katzman, a claims adjuster from Bloomfield Hills who supports the bills, told reporters that she quit Allstate Insurance Company in 2003 because she and other adjusters were "pressured to deny claims to people who deserved them." Allstate is the company that single-handedly led a change in the insurance industry from a fiduciary "good hands" identity to a no-holds-barred, "boxing gloves" approach to claims management that placed profits above the interest of its insureds. That entire development and the enormous resulting profits have been documented in earlier entries of this web log.