H.L. Mencken, the great irreverent journalist and essayist of the early 20th century, used to say that for every complex problem, there’s a solution that is simple, easy … and wrong.
Now I don’t think Mencken ever spent a minute thinking about auto insurance rates in Detroit, but if he were here today, I’m convinced he’s quickly see how complicated things are.
Yes, it is true we have this vast pot of money in the catastrophic claims fund. I don’t even know how much is there, although I’ve been reliably told it could be as much as $20 billion.
That’s an asset that no other state has, and it has been a lifesaver for many of the thousands horribly injured in traffic mishaps, like the man who was driving Oakland County Executive L. Brooks Patterson when he had his terrible accident a few years ago.
But I see no reason to think things would be just fine if we stopped guaranteeing that if people were horribly battered in crashes and no longer able to work, their medical needs would still be met regardless. What I know is that if we allowed people to forego this coverage for slightly cheaper rates, it wouldn’t be long before we had people with a need for lifetime care who no longer had any money. And that would mean exquisite tragedy for them and their families.
Nevertheless, this state is being strangled by high insurance rates, and Detroit is suffering in ways we can’t measure, such as the people who will never move to the Motor City because of the car insurance rates, or those who live there and can never vote, because their drivers’ licenses say they live with their parents in Farmington Hills or Grosse Pointe. They do that, of course, because their car insurance rates might triple if they were honest.
Michigan outside Detroit is suffering too. Consider this: Michigan has the highest car insurance rates in the country. Drivers pay, on average, $2,239 dollars a year. Now imagine that you have to move just across the state line. Ohio drivers get the second cheapest car insurance in the country, behind only Vermont. Buckeye drivers pay an average of $944 dollars a year.
Not surprisingly, this is driving some politicians crazy. After twice failing to get the legislature to require lower rates, Detroit Mayor Mike Duggan filed suit in federal court last year claiming Michigan’s no-fault law is unconstitutional.
Nobody knows how long that will take to wind through the courts, but don’t hold your breath. Here’s what I think. Governor Gretchen Whitmer should appoint a commission or task force consisting of the best and brightest people in this state, including insurance experts, to analyze the problem and propose a range of solutions.
My hunch is that there are a number of factors behind why rates are so high, and we will have to do a number of things to get back in a range similar to the rest of the country. It could well be that we need national and/or state legislation aimed at curbing the power and the practices of the insurance industry. It may well be that there is far more money in the catastrophic claims fund than will ever be needed, and that might be a factor too.
But this, more than any major state issue I can remember, is a case where the vast majority of us simply don’t have enough information to know what could and should be done. And the future of this state and our ability to progress may well depend on us getting it right.
