In case you missed it, the Governor's budget had a few lines regarding auto insurance when it was passed. Basically starting June 1, 2010 every car on the road in Wisconsin will be required to be insured. Some people don't realize that Wisconsin is one of only two states that don't currently require auto insurance, but starting next year that will all change. You can read all of the details in a Journal Sentinel article http://www.jsonline.com/business/51147942.html. In addition to requiring auto insurance, the budget also requires the minimun insurance requirements to be increased over the next few years.
I have had a few discussions with clients asking me what this will mean for their insurance premiums. In my opinion, it means premiums are going up. If you increase the minimun requirements for everyone then the people with the lowest liability limits are going to need to increase their coverage. Some will decide the increased cost for the new higher limits is too expensive and decide to risk it and not carry any insurance. So the number of uninsured drivers goes up. With more uninsured drivers there are, the more claims that go unpaid increasing everyone's insurance costs. In addition to an increase in the number of uninsured drivers, the insurance companies are also going to see more people buying policies and not keeping them in force. How does this increase costs? Basically an insurance company looks at a new policy as a long term investment. The cost to start a new policy, go through underwriting, issue the policy etc is where the majority of the cost comes for the company. They anticipate the policy will stay in force for 3 years which is about when a company breaks even on a policy, depending on the claims of a client.
Overall, I really disagree with the idea of the government stepping in to make decisions for people. As an agent, I counsel my clients to carry the limits appropriate for their life, family, budget, etc. This is the job of the insurance professional, not the State of Wisconsin. I would love to have every person in Wisconsin insured properly but that is a little utopian in my opinion. The costs associated for the insurance companies and the State of Wisconsin will far outweigh the benefits of a few more people carrying insurance. In fact, the article points out that mandating insurance does not mean an increase in insured motorists. Obviously we are going to have to wait and see what happens with all of the new rules but I am going on the record now as being firmaly against these changes, not just for my agency but for my clients too!
Showing posts with label Governor Doyle. Show all posts
Showing posts with label Governor Doyle. Show all posts
Monday, July 20, 2009
Friday, June 5, 2009
Don't raise my insurance premiums!
Recently the Joint Finance Committee approved a final version of Governor Doyle's budget which contains a number of mandates that are going to have a major affect on everyone's insurance premiums. Did I mention they did this in the middle of the night? That doesn't seem sneaky at all!
Here is a summary of the issues:
1. A return to joint and several liability, in which you can be forced to pay any millions of dollars even if you were only minimally at fault. Currently, state law mandates that a defendant must be found at least 51% at fault to be found liable. Doyle wanted to reduce that to 1%. The committee will tell you that they listened to the people and compromised by changing Doyle's proposal to 20%. So now, an individual who is 80% innocent can still be held liable for 100% of all damages.
2. Requiring the highest auto limits in the nation. As a compromise, the Democrats agreed to phase in the increases. However, to make matters worse, they added an annual inflationary index that would eventually require the minimums to be raised to odd numbers like $103,624.
3. Allowing stacking of limits for Uninsured and Underinsured Motorist. This is a particular concern for commercial auto. For example, under current law if a customer purchases a limit of $1 million, then that customer is protected up to that limit for any one loss. Under the new proposal, the limit would be determined based upon the number of vehicles that are insured. So, the person who owns a fleet of 100 vehicles, would be able to "stack" all of the limits together and would be covered for, not the $1 million he paid for, but $100 million.
4. Allowing judges and attorneys to give a jury instructions which will unduly influence them and introduce a sympathy factor. A jury is supposed to decide cases on fact, not sympathy.
5. The budget also calls for numerous tax increases as well as fee increases on such everyday items as your cell phone.
I know people don't like thinking about insurance but we all have to pay for it and our Governor is trying to make you pay more by adding in these changes to the budget. If you have a second click on the link, http://www.votervoice.net/link/target/wiia33772441.aspx and fill out the form to let them know you do not want to pay more for your insurance premiums.
Tom
Here is a summary of the issues:
1. A return to joint and several liability, in which you can be forced to pay any millions of dollars even if you were only minimally at fault. Currently, state law mandates that a defendant must be found at least 51% at fault to be found liable. Doyle wanted to reduce that to 1%. The committee will tell you that they listened to the people and compromised by changing Doyle's proposal to 20%. So now, an individual who is 80% innocent can still be held liable for 100% of all damages.
2. Requiring the highest auto limits in the nation. As a compromise, the Democrats agreed to phase in the increases. However, to make matters worse, they added an annual inflationary index that would eventually require the minimums to be raised to odd numbers like $103,624.
3. Allowing stacking of limits for Uninsured and Underinsured Motorist. This is a particular concern for commercial auto. For example, under current law if a customer purchases a limit of $1 million, then that customer is protected up to that limit for any one loss. Under the new proposal, the limit would be determined based upon the number of vehicles that are insured. So, the person who owns a fleet of 100 vehicles, would be able to "stack" all of the limits together and would be covered for, not the $1 million he paid for, but $100 million.
4. Allowing judges and attorneys to give a jury instructions which will unduly influence them and introduce a sympathy factor. A jury is supposed to decide cases on fact, not sympathy.
5. The budget also calls for numerous tax increases as well as fee increases on such everyday items as your cell phone.
I know people don't like thinking about insurance but we all have to pay for it and our Governor is trying to make you pay more by adding in these changes to the budget. If you have a second click on the link, http://www.votervoice.net/link/target/wiia33772441.aspx and fill out the form to let them know you do not want to pay more for your insurance premiums.
Tom
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