Legislators Introduce Insurance Consumer Protection Package
Legislation tackles industry practices that keep rates high
LANSING — A group of House Democratic legislators have introduced legislation that could reduce the high cost of premiums while extending consumer protections to those who buy insurance. The bill package would address home and auto insurance rates, in addition to improving the process by which consumers learn about and shop for policies. The bills would also deal with the manner in which insurance companies handle their customers’ personal and sensitive information.
“The process of buying insurance for anything — whether it’s insurance for your first car or a policy for the home in which you choose to retire — is often complicated, making comparison between policies or fully understanding coverage difficult,” said state Rep. Jeremy Moss (D-Southfield), the lead sponsor on two bills in package. “House Democrats are trying to give more resources to consumers to shop for low rates and dismantle industry practices that prevent them from seeing reward and discounts to which they might be entitled.
“Consumers are currently at a disadvantage, with the balance of information significantly tilted in favor of insurance companies,” said state Rep. Donna Lasinski (D-Scio Township). “This package would correct that, and put the power of choice back in the hands of consumers, where it belongs.”
The bills in the legislative package would:
- Ban the price of price optimization, which some companies use to set insurance premium pricing on factors unrelated to what is being insured, including preventing those who don’t have the time to shop around for better rates from seeing the same rewards and discounts as those who do. (House Bill 5271, introduced by Rep. Moss)
- Direct the Michigan Department of Education to create a voluntary model program that schools could use to teach students about how insurance works and their rights and responsibilities when it comes to having all types of insurance. (House Bill 5273, introduced by Rep. Moss)
- Require the Michigan Department of Insurance and Financial Services to publish online premium comparisons for standardized coverage based on specific examples, which would allow shoppers to have an apples-to-apples comparison of premiums from several insurance companies. (House Bill 5272, introduced by Rep. Lasinski)
- Require insurance companies to get a consumer’s consent in writing before sharing personal information with third-party affiliates. (House Bill 5274, introduced by Rep. Gay-Dagnogo)
- Require insurance companies to include information on their annual report to the state Department of Insurance and Financial Services about any security breach that compromised consumers’ personal information, and the steps the company took to address the situation. (House Bill 5275, introduced by Rep. Cochran)
“What we hear over and over again is people need transparency in this process,” said state Rep. Tom Cochran (D-Mason). “There is a baseline level of knowledge about the purchasing process, and what protections are included, that is currently being denied to consumers in the state, and that isn’t right. Insurance companies have access to an unparalleled level of information about policy holders — it is only fair consumers have the same level of information about the companies and their policies, too.”
“In this heightened era of data insecurity, it is critical that we put these protections for consumers in place before something happens to their information, not afterward,” said state Rep. Sherry Gay-Dagnogo. “Given state insurance requirements, consumers are engaging in a mandated transaction with these companies, so it is the government’s responsibility — as the originator of that mandate — to ensure that the process is fair and safe for the consumer. My colleagues and I look forward to seeing this package receive a committee hearing and advance quickly to the House floor.”