If our product must be purchased, it should be affordable or bad things can happen in the public affairs arena. We’re finding that to be the case in Minnesota.
Minnesota is one of the few remaining states that has no-fault auto insurance. Like most other no-fault states, our system is broken. Our mission at the Insurance Federation of Minnesota this year was to teach lawmakers that our state’s current no-fault system needs fixing … fast.
Our auto insurance rates are the 16th-most expensive in the country and are climbing. Our neighboring states, Wisconsin, Iowa, South Dakota and North Dakota are 42nd, 49th, 50th and 51st respectively (D.C. counts as a state in this ranking). If we don’t fix our system soon, we’re going to be in the top 10.
To understand why our costs are so much higher you have to understand a little about how our unique system works.
Motorists in Minnesota are required to carry personal injury protection. PIP pays the driver (and certain others) for their own medical and other expenses if they are hurt in an accident, no matter who’s at fault. This first-party coverage was meant to prevent having to go to court to prove who was at fault, provide necessary medical treatment and speed up the claims-paying process.
But a funny thing has happened in the last 30 years since the no-fault experiment started in Minnesota. Unscrupulous medical providers are taking advantage of a quirk in the law that doesn’t allow any medical-claim cost controls that our normal health insurance system has. And courts began, in effect, bypassing the lawsuit limitations in the law. Today almost any accident in Minnesota can get both no-fault benefits for uncontrolled-cost medical providers and a generous lawsuit recovery for the driver.
While that may be a good deal for chiropractors and trial lawyers, it is a very bad deal for consumers. Since almost any accident can end up in court anyway, Minnesotans are really paying for two auto insurance systems: no-fault and the traditional tort system.
It’s time we chose one or the other.
We’ve also noticed in recent years that Minnesota drivers are being hit with another double whammy. The rate of uninsured motorists is creeping up, meaning insured drivers are paying more for uninsured/underinsured coverage, which Minnesota also requires all drivers to carry. One of every six Minnesotans is illegally driving without state-mandated no-fault auto insurance.
In Wisconsin, only one of every 10 drivers has no insurance, even though Wisconsin is one of the few states that doesn’t require mandatory auto insurance. Why the difference? Wisconsin’s average auto insurance premium is about $200-a-year cheaper than Minnesota’s. It appears to me that more drivers in Wisconsin buy insurance because they can afford it!
We were hoping this year was going to be the last year of our out-of-balance auto insurance premiums. Taking a cue from Colorado, which allowed its no-fault auto insurance laws to sunset a few years ago amid astronomical auto rate hikes, the Insurance Federation of Minnesota embarked on a campaign to show state lawmakers that the system is broken, that we know how to fix it, and that they could potentially save Minnesota drivers hundreds of dollars a year. It is a very, very powerful message.
But one side effect of the Colorado no-fault repeal is that many of the chiropractors who no longer were fleecing that state’s drivers moved east and set up shop here in Minnesota. I don’t want to paint every chiro with the same brush, but there are some here who are so greedy they are ruining the system for all of us. It is so bad now that even the trial lawyers said that the chiropractors were to blame for the rising auto insurance rates. We beg to differ–they’re both at fault!
We lost at the legislature this year when our bills died, but only because of a furious last-ditch grassroots fight by the 800-pound gorilla, the Minnesota Chiropractors Association. But their victory is going to be very short lived. We know our message wins with consumers who are fed up with higher and higher auto insurance premiums. Once consumers get engaged on this issue, it’s over.
Lawmakers have not heard the last of this issue. We look forward to the fight ahead.
Al Parsons has been the Insurance Federation of Minnesota’s president and CEO for the past 11 years. Visit www.insurancemn.org for more information.
Topics Auto Legislation Wisconsin Minnesota
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