State senator defends 7-day insurance policies as insurance department threatens to ban them

Lawmaker says department should address the rising cost of auto insurance instead

State senator defends 7-day insurance policies as insurance department threatens to ban them

Insurance News

By Allie Sanchez

A Michigan senator is up in arms with the state Department of Insurance and Financial Services (DIFS) following its order to ban the sale of temporary car insurance to residents.

Chairman of the Senate Insurance Committee Joe Hune is tackling the DIFS review of the legal basis for selling seven day insurance in the state. The review was prompted by Randall Gregg, general counsel of Michigan DIFS.

Gregg has yet to give a statement about his reasons for initiating the review, but Senator Hume speculated that he made the move because “he has a bug up his ass about it.”

However, Andrea Miller, communications director for the insurance department, clarified that “no-one at the department has an axe to grind with LA Insurance” in an email to local publication Crain’s.

DIFS has served a Notice of Withdrawal of Approval to Integon, the provider behind LA Insurance’s temporary insurance product.

Crain’s first reported of the possible ban towards the end of last month but state regulators have kept quiet about their review of the legal merits of temporary insurance.

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DIFS notified Integon on March 15 that Michigan will disallow the sale of its weekly product beginning the middle of this month. Implementation of the ruling was deferred following a review by director Patrick McPharlin, director of the insurance department.

The publication earlier reported that some motorists abuse the product by getting temporary insurance when they need to have their vehicle registration renewed, and then do not get proper coverage for the rest of the year after the product expires.

Hune argued however that targeting the product is not a solution to the issue. Rather, he said, the industry needs to address the escalating cost of auto insurance in the state, which is driving motorists to use the product in the first place.

“We have an affordability issue in so many urban areas — and that’s the problem,” Hune told Crain’s. “That’s what has created the short-term policies, and it wouldn’t exist if the legislature would address affordability in auto insurance.”

He concluded, “Some folks have no choice but to pay by the week or pay by the month because it’s just so damn expensive.”

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