Doyle's Proposal To Raise Wisconsin Car Insurance Levels Dra

 

Monday, Mar 09,2009, 3:19:13 PM   Click:

Doyle's proposal to raise car insurance levels draws scrutiny Paul Gores and Stacy Forster Milwaukee Journal Sentinel McClatchy-Tribune Regional News

Mar. 2--The cost of auto insurance for Wisconsin drivers would jump and some financially stressed consumers probably would drop coverage if provisions included in Gov. Jim Doyle's budget plan become law, the insurance industry says.

But Doyle and trial lawyers backing a proposal to raise minimum liability coverage for auto policies contend that change is needed to bring coverage in line with medical costs that have soared since the current law was put in place 28 years ago.

Increased minimum coverage requirements could sting even more if lawmakers decide to make auto insurance mandatory for all Wisconsin motorists. Wisconsin and New Hampshire are the only states that don't require drivers to have auto insurance.

Doyle's budget doesn't propose changing that, but some lawmakers have been trying for more than 70 years to require drivers to carry auto insurance. Although no bill has been introduced yet, Democrats who now control the state Legislature have supported bills to do so.

A provision in Doyle's budget -- one of several regarding auto insurance -- would require motorists who buy insurance to obtain at least $100,000 of coverage for injuries to one person, and purchase $300,000 of insurance to cover medical payments for accidents in which two or more people have been injured. The current minimum is $25,000 per injured person and $50,000 per multiple-injury accident.

The Doyle provisions also would raise the property damage coverage minimum to $25,000 from the current $10,000, increase the minimum non-health insurance medical coverage for a driver or people injured in his car, and make underinsured motorist coverage mandatory.

The Wisconsin Insurance Alliance estimates the changes proposed by Doyle would force families to pay at least 33% more for auto insurance. Those who can't afford the higher premiums are likely to forgo them and drive without insurance, the industry trade group says.

About 15% of Wisconsin drivers are uninsured, slightly higher than the national average of 13.8%, according to 2007 estimates from the Insurance Research Council. The alliance is particularly irked that the proposed changes are part of Doyle's budget and not a separate bill that could be debated independently of other budget issues.

"We're very disappointed that this is the process the governor and others have chosen," said Andrew J. Franken, president of the Wisconsin Insurance Alliance. "We are eager to discuss this openly, have public debate and inform people of the ramifications of all these provisions, and we may not get a chance to do that."

Treatment costs

The proposed changes would bring coverage more in line with the increased costs of treatment for people injured in accidents, and would provide greater certainty to those with insurance, said Doyle spokeswoman Carla Vigue. Vigue said the provisions were included in the budget because they affect the state's Medicaid health care program. Many people who are injured in car accidents can't pay for the cost of treating their injuries and end up in Medicaid, pushing the costs on to taxpayers, she said.

It's unclear whether the proposal will be part of the coming discussion on Doyle's budget. The budget-writing Joint Finance Committee typically takes out items it considers to have limited impact on the state budget.

Rep. Mark Pocan (D-Madison), co-chair of the committee, said he and other committee members are waiting to see a Legislative Fiscal Bureau analysis of the governor's proposal before deciding what non-budget items should be removed.

Because the issue affects so many people, it deserves a bigger discussion, perhaps outside the budget process, said Rep. David Cullen (D-Milwaukee), who chairs the Assembly's Insurance Committee.

American Family Insurance, the largest insurer of car drivers in Wisconsin, said it doesn't see any need to change the current coverage minimums.

"Potentially, it could prompt some motorists to drop this insurance," said Steve Witmer, spokesman for Madison-based American Family. "We think the free market works just fine. Our agents talk to their customers about their needs, and we feel customers are making good decisions that are right for them."

Insurance ally

The industry has a faithful ally in Rep. John Nygren (R-Marinette), a member of the Assembly's Insurance Committee and an insurance agent. He said many people who have insurance already carry more than the minimum coverage requirements, and those who don't struggle to pay for minimal coverage.

"If they can't afford it, that just drives more people to be uninsured," Nygren said. "We're currently one of the lower-cost states for automobile insurance, so why we're looking to mess with that is beyond me."

Keith Clifford, a spokesman for the Wisconsin Association for Justice, which represents the state's trial attorneys, said the current coverage minimums are outdated. Clifford, a personal-injury lawyer in Madison, said the state's minimums for negligent drivers don't take into account modern medical expenses such as the use of MRI equipment and even emergency helicopter flights of accident victims to hospitals. Medical treatment that cost $25,000 in 1982 today costs $104,000, he said.

Those at fault in accidents should pay for the injuries they cause and not pass that cost to victims or taxpayers when auto insurance coverage is too low, he said.

"There has been no keeping pace with the real cost of medical expenses and the real losses," Clifford said.

Auto insurers assert that the current minimums cover more than 90% of auto accident injuries. In 2007, Wisconsin's bodily injury claims averaged $16,600 and property damage was around $2,500, according to the Property Casualty Insurers Association of America.

But insurance isn't about averages, Clifford says.

"The whole point behind having insurance is to have adequate coverage in the event you're in a catastrophic collision," Clifford said.

Meanwhile, lawmakers again are considering legislation to make auto insurance mandatory for all drivers.

Sen. John Lehman (D-Racine), who has sponsored such measures in the past few legislative sessions, said he may reintroduce the bill.

While mandatory insurance can have a more severe impact on low-income drivers, often people who get in accidents have a hard time understanding why other drivers are allowed to go without insurance, Lehman said.

"Driving is a responsibility, and part of that responsibility is to be sure that you're insured," he said.

But the current system has worked, Nygren said, and making insurance mandatory could make things worse.

"If it's simply driving people to be uninsured, it doesn't solve the problem we're trying to fix," he said.
Copyright (c) 2009, Milwaukee Journal Sentinel Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. Mar. 2--The cost of auto insurance for Wisconsin drivers would jump and some financially stressed consumers probably would drop coverage if provisions included in Gov.