Title : Dealers Insurance - L.A. Insurance stops selling controversial 7-day auto plans after settlement
link : Dealers Insurance - L.A. Insurance stops selling controversial 7-day auto plans after settlement
Dealers Insurance - L.A. Insurance stops selling controversial 7-day auto plans after settlement
Dealers Insurance - L.A. Insurance stops selling controversial 7-day auto plans after settlement
L.A. Insurance stopped selling short-term plans last weekState insurance regulators declared weeklong coverage not compliant with no-fault law Policies had drawn criticism as a mechanism that encouraged uninsured driving
L.A. Insurance has ceased selling seven-day auto insurance
plans in Michigan under a settlement agreement its carrier reached with
state regulators earlier this year to eliminate the controversial
no-fault insurance product.
The Royal Oak-based insurance
agency and its carrier, Integon National Insurance Co., came under
scrutiny last year from the state Department of Insurance and Financial
Services for selling seven-day plans that allow drivers to legally
registered their vehicles before driving without coverage for the rest
of the year.
L.A. Insurance stopped selling seven-day
plans Sept. 11 after the state gave Integon six months to develop a new
insurance product that complies with the no-fault law's requirement of
continuous coverage, said Randall Gregg, senior deputy director and
general counsel of DIFS.
"The difference between this product and a seven-day policy
type product is it's renewable and people are going to get the invoices
so they can continue to make the installment payments to continue their
coverage," Gregg told Crain's.
Crain's first reported in March 2017
on the state insurance department's efforts to ban seven-day plans
administratively by declaring them not in compliance with Michigan's
unique no-fault auto insurance law because they expired after seven
days.
Integon had been selling its weeklong Jump Start
Policy insurance plan in Michigan since at least 2011, according to
public records.
L.A. Insurance advertised the seven-day auto insurance plans for as little as $199, but the polices often cost more.
Earlier this year, L.A. Insurance paid the state $142,500 in fines
for allegedly inflating the cost of seven-day insurance plans with
six-month roadside assistance coverage that customers often didn't know
they were purchasing.
Detroit Mayor Mike Duggan has called seven-day insurance a "scam" and a symptom of Detroit's highest-in-the-nation auto insurance rates.
Like any auto insurance plan that's paid in installments,
motorists can still drop the coverage at any point in the six-month
term.
"We can't force consumers to make those payments
and keep that coverage in place ... for the full six-month term," Gregg
said. "But under the code, those people are entitled to have a product
that is renewable if they continue to make those payments."
L.A. Insurance CEO Anthony Yousif did not return multiple messages from Crain's seeking comment about the end of seven-day insurance plans.
But
in prior interviews, Yousif has said the state insurance department was
unfairly targeting his company, which has at least two dozen stores in
Detroit alone and several more scattered across the suburbs in Macomb,
Oakland and Wayne counties.
"It's going to really hurt the business. All the stores in Detroit are probably going to end up closing," Yousif told Crain's
in a March 2017 interview. "The people who were buying the seven-day
(plan) are going to end up buying more fake insurance because they can't
afford real insurance."
It's not exactly known just how many seven-day auto insurance policies have been sold annually in Michigan.
Between
July 2015 and June 2016, Secretary of State Ruth Johnson's office
audited 719,819 paper insurance forms and found 90,701 drivers submitted
seven-day policies. Johnson's office found 40,972 of those 90,701
policies — or 45 percent — were canceled sometime after the vehicles
were legally registered. But that figure did not account for an unknown
number of seven-day policies that could have been submitted to the
Secretary of State electronically.
Johnson had called on lawmakers to ban the seven-day plans outright.
The
Secretary of State's office had been considering the use of designated
seven-day license plates for motorists to make it easier for police
officers to spot a vehicle without current insurance coverage, "but it's
moot now," spokesman Fred Woodhams said Wednesday.
"Secretary Johnson is pleased to see that these policies are no longer available," Woodhams said in an email to Crain's.
"... Johnson believes the state must have a real-time system to
validate insurance policies for law enforcement personnel to help
address the problem of uninsured drivers."
source : http://www.crainsdetroit.com/insurance/la-insurance-stops-selling-controversial-7-day-auto-plans-after-settlement
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