In early February of 2009, Governor Granholm of Michigan asked each auto insurance company who conducts business within Michigan to make a pledge to freeze their rates for a 12-month period. This is to be effective immediately but these auto insurance companies have until March 1, 2009 to comply.

The reasoning behind this rate freeze is to help the citizens of Michigan better handle the sour economy. It was one idea among others proposed in a speech Governor Granholm presented in her seventh State of the State address. During this 12-month period of rate freezes, “the Legislature works to enact comprehensive insurance reform to ensure that Michigan driers have access to solid coverage at fair and affordable rates.” She also cautioned in her speech that the insurance companies that fail to freeze rates for 12 months could be punished by the Office of Financial and Insurance Regulation (OFIR).

A press release dated early March of 2009 gave the names of 12 auto insurance companies who have agreed to freeze their auto insurance rates in an effort to help drivers deal with the economy. The OFIR Commissioner Ken Ross said, “Auto insurance has simply become unaffordable to many of the state’s citizens and I commend these companies for pledging to freeze their rates while the legislature works on comprehensive auto insurance reform. Insurance companies that have not signed up for the pledge can continue to notify our agency that they will refrain from raising their rates for one year.”

The list of companies that pledged to freeze their rates for a 12-month period includes the following: American Bankers Insurance Company of Florida, American International South Insurance Company, American Reliable Insurance, Electric Insurance Company, Essentia Insurance Company, Esurance Insurance Company, Great Lakes Casualty Insurance Company, IDS Property Casualty Insurance Company, Liberty Mutual Fire Insurance Company, Merchants Mutual Insurance Company, Meritplan Insurance Company, Metropolitan Direct Property & Casualty Insurance, Metropolitan General Insurance Company, Metropolitan Group Property & Casualty Insurance, Metropolitan Property & Casualty Insurance Company, Pharmacists Mutual Insurance Company Safeco Insurance Company of America, Safeco Insurance Company of Illinois, and Wolverine Mutual Insurance Company. There are around 100 companies that have not made the pledge.

For the auto insurance companies that have not pledged, they will need to consider the consequence for not doing so. OFIR will “utilize every administrative tool at the Office’s disposal to assure that the automobile insurance company provides automobile insurance at fair and equitable rates in this state, including, but not limited to disapproval of rate increases or rejection of rate filings submitted by the automobile insurance company until the proposed rate has been thoroughly and carefully evaluated and the company has clearly demonstrated that the proposed rate meets all applicable statutory and constitutional requirements.”

Of course, it is a possibility that some insurers do not believe a rate freeze would be fair to their company. Nearly 100 auto insurance companies have not made the pledge. Auto insurance rates have increased over the years, partially due to the rise in cost of living. Insurers look for the opportunity to raise rates to keep a profit. Increasing medical expense and property costs call for an increase in rates to keep a better balance of money coming into the insurer while they are paying out claims.

Also, the Michigan Insurance Coalition (MIC) calls the proposal to freeze Michigan auto insurance rates for 12 months “an ill-conceived plan that could end up costing jobs at Michigan insurance companies.” They believe unless the Governor freezes the rates of hospitals, doctors, auto-repair shops and lawyers, the rate freeze would be irresponsible. Tom Shields, a spokesperson for MIC, also suggested a freeze on the number of accidents, fraud, and car theft, and regarding the Governor’s proposal claimed “this turkey of an idea will not fly.”

The MIC is also concerned for employees with insurance companies. They feel a result of this rate-freeze could include these employees losing their jobs.

While a freezing of rates in Michigan may be beneficial to those citizens, drivers from other states should know there are ways for them to also get deals on their auto insurance. Michigan does not need to be the only state getting help with auto insurance prices. As you browse through our Website you will notice there is a way for us to provide quotes from auto insurance companies in your area. Find the box that asks for your zip code, enter it in, and proceed with the following questions. Answer those questions honestly and that information will be passed along to auto insurance companies. A list of quotes and the companies providing them will be given to you, and you will be given the opportunity to review the quotes and select a policy and auto insurance company. Do not dismiss the opportunity to look around for other auto insurance companies because there is a chance that someone else could offer you cheaper rates for the same policy you are currently carrying.

Also, each company offers ways for drivers to receive discounts on their premium cost. These discounts apply to the driver’s ability to demonstrate safe driving through different measures. Some insurers offer discounts for taking and passing different safe driving courses. These classes teach drivers different skills needed on the road to help avoid accidents or other dangerous situations. Students who drive can get discounts for working hard in school and getting good grades. Keeping a certain grade point average will also keep auto insurance rates low for them. Driving a brand new flashy car will increase auto insurance rates, so if you are looking to decrease your spending on your auto insurance, try to drive a more modest vehicle that is a couple years old.

The Governor of Michigan may have good intentions by asking insurance companies to freeze their rates for a 12-month period, but many Michigan auto insurance companies disagree and feel that this pledge will hurt their companies in the long run. With the current position of the economy many consumers are welcoming opportunities to keep their bills cheap and spending low. Whether drivers are located in Michigan or elsewhere, all of them can look for ways to keep their auto insurance costs lower.