How small New Jersey insurer CURE is trying to break into Michigan’s auto insurance market – with Pistons sponsorship
The state legislature’s 2019 overhaul of Michigan’s single no-fault auto insurance law attracted 28 new carriers with potential to join the market as the reform measure promises to reduce exposure to financial liability insurance companies.
However, only six of those companies or their affiliates have rate filings that have been approved by the Michigan Department of Insurance and Financial Services, according to the agency.
Boston-based Liberty Mutual Insurance Co. and its subsidiary Liberty Mutual Personal Insurance Co. is the largest national brand with DIFS-approved rates for the sale of auto insurance policies in Michigan.
The Columbus-based Nationwide Affinity Insurance Co. of America is among 22 other new carriers approved to do business in the state, but has yet to file a rate plan with DIFS, according to regulators. ‘State.
While Liberty and Nationwide offer well-established brands with familiar national television advertising campaigns, most of the new carriers that have gained state approval to write policies in Michigan are smaller insurers looking to gain a foothold. a market of nearly 7 million vehicles. on the road.
Gaining notoriety is the first big hurdle, said Eric Poe, CEO of CURE Auto Insurance, an operator based in Princeton, New Jersey, which begins writing policies in Michigan on Thursday. (CURE stands for Citizens United Reciprocal Exchange).
To help his business get started, Poe signed an agreement with the Detroit Pistons to make CURE Auto Insurance the official backdrop sponsor for the Pistons’ post-game press conference for home and away games. ‘outside.
Terms of the deal were not disclosed by CURE or the Pistons.
But CURE’s CEO suggested his company was able to afford such sponsorship, in part because the Pistons finished bottom of the Eastern Conference this season with just 20 wins (the same number of wins the Pistons have. marked in the pandemic-shortened season 2019-20).
CURE had similar small dollar sponsorships in the past with the Philadelphia 76ers and New Jersey Nets before moving to Brooklyn, when both teams were in rebuild mode as are the Pistons, Poe said.
“I think there are a lot of promising things going on with the Pistons,” Poe told Crain’s. “So I kind of believe in the buy low, sell high model, and I feel like the Pistons are buying low right now.”
Poe is hoping his company can gain some market notoriety with its logo on TV during post-match press conferences featuring Pistons forwards Jerami Grant and Saddiq Bey or the team’s expected rookie star. will get with the No.1 pick in the NBA Draft on July 29.
CURE also signed a five-year agreement with former Pistons “Bad Boy” Rick Mahorn to be a brand ambassador for the auto insurer. Mahorn, 62, likely also has some notoriety in the New Jersey and Philadelphia markets of CURE, having also played for the 76ers and Nets after winning the NBA Championship with the Pistons in 1989.
Granted, CURE is a David compared to a Goliath like Liberty Mutual, which had $ 145 billion in assets at the end of 2020, according to its annual financial report.
CURE, a family-owned regional auto insurance company with approximately $ 45 million in assets, insures 40,000 vehicles in New Jersey and just under 5,000 vehicles in Pennsylvania, mostly just across the Delaware River from New Jersey to the Philadelphia market, Poe said.
Poe said he sees an opportunity to expand in Michigan, particularly in Detroit, where about half of the city’s motorists have driven uninsured for years due to the annual cost of insuring a vehicle that reached $ 6,000, double the state average.
Michigan’s recent auto insurance reforms, said Poe, “will transform Michigan – at least in our opinion – from arguably the worst state for auto insurance in the country to one of the best performing states for the nation. auto insurance in the country, because there will be no debate about what the reasonable rate is.
The 2019 law rolled out the flawless auto modifications in two stages.
The first step came last July when, for the first time, drivers were allowed to drop unlimited medical coverage, known as injury protection, on their auto insurance policies if they have Medicare or an emergency plan. health insurance that covers automobile injuries. Motorists were also able to choose a cap of $ 500,000 or $ 250,000 on PIP coverage, resulting in reductions on the PIP portion of a driver’s insurance premiums of 35 percent and 20 percent, respectively.
The second stage of the 2019 law begins Thursday with the establishment of a first cap on payments to medical providers for the care of injured motorists.
This so-called fee schedule caps medical procedures with a Medicare billing code at 200% of what Medicare pays and places a 55% cap on home health care services and rehab clinic care that are not covered by the Federal Seniors Health Insurance Program. .
Poe said the fee schedule provides financial certainty for insurers so they know they will have stability in the cost of certain medical procedures and know that care will be needed.
âWhat people don’t realize is that when you don’t have reasonable rates, you create a pot of gold at the end of the rainbow for people to overtreat,â Poe said. . “You won’t get overtreatment if people don’t have an incentive to overtreat.”
Going forward, Poe said, the fee schedule will protect against “rabies abuse” in the medical billing of injured motorists.
âWe believe there is an underserved marketâ in Michigan, said Poe. “We believe the fee structure is going to have a significant impact.”
The new law also prohibits the use of certain non-driving factors to set auto insurance rates, prohibiting insurers from penalizing a motorist for not having a college degree, for example.
Poe has advocated across the country to ban the use of insurance pricing factors that have nothing to do with a motorist being a good driver.
He is a familiar face in the administration of Detroit Mayor Mike Duggan. Poe had previously consulted with the mayor’s office on some of the non-driving factor ban frameworks in Duggan’s early attempts to convince lawmakers to overhaul the no-fault insurance law.
The law prohibits the use of FICO credit scores for pricing, although it still allows insurers to develop their own ratings to assess a driver’s creditworthiness, Poe said.
âIt’s a little misleading to say that it helps consumers with bad credit scores because my industry just puts one or two more items on a credit score and dresses up a pig and says, ‘Hey, that. is a proprietary rating. âThis is still ok to use,â Poe said.
CURE Auto Insurance, however, does not use credit scores in any way to set its rates, Poe said.