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                                                                                                          November 6, 2009

A Column of Personal Opinion

By State Senator Sheila Harsdorf


Policy in Budget Comes Home to Roost


In the midst of last summer’s public debate on the state’s budget bill, legislative Republicans sought to remove all policy items from the budget bill passed by the majority party.  Many of these items in the final bill were controversial, received no public hearing, and had nothing to do with the state budget. Now, months later we are seeing the net effect of a budget bill that went too far in raising everyday costs for Wisconsinites. 

Car owners are now opening their new auto insurance premium bills with surprise and alarm because significant changes were made to Wisconsin’s auto insurance laws in the budget bill.  Auto insurance minimum coverage requirements were increased, clauses were added that expanded liability and new mandates on insurers were added.   Of course, when you expand liability, change the rules on what is covered, and prohibit insurers from calculating risk, inevitably costs to policyholders will increase. 

In a study done by the Wisconsin Insurance Alliance in response to such changes, and confirmed by independent actuaries at the UW-Madison and St. Johns University, many policyholders will see premiums increase by more than 33%.   The short answer from legislators that forced these policy measures into the budget bill has been to shift blame to insurance companies.

It is convenient to blame insurers, but hardly responsible or appropriate in this case.  If legislators were insistent upon making such changes to auto insurance coverage, it should have been in separate legislation that was open to public scrutiny.  There it would have received public hearings and deliberation, instead of being lumped into a budget bill.  That is why we fought so aggressively to remove these policy items that likely would not have survived on their own.

There will be legislative efforts to try and undo these budget changes, but it will be an uphill battle.  Hopefully, legislative leadership revisits this issue now that policyholders are reacting very unfavorably to their increased premiums.

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