by Gary Wolfram, D. Joseph Olson
Competitive Enterprise Institute
October 21, 2010
Michigan’s insurance industry provides a good example of the unintended consequences of government intervention in the market, and of Ludwig von Mises’s interventionist dynamic, in which government intervention begets more intervention. In an attempt to keep any particular person from suffering economic losses due to an auto accident, the legislature enacted the requirement of unlimited personal injury protection. This created a situation where insurance companies face great uncertainty as to their possible liability in auto accident claims, and has led to overuse of expensive medical treatments. This in turn has led to high insurance premiums.