Michigan Senate approves plan to cut car insurance rates

Lana Theis

LANSING (AP) — Michigan’s Senate passed legislation Tuesday aimed at cutting the country’s highest average auto insurance premiums by eliminating a requirement that drivers buy unlimited medical benefits to cover crash injuries.
No other U.S. state has such a mandate. Motorists could instead choose among lower levels of personal injury protection, including no coverage if they have other qualifying health insurance.
Senate Insurance and Banking Committee Chairwoman Lana Theis, a Brighton Republican, said residents are “very, very angry” over paying the nation’s highest premiums.
“We mandate they buy unlimited lifetime medical insurance whether they want it or not,” she said. “They have choice in every other area of their lives except this one.”
The Republican-backed measure won largely party-line Senate approval on a 24-14 vote, but Democratic Gov. Gretchen Whitmer pledged to veto it without changes.
“It preserves a corrupt system where insurance companies are allowed to unfairly discriminate in setting rates and the only cuts it guarantees are to drivers’ coverage,” she said in a statement. “I am only interested in signing a reform bill that is reasonable, fair and protects consumers and this is not it.”
Legislative stalemates have blocked such overhauls from passing before.
“The current system’s really failing Michigan drivers and families,” said Republican Sen. Aric Nesbitt of Lawton, the bill sponsor who pointed to a recent study showing that the state’s estimated annual premium of $2,610 is almost double the national average.
“Thousands of Michiganders have been priced out of driving, and thousands more risk driving without insurance.”
The measure also would stop car insurers from having to pay much more than health insurers do for the same medical services — another factor driving overall claim costs — crack down on fraud with a task force and make other changes such as limiting “judge shopping” by people who sue insurers.
The GOP-led House is working to craft legislation, too, while Whitmer has ordered her administration to study how insurers use non-driving factors such as education levels to price premiums.
The Senate plan faced Democratic criticism because it would not include a mandated rate rollback, nor would it eliminate the use of credit scores or other non-driving components in rate-setting.
“I don’t think anybody in the state benefits if we reduce the coverage and your costs stay the same, especially for such a drastic reduction” in PIP coverage, said Sen. Mallory McMorrow of Royal Oak.
Nesbitt said a government-ordered reduction is not needed because insurers’ costs would be lowered under the proposed law and they would have to justify their new rates to the state Department of Insurance and Financial Services and stay competitive with other insurance carriers.