Senate Approves Auto Insurance Reform Legislation
May 7, 2019
Lawmakers are again trying to tackle auto insurance reform and lower rates for motorists.
The bills won approval from the Republican-controlled Senate today. Supporters says the bills would reduce auto insurance rates in Michigan by providing drivers more coverage choices, crack down on fraud and lawsuit abuse, and reduce inflated medical costs. The measures would let drivers purchase no personal injury protection coverage if they have other qualifying health insurance, or choose up to $250,000 in benefits unless insurers offer higher amounts. The legislation also would curb medical providers' ability to bill car insurers much more for care than health insurers pay. Democrats criticize the legislation for not mandating rate reductions or prohibiting the use of discriminatory non-driving factors in setting rates. The only estimated reduction that's guaranteed is the end of the Michigan Catastrophic Claims Association (MCCA), whose annual fee would be reduced from the current level of $192 per vehicle to $40. Republicans say that unique fee assessed on Michigan drivers would be slashed and insurers with lower costs would have to cut personal injury protection rates to appease regulators and stay competitive.
Republican Senator Lana Theis chairs the Senate Insurance and Banking Committee, which unveiled the plan this morning after four months of public hearings and testimony. The Brighton Township Republican said the committee took a methodical approach to developing the plan, garnering feedback and insight from a wide range of knowledgeable and experienced stakeholders to better understand the problems and define solutions. She noted auto insurers pay significantly more to hospitals and other health care providers than other insurers do for the same care, by upwards of 400%. The reform would reduce these out-of-control medical costs by ending the practice through cost parity. Theis says the committee, and the Senate in general, has been focused on finding a real, impactful solution to lowering auto insurance rates in the state. She added this “has been a uniting effort, bringing together legislators and citizens of differing backgrounds, because it doesn’t matter where a person lives, what they do, how much they earn, or what affiliation they have — everyone is paying too much for auto insurance and we are together in lowering our rates.”
Efforts to change the no-fault auto insurance system have failed in the past. According to an October 2018 report, Michigan drivers pay the highest auto insurance rates in the country — 83% higher than the national average. A recent University of Michigan study also said that auto insurance rates are unaffordable in 97% of the state’s ZIP codes. The bills won passage from the Republican-controlled Senate on a largely party-line vote today. They move to the GOP-led House for consideration next.
Gov. Gretchen Whitmer is threatening to veto Senate-passed auto insurance legislation if it gets to her desk in its current form. The Democrat said Tuesday the bill headed toward the House "creates more problems than it solves." Whitmer says the legislation "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." (JM)