News Story

Dems Cite U-M Report To Knock Similar GOP Auto Insurance Reform

Legislature’s reform bills contain key medical cost, coverage cap features recommended by U-M unit

Democrats in the Michigan House reacted with nearly uniform revulsion last week to the auto insurance reforms passed by the chamber’s Republican majority.

Democratic Leader Christine Greig, D-Farmington Hills, called it “another ... handout” to an insurance industry she said was “one of the least regulated in the U.S.”

In support for her claim, Greig cited a March 2019 report from the University of Michigan’s Poverty Solutions project on Michigan’s insurance rates, which are the highest in the nation.

Her comments were echoed in statements by more than a half-dozen of her caucus colleagues, each referencing the U-M report.

But the report, “Auto Insurance and Economic Mobility in Michigan: A Cycle of Poverty,” is silent on the question of whether Michigan’s insurance industry is among the least regulated in the country.

In explaining why insurance is so expensive in Michigan, the report cites a mix of policies and what it calls “lax regulations.” But its prescription for reform tracks remarkably close to the Republican-passed legislation (which, not incidentally, contains a raft of new insurance regulations).

“A clear way to reduce rates would be to rein in PIP (personal injury protection) payouts,” said the report, which suggested replacing unlimited lifetime coverage with “coverage that best fits (consumer) needs.” The proposal approved by the House does that.

Michiganders would also, the report said, benefit if lawmakers imposed fee schedules on health care providers for treating auto accident injuries, much as schedules exist for care given under workers’ compensation insurance.

“Doing so would immediately reduce costs associated with the system,” it said. The House legislation mandates such a fee schedule.

The legislation also authorizes state insurance regulators to set rules prohibiting the use of factors, such as credit scores, not related to driving. That’s another approach recommended by the U-M report.

Joshua Rivera, a co-author of the report, said his group commends the Legislature for seeking to address the state’s high insurance rates, but it doesn’t take positions on specific legislation.

“We hope policymakers look at the data and consider solutions,” Rivera said, “We tried to set some goalposts for reform. We know the status quo is a barrier” to economic mobility for the poor, he said.

Grieg and several of her House colleagues did not respond to multiple requests for comment on the U-M report.

The House last week passed House Bill 4397, and the Senate passed Senate Bill 1, insurance reform bills that eliminate mandatory unlimited medical coverage, restrict medical care prices charged to crash victims, and more. The House bill authorizes regulators to prohibit the use by insurers of using factors in pricing that are not rationally correlated with insurance losses. It's unclear if that criteria would include credit scores.