News Story

If At First ... Legislature Looking To Rein In Auto Insurance

Special interests halted past reform efforts

A new report confirms that Michigan motorists continue to pay the highest auto insurance rates in the country. Recent Republican majorities in the state House and Senate have made insurance reform one of their top priorities, and with newly elected Democratic Gov. Gretchen Whitmer now in office, Democratic lawmakers are also getting more active on the issue.

The average auto insurance policy in Michigan cost $2,693 per year, according to the 2019 State of Auto Insurance Report from The Zebra, a car insurance search engine. That’s almost double the national average of $1,470. And Detroit drivers pay more than double the state average: At $5,464 per year, Detroit’s average is the highest in the U.S.

Michigan's auto insurance rates have increased more than 20 percent since 2011, even with a 6 percent decrease between 2017 and 2018. Requiring motorists to carry unlimited personal injury protection coverage for crash injuries is one reason.

Vehicle insurance rates in most states have been increasing in recent years. From 2017 to 2018, motorists in 41 states and Washington, D.C., experienced rising rates, while those in 10 states saw a decrease. Nationwide, the average year-to-year increase has been 2.3 percent.

In just three other states – Louisiana, Rhode Island and Florida – motorists are paying annual rates that exceed $2,000, according to The Zebra. In four states, insurance costs below $1,000. Maine has the lowest average, at $896 per year.

After Gov. Gretchen Whitmer’s State of the State address on Tuesday, state Rep. Michele Hoitenga, R-Manton, said that insurance reform will be one of the GOP’s top priorities this session. Speaker of the House Lee Chatfield, R-Levering, established a separate committee to devise a way past obstacles to bringing down rates.

In a tweet, Chatfield said citizens need a bipartisan solution.

“It’s time we cut through politics and deliver real reform to our rigged car insurance system,” Chatfield’s tweet says. “Families and seniors are paying too much, and they deserve relief. I’ve created a special committee to reform car insurance and have asked [Rep. Jason] Wentworth to chair it. Let’s get it done!”

Gideon D’Assandro, a spokesperson for Chatfield, said in a phone interview that the lawmaker intends to work for a compromise to bring down rates. Although insurance reform has been a partisan issue in the past, D’Assandro said that it has become less partisan in recent years.

D’Assandro said that Chatfield will be going into discussions with an open mind and no specific plan. This way, he said, a bipartisan compromise can be developed.

One key provision in a defeated 2017 reform bill would have limited how much medical service providers could charge in crash injury cases. This was strongly opposed by hospitals, and 22 Michigan House Republicans joined all but four Democrats in voting down a bill that included this reform.

In past years, most but not all Republicans have supported proposals to make unlimited personal injury protection benefits for individuals optional, not mandatory. That proposal has failed to get Democratic support. Republicans have also supported tort reform measures intended to reduce the number of crash cases that find their way into court, a costly practice that led Michigan, in 1973, to adopt a no-fault auto insurance system in the first place. Democrats are more reluctant to change this.

Samantha Hart, communications director for the Michigan House Democrats, said in an email that Democrats are deeply engaged in the committee process to find solutions to the high insurance rates and have been seeking input from experts and stakeholders.

“House Democrats made a commitment to listen to all sides with open minds to find solutions and we are ready to deeply investigate and understand the root causes of our high auto insurance, leaving no door unopened to finding a solution for Michigan drivers on high auto insurance rates,” Hart said.

The Zebra report analyzed 61 million auto insurance rates across the country, looking at rate changes and risk factors that lead to insurance rate changes.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.