From comments made by Michigan Attorney General Bill Schuette when he announced his run for governor to a plan offered by bipartisan group of lawmakers, calls to reform Michigan’s no-fault auto insurance rose to the top of the agenda.
Add the two newest entries to the insurance debate to efforts being made by Speaker of the House Tom Leonard, R-Dewitt, who is working with Detroit Mayor Mike Duggan to come up with a way to reduce rates across Michigan and especially in Detroit, where drivers can pay up to $3,000 a year for insurance.
Duggan has called astronomical auto insurance rates — Michigan is ranked highest in the nation — “the biggest scandal in the state.”
And Senate Majority Leader Arlan Meekhof, R-West Olive, also rates insurance reform as a top priority, but has his own ideas on what shape that reform will take.
Lawmakers have been unsuccessful in their multiple attempts over the last several years to reform the state’s no-fault auto insurance system, which carries the highest costs in the nation, fueled in part by lifetime health benefits for people catastrophically injured in vehicle crashes.
And it’s not certain that they’ll be able to cross the finish line this year, despite a renewed push for reform.
“Change happens when good politics meets good policy,” said Jeff Williams, CEO of Public Sector Consultants, a Lansing-based public policy think tank. “We’re seeing momentum on the politics side and a desire for change. So that makes action more likely. But in the policy environment, I haven’t heard new ideas or proposals.”
1. A rare show of bipartisanship on the issue emerged last week when 15 members of the House of Representatives — both Republicans and Democrats — gathered at the Lansing Center to announce a package of bills to reduce auto insurance rates, including: a prohibition on auto insurance companies from using anything other than a person’s driving record — such as credit scores, ZIP codes or gender — to determine rates; a guaranteed reduction in rates of 20 to 30 percent without a loss of benefits; the creation of a fraud authority to root out abuses by both insurance providers and customers; and a fee schedule for both medical services and the amount paid to people who care for car crash victims.
“Insurance companies find excuses to charge people higher rates for their insurance even when they’re perfect drivers,” said state Rep. Sherry Gay-Dagnogo, D-Detroit. “I’m not saying women are better drivers than others. I’m just saying it’s not fair to charge us more because of our pulchritude.”
The proposal gained some support from organizations that have been opposed in the past, such as the Brain Injury Association of Michigan.
“We’ve been working for the past few legislative cycles to come up with a comprehensive reform package that will improve Michigan’s auto insurance system that will protect the lifetime injury coverage that is so crucial to accident survivors while still reducing the cost for drivers,” said Thomas Constand, president of the association, who was at the announcement. “Today, we have the makings of that lasting bipartisan solution.”
But the prohibition on non-driving factors to be used to set rates has been proposed before by Democrats, going back to former Gov. Jennifer Granholm, and have been shot down by the courts and Republicans.
And the current leadership in the Republican-controlled House of Representatives and Senate aren’t on board with the latest proposal.
“I have not had an opportunity to review this or even know what’s in the proposal,” Leonard said. “But I am very excited by the fact that other groups are finally coming to the table, or at least proposing solutions.”
2. Leonard and Duggan have been working for months on an auto insurance fix that is working toward reducing insurance rates by 25%-30%. While specific details haven’t been released yet, an option for customers to buy less expensive plans that would have a cap on medical coverage has been discussed.
Similar proposals have fizzled in the past and Meekhof has declared that any proposal that would mandate the rates insurance companies could charge amounts to “price fixing” that would be “dead, dead, dead” in the Senate.
But Duggan, a tenacious politician unaccustomed to defeat, has been working the Legislature hard, trying to drum up support for what he described in his State of the City address earlier this year as one of the major drags on the city’s comeback.
And Leonard said the momentum is on their side.
“Outside groups are scared and are finally coming to the table because they know that we’re very close to getting something together that will deliver real rate relief for the citizens of this state,” he said.
3. Meekhof said auto insurance reform doesn’t have to be all encompassing in order for customers to realize rate relief. There are three areas that could help, he said, including limits on what caregivers are paid; a fraud authority, and capping benefits for uninsured passengers or pedestrians who are injured in accidents.
“By the time you get the insurance industry and hospitals to agree on those three things, the immaculate conception has just happened,” he said, adding that he has no intention of considering a mandatory rollback in rates.
“When do Republicans get in between a private transaction between a business and customer and set what prices are?” he said. “Anything that interrupts the free market is dead.”
4. When Schuette officially announced his campaign for governor last week in Midland, he said putting money back into the pockets of Michiganders —through tax and auto insurance relief — topped his campaign agenda.
But specific plans haven't been developed yet, said campaign spokeswoman Bridget Bush.
"Bill is closely watching the current legislative activity that is unfolding," she said. "We know a key piece that has to be acted upon is fraud and frivolous lawsuits that drive up costs for good drivers and law-abiding citizens."
Despite the lack of agreement on the proposals making the rounds in Lansing, state Rep. Ben Frederick, R-Owosso, said there is room for optimism.
“We all have certain points from which we start these negotiations,” he said. “What we’ve seen time and time again is a failure in the House to get something done. But everyone should give a little to get something big done.”
It’s hard, however, to balance the needs of severely injured accident victims, who travel to the Capitol to tell their stories whenever the issue comes up in Lansing, and the desire of Michiganders to lower exorbitant auto insurance bills.
“I have never in my life met a legislator who is so hard-hearted and has said those stories have no effect on them,” Williams said. “I use the discussions over repealing the Affordable Care Act as a comparison. Both of those discussions are talking about extreme financial risks on events that haven’t happened yet that have huge price tags for society. But where do you draw the line?”
No actual bills have been introduced yet, but are expected soon from lawmakers.