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Democrats Offer Proposal To Lower Michigan's Car Insurance Rates 40%

This counters the Republican plan.

May 16, 2019 - 1:40 pm

(WWJ) Democratic state lawmaker have announced their rebuttal today to the GOP plan on reforming no fault auto insurance.

What they're calling "the D.R.I.V.E. plan" delivers what they say is the first holistic approach to Michigan’s auto insurance system by Delivering Reduced Insurance Rates and Value to Every Michigander.

Michigan’s auto insurance industry is one of the least regulated in the U.S. with Michigan drivers paying nearly two times more than drivers anywhere else in the nation, according to a University of Michigan study; and  Democrats’ D.R.I.V.E. plan tackles those rates by requiring a 40% rate reduction on the total bill, increasing consumer protections and ending discriminatory rate-setting practices like red-lining.

“Like most Michiganders, I don’t want to cross my fingers and hope that insurance companies actually reduce my rates, I want a guarantee,” said House Democratic Leader Christine Greig of Farmington Hills. “That’s why we are here today. House Democrats know we can do better than the plans passed by the House and the Senate. Our D.R.I.V.E plan will put Michiganders back in the driver’s seat by guaranteeing rates go down by at least 40% while ensuring no insured driver is left behind with zero coverage when the unthinkable happens.” (Scroll down for more details on the  D.R.I.V.E. plan)

Meanwhile, GOP-backed legislation pending on the House floor does not include crucial protections for drivers that Gov. Gretchen Whitmer has called for. Those include a mandatory price reduction for drivers, plus removing zip code or credit score as factors in the price.  

The question is, does either plan have a chance to pass? 

WWJ Lansing Bureau Chief Tim Skubick says there's hope with talks going on behind the scenes to find a middle ground.

"This is a major development in the sense that if you're talking, there is always the chance of a deal," he reported, Thursday afternoon. "There's no guarantee, but the two Republican leaders appear to be all in on sitting down with the governor and once and for all finding solutions on cost savings for Michigan motorists."

"They aren't there yet," Skubick added, "but this is a major, major step in that direction."

Under the current no-fault system, Michigan has the highest auto insurance rates in the nation -- about $2,400 per year on average, which is nearly $1,000 above the national average. Michigan is also the only state that requires seniors to buy duplicative coverage, costing them between $600 and $1,000 each year.

The Senate last week voted 24 to 12 in favor of legislation that would eliminate a requirement that drivers buy unlimited medical benefits to cover crash injuries. But it doesn't go far enough for Whitmer and her fellow Democrats. 

Skubick said only two Democrats sided with Republicans who led the Senate plan.

"Here was the major dispute: The Democrats voted no for the most part because they said there was no guarantee that there would be any savings for any motorists in the state under this so-called reform plan," Skubick reported. 

While the Republican-backed legislation does not set specific rates, supporters said what it would do is provide drivers with more choice in their level of coverage; with an option for people age 62 and older with lifetime health care benefits to not carry certain coverage. (More on the Republicans' plan here).


The Democrats say their D.R.I.V.E. plan would:

  • Lower Rates by 40% – Guaranteed rate reduction for all drivers by requiring insurance companies reduce rates by 40% off the total bill.
  • Base Rates Only on Driving Factors – End red-lining and the use of discriminatory non-driving factors. Prohibit insurance companies from using zip code, marital status, education level, home ownership status, gender or credit score from being used to set rates.
  • End Insurance Fraud – Create a consumer protection fraud authority that can take on fraud within the system and hold perpetrators accountable.
  • Keep Strong Health Care Coverage – Maintain full Personal Injury Protection accident coverage for all drivers.
  • Reduce Lawsuits – Extend the amount of time claimants have to file a claim from one to three years.
  • Lower Rates for Seniors – Recognize Medicaid and other lifetime retirement health care as an alternative to PIP coverage as long as the alternative includes long-term care coverage.
  • Increase Transparency – Hold a microscope to the Michigan Catastrophic Claims Association so drivers know how rates are set.
  • Lower Medical Costs – Give drivers a discount for coordinating their auto insurance with their health care.

The Dems say the 40% rate reduction would result in significant savings for Michigan drivers and provide an avenue for uninsured drivers to re-enter the marketplace.