Michigan House plans quick passage of auto insurance bill

Posted at 11:07 PM, May 08, 2019

LANSING, Mich. (AP) — The Republican-led Michigan House was poised Wednesday night to approve a plan to reduce the state’s high auto insurance premiums, moving quickly to no longer require that drivers buy unlimited medical benefits through their car insurer to cover crash injuries.

The surprise move would set the stage for a potential showdown with Gov. Gretchen Whitmer, who a day earlier threatened to veto separate auto insurance legislation that cleared the GOP-controlled Senate . House Republicans expressed confidence that the Senate would back their proposal and send it to the Democratic governor as soon as next week.

The House bill would let motorists forego mandatory unlimited personal injury protection, a requirement only in Michigan. Insurers would have to cut PIP rates, for five years, by between 10% and 100%. That could equal an estimated $120 and $1,200 in savings for someone paying $2,400 annually, assuming the PIP fee accounts for half their bill, according to Republicans’ projections.

People opting out of unlimited coverage and instead choosing between $0 and $500,000 in medical benefits would not have to pay much of what will soon be a $220 annual per-vehicle fee that reimburses auto insurers for expenses surpassing $580,000 for the severely injured. The measure also would stop car insurers from having to pay much more than private and public health insurers do for the same medical services, a factor driving claim costs. They would follow a fee schedule similar to what exists for workers’ compensation injuries.

A recent study showed that Michigan’s estimated annual premium of $2,610 is highest in the country and almost double the national average

While the pending House vote would be a big step forward in efforts to cut premiums after a half-dozen years of legislative stalemates, the bill’s prospects were uncertain. Majority Republicans have made car insurance changes a top priority, but Whitmer has been more focused early in her term on fixing the roads with a proposed fuel tax increase and enacting her first budget.

Her Democratic allies in the House planned to blast the insurance legislation, and criticized how it was unveiled and approved in the matter of hours with no public review or committee testimony. They accused the GOP of playing “partisan games.”

After the five-year period of mandated lower premiums, Michigan would scrap a “file-and-use” system that lets rate increases take effect before regulatory review. Rates instead would be subject to prior approval.

The bill would also create a task force to target fraud, limit reimbursement for family attendant care and no longer let insurers use sex as a rating factor when pricing policies issued on a group basis.