Michigan's auto no-fault was meant to lower insurance costs, but did it?

Posted at 12:59 PM, Oct 11, 2022
and last updated 2022-10-12 11:26:10-04

(WXYZ) — Michigan continues to have the second highest auto insurance rates in the country.

The average car insurance rate in Michigan is $2,639 per year, which is 70% higher than the national average of $1,483, according to insurance quote company The Zebra.

In 2019, the Republican-controlled Legislature and Democratic Gov. Gretchen Whitmer celebrated the passage of auto no-fault reform. They said it was great news that would lower your insurance costs.

But did it?

“I haven’t noticed much of a decrease. If anything, it went up a little bit,” driver Jeffrey Lindblom said.

Driver Mary Crosby said, “I want to say like $800 a year.”

Most people 7 Action News spoke with who kept similar coverage say they have seen their rates increase. However, some people who bought a lot less coverage as the state got rid of mandatory unlimited personal injury protection coverage saved some money.

“That definitely helped out, just being able to choose what you want,” Jason Henzi said.

So how can you assess overall whether the law worked and if Michigan drivers paying more overall? There is a way to find out.

Insurance companies submit data on how they charge you. The state reviews it and approves it. For most people, it is hard to understand. So we talked to the director of Insurance for the Consumer Federation of America.

“It is safe to say about half a billion,” director of insurance Douglas Heller estimated of the increase auto insurance companies will be collecting in Michigan this year.

Heller went through filings and found that most major insurance companies this year filed with the state for major increases and got them approved by the Department of Insurance and Financial Services.

Here are a few examples:

  • Allstate is up 12%
  • Safeco is up 11.4%
  • Auto Club is up 9%

“The Legislature failed us back in 2019 by refusing to take on the insurance companies' practices and focused instead on the care that consumers need after a crash,” Heller said.

We have reported how people with catastrophic injuries fought to keep care after cuts. A court has since ruled that care cannot be cut retroactively for those injuries prior to the law.

That is not impacting current rate increases, which were submitted before the court ruling in August. So why are you paying more?

Heller says in his opinion, two forms of pricing discrimination are making insurance companies big money:

  • They can charge more based on the census tract you live in
  • They can use your credit score to determine how much to charge you

“It is absolutely a civil rights issue. And that is why over the generations, it's been civil rights groups that have led the charge for insurance reform and auto insurance reform,” Heller said.

This comes as inflation hurts credit scores for the poor.

So, what do the insurance companies have to say?

The Insurance Alliance of Michigan blamed inflation for increasing costs insurers face saying, “Without the reforms, Michigan drivers would not have had the PIP reductions."

The Michigan Department of Insurance and Financial Services released a statement saying it, “reviews insurers" costs versus the premiums they receive to ensure any rate changes are justified."

Heller says remember: Michigan continues to have the highest rates in the country.

“The insurance industry is unaccountable and the Legislature did nothing to change that,” Heller said.