May 17, 2022

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Michigan auto insurance reforms pave way to more savings, choice and accountability

Reforms to Michigan’s broken and outdated auto insurance system are saving money for families. And the road to a more accountable, transparent and affordable auto insurance system is only just beginning.

In less than two years after implementation, these reforms have saved Michiganders $1 billion in Michigan Catastrophic Claims Association reduced fees in 2020 and 2021, and this spring, Michigan families will get a $400-per-vehicle refund, amounting to another $3 billion in additional savings. Yet efforts to curtail these savings are already being peddled in Lansing.

These savings come at a crucial time for Michigan families and businesses. Inflation is at the highest rate since 1982 and here in the Midwest, consumer prices rose 7.5 percent in the past year, more than the national rate. Michigan families and businesses deserve relief, and auto insurance reforms are delivering.

At the same time, these reforms are encouraging more drivers to buy auto insurance, many for the first time. Since reforms took effect in July 2020, more than 155,000 motorists have bought auto insurance and 66,000 of them didn’t have any insurance for three years or more.

Michigan’s auto insurance reforms are doing what they were supposed to do: Drive down prices and give consumers more choices for the kind of coverage that works best for them.

Because of high demand from consumers, more companies have entered Michigan’s auto insurance market: 37 new companies either recently began providing coverage for Michigan motorists or plan to do so soon. More competition among more companies will further drive down auto insurance costs.

On top of refunds, Michigan consumers can also add to their savings by choosing different levels of medical coverage, or Personal Injury Protection. Even motorists who choose to keep unlimited, lifetime medical benefits are saving money on their auto insurance premiums, according to the Michigan Department of Insurance and Financial Services.

Where auto insurance reforms put consumers first, they also hold medical providers accountable. For decades, medical providers significantly overcharged consumers for medical procedures to treat an individual involved in an auto accident. These unscrupulous providers charged as much as five times more for traffic-related injuries than they normally would for other comparable medical procedures. The opaque, bloated system became a feeding trough that only a few special interests had access to and, for decades, feasted from. Auto insurance reforms have put the brakes on this shady practice, ensuring that savings are passed on to consumers.

The results are promising: Since Michigan’s reforms went into effect, premiums in the state have gone down, according to the past two State of Auto Insurance reports from The Zebra. Where Michigan once had the dubious distinction of being the most expensive state for auto insurance, that honor now belongs to Louisiana, The Zebra report shows.

Michigan’s bipartisan reforms are saving money for consumers and holding special interests that benefited from the old system more accountable. Leaders and policymakers must resist efforts to turn back the clock and undo the advances we are making. We must allow these reforms to continue driving costs down, giving consumers more choices and keeping Michigan’s outdated auto no-fault law in our rear-view mirror.

Erin McDonough is the executive director of the Insurance Alliance of Michigan.