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Whitmer orders study of insurers’ use of non-driving factors

LAKE ORION, MI - MARCH 22: Michigan Gov. Gretchen Whitmer speaks at an event where General Motors Chairman and CEO Mary Barra announced a $300 million investment in the GM Orion Assembly Plant plant for electric and self-driving vehicles at the Orion Assembly Plant on March 22, 2019 in Lake Orion, Michigan. (Photo by Bill Pugliano/Getty Images)

LANSING, Mich. (AP) — Gov. Gretchen Whitmer on Wednesday ordered a review of how Michigan’s auto insurers use non-driving factors such as education and credit scores to set premiums that rank among the nation’s highest.

The Democrat’s directive also includes an examination of how insurers price policies that coordinate medical coverage with drivers’ health insurance, and arrives as Republican lawmakers prepare to unveil legislation designed to reduce car insurance rates.

“Auto insurance rates must be fair and reasonable,” Whitmer said in a statement. “We must take a hard look at how auto insurers are setting rates to ensure these practices are lawful and to determine how we can achieve complete and lasting reform for Michiganders.”

The use of non-driving factors such as education, homeownership, occupation and credit scores is legal in the state. The law bars insurers from using sex or marital status as rating factors for policies issued on an individual basis, though policies issued on a group basis are exempt.

Michigan is the only state to require unlimited coverage for medical expenses resulting from auto crashes. It also allows health providers to bill car insurers much more for care than health insurers pay. The annual fee to cover personal injury protection benefits exceeding $550,000 will rise to a record $220 per vehicle this summer.

While medical costs are factors in Michigan’s high rates — and issues the GOP legislative majority intends to address — Whitmer said she is committed to using the power of her office to study other dynamics, too. Democratic legislators in particular have said allowing non-driving factors in rate-setting is discriminatory, especially in the Detroit — where residents pay $5,414 a year in premiums. That is more than double the state average, which is almost double the national average, according to a University of Michigan report cited by Whitmer.

The insurance department will identify what specific non-driving factors are being used and how they are being applied, and make recommendations for legislation, rules or other measures. It also will review “coordinated” auto insurance policies — cheaper coverage that is available to motorists who choose to make their health insurance the primary insurer for crash injuries and their auto no-fault coverage secondary.

Whitmer wants to know if car insurers are appropriately reducing the price of premiums for those picking coordinated coverage.

A trade group for the insurance industry welcomed the state review.

“We encourage the governor to review costs associated with medical providers and personal injury attorneys and examine rampant fraud and abuse within the system, dramatic overcharging by medical providers and Michigan’s one-of-a-kind mandate that every driver purchase unlimited, lifetime medical benefits,” said Tricia Kinley, executive director of the Insurance Alliance of Michigan. “We are confident the governor will reach the same conclusion as independent experts on the true cost drivers behind Michigan’s highest-in-the-nation auto insurance premiums.”

Senate Majority Leader Mike Shirkey, a Clarklake Republican, said Wednesday there “soon” will be movement on auto insurance bills — a top priority for the GOP caucus .

“We can measure that in days, not weeks, probably,” he said.

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  • rg

    Eliminating unlimited coverage for medical expenses and limiting claims by personal injury attorneys would be a good start.

    • steve

      I read that the unlimited PIP insurance that Michigan requires costs the average about $200.00 per year, and Michigan is the only state in the country that has it. Other states have PIP too, but with dollar limits and a lower cost.

  • WRTolkas.

    I’m a senior. No debt, one credit card. Never missed a payment in my life. Because I am not a thrall to the bank, guess what happened to my credit score? Yep down. Insurance companies don’t miss a trick. Write your Representative. Tell him/her that unless this mess is cleaned up this year, they lost your vote. Period.

  • Kevin Rahe

    Changing the way insurers use non-driving factors to set rates won’t reduce the average premiums Michigan residents pay – it will just shift them from some residents to their neighbors. The promise of unlimited coverage is a pot of gold for healthcare providers, who should know neither that coverage for a particular patient is unlimited nor who is paying the bill.

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