After the collapse of Mayor Mike Duggan’s D-Insurance proposal, the latest push to reform the state’s no-fault auto insurance laws to guarantee premiums lowered 20 percent to 50 percent — in part because high rates have disproportionately affected places like Detroit — will take more than just an elaborate press conference to become law.
The bill, HB 5013, calls for three levels of personal injury protection: $250,000, $500,000 and unlimited injury protection. It was unveiled Sept. 26 in a seemingly bipartisan fashion by Duggan, House Speaker Tom Leonard, R-DeWitt, and state Rep. Lana Theis, R- Brighton, chairwoman of the House Insurance Committee in Lansing, and is meeting resistance from some Democratic lawmakers.
Why is their support crucial?
Because if members of the Republican Caucus in the House are not entirely sold on the plan, Democratic votes will be needed for it to pass. Democrats make up 45 of the 108 representatives in the House, where 55 votes are needed to get any legislation through before the Senate takes it up.
But the bill’s skeptical audience is in the mayor’s backyard where some members of the Detroit Democratic delegation are not making any commitment to support the plan. Others are emphatically saying “no” by picking it apart.
“The proposed legislation will not provide true cost savings for residents, particularly in Detroit,” said state Rep. Fred Durhal III, D-Detroit, vice chairman for the House Appropriations Committee and who represents central Detroit. “For example, if a Detroiter is paying $4,000 a year for insurance, and the rate reduction is 30 percent, then that is only $1,200 in savings. This may seem like a huge reduction, but realistically speaking for citizens and families in my district, if you can’t pay $4,000, (then) $2,800 dollars is still difficult to pay.”
At the heart of the reform debate is the question of fairness, which state Rep. Sherry Gay-Dagnogo, a member of the House Insurance Committee and chairwoman of the Detroit delegation, has raised since Duggan and Leonard went public with their plan.
“If we truly want to address rates we must begin focusing on the discriminatory non-driving factors that have been used in the calculation of auto insurance rates, allowing companies to squeeze additional dollars out of hardworking men and women across the state,” said Gay-Dagnogo, whose northwest Detroit district includes the Brightmoor and Grandmont-Rosedale communities.
“Insurance companies still ask questions that have nothing to do with an individual’s driving record. The questions of ZIP code, credit score, highest level of education, occupation, gender and etc. … suggest discriminatory practice to qualify for low rates, particularly in urban areas around our state. If we are to seek true rate relief these questions must be eliminated,” Durhal said.
“I think the mayor’s plan is a start. However, I believe there is much more we can do to craft legislation that will be fair for all citizens.”
Another city legislator, Stephanie Chang, whose district includes southwest Detroit, is not sold on the plan.
“The high cost of auto insurance is a major issue affecting families in my district and across the state and I am glad we are seeing proposals to address the issue from various groups,” Chang said. “I also want to ensure that we are increasing transparency and reducing fraud while we find a way to reduce Detroiters’ and Michiganders’ rates without compromising the care they may need in the most dire of circumstances.”
Another Democrat, Rep. Rose Mary Robinson, who represents parts of Detroit and Hamtramck, was more critical of the proposal.
“The mayor can’t prove that seniors will get a benefit. It’s a gimmick,” she said of the plan.
State Rep. Tim Greimel, the former House Democratic leader whose district includes Auburn Hills, Keego Harbor, Orchard Lake Village and Pontiac, is equally skeptical.
“I support several elements of the bill, especially establishing a fraud authority, curtailing waste and abuse, reducing exorbitant rates charged by health care providers, and reducing auto insurance premiums for consumers,” Greimel said. “Unfortunately, the bill would also lead to strict limits on care and benefits for those injured in catastrophic car accidents, leaving vulnerable victims without needed care and increasing costs to the state’s taxpayer-funded Medicaid system.
“Moreover, the bill would only meaningfully lower auto insurance premiums for five years, after which insurance companies would again be allowed to jack up premiums.”
One Metro area Democratic legislator said she is supporting the Duggan effort.
But Rep. Leslie Love, D-District 10, which comprises Redford Township and parts of Detroit, supports the mayor’s second attempt at seeking to reform auto insurance rates for Detroiters. She was among several leaders standing behind Duggan including the Detroit NAACP president, the Rev. Wendell Anthony, during last week’s press conference to drum up support for the reform.
“The bill the mayor is advocating for is a good effort — the only one on paper too — and a good beginning point for debate and resolution,” she said.
“Legislators from Detroit, in particular, have been fighting this fight for two decades,” Love said. “And for two decades nothing has changed and Detroiters continue to pay the highest rates in America. Everyone is getting paid and we are left paying exorbitant rates. I’m sick of it.”
Duggan has said reducing Detroit’s auto insurance rates is a civil rights issue because it limits economic opportunities for many Detroiters who can’t drive to good paying jobs because they can’t afford insurance.
Beyond the debate about the true benefits of the package Duggan is pushing lies the question of also empowering the office of the state insurance commissioner to police rising premiums.
“I’ve always said a big part of this is having greater transparency and empowering the Michigan insurance commissioner with the same powers that insurance commissioners have almost everywhere else,” said attorney Steve Gursten. “If we force people by law to purchase auto insurance, we should have the power to regulate excessive profit margins.”
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