Lansing — Two weeks after Democrat Abdul El-Sayed launched his run for Michigan governor, his wife found out she was pregnant. Facing the prospect of his statewide campaign and her work schedule, they moved in with her parents to help raise the baby.

The couple got an unexpected bonus when they moved from Detroit to Shelby Township: Their auto insurance rates “dropped thousands of dollars,” said El-Sayed, 33. “And we don’t drive fancy cars. I drive a Ford Focus.”

Same drivers. Same cars. Different ZIP codes.

“That’s just wrong,” El-Sayed told The Detroit News, outlining his plan to reduce auto insurance rates by prohibiting insurers from using non-driving factors to determine rates, creating a “Truth in Insurance Commission” to oversee the industry, capping hospital charges and restricting attorney access to accident reports.

“The same driver shouldn’t pay different rates because they live in a different place, and that kind of red-lining by the insurance industry is exactly what’s wrong with the system,” he said. “It is a civil rights issue because the costs fall disproportionately on low-income folks and people of color.”

Insurers say they use several factors to mitigate risk and determine rates in Michigan, the only state in the nation that requires plans to include unlimited lifetime medical benefits under its no-fault auto law.  Michigan rates consistently rank among the highest in the nation, with Detroit often cited as one of the most expensive cities in the country.

El-Sayed opposes Detroit Mayor Mike Duggan’s push to allow motorists a choice to buy plans with reduced medical coverage, saying it could create a two-tiered system where poor people have worse insurance. But he has proposed an ambitious and expensive Medicare-for-all program for Michigan that would alleviate the need for auto insurers to provide medical coverage.

The Duggan-backed plan failed in the House last fall, another setback in a decades-long battle that has featured intense lobbying by the auto insurance industry, hospitals and trial lawyers. A Detroit group is trying to revive the debate by running billboards mocking lawmakers for inaction and promoting a revised “driver’s choice” proposal.

Current Michigan law requires insurers to consider factors such as age, driving record and average miles driven before factoring in geography. El-Sayed’s plan, like Democratic legislation introduced in the state House, would prohibit territorial rate setting and ban the use of credit scores and other socioeconomic factors for rate setting.

The former Detroit health director also wants to cap medical provider reimbursement rates for auto accident victims at 130 percent of Medicare, establish a fraud authority to monitor insurers and create an Auto  Victim’s Privacy Protection Plan that would restrict attorney access to accident reports, victim’s personal information and direct mail solicitations.

“We’ve got to stand up to make sure we’re protecting Michiganders from exploitation by ambulance chasers and exploitation by the hospital industry that’s charging auto insurance substantially more than it’s charging health insurance for the same services,” El-Sayed said.

His auto insurance reform proposal is the most comprehensive call for action of its kind so far in the Democratic gubernatorial primary, but he is not the only candidate talking about the issue.

Former Senate Minority Leader Gretchen Whitmer, endorsed by Duggan, has said insurers should not be able to use zip codes or credit scores to determine rates and wants transparency in the Michigan Catastrophic Claims Association. Ann Arbor entrepreneur Shri Thanedar also wants to ban the use of non-driving factors in rate setting.

El-Sayed’s plan proposes formation of a Truth in Insurance Commission that would review rate changes in coordination with the Michigan Department of Insurance and Financial Services, communicate rate changes to the public, hold public hearings and oversee a statewide study of auto rates and assessments.

He also wants to require insurers release data on premiums and payouts and is proposing to open up the Michigan Catastrophic Claims Association to the Freedom of Information Act. The MCCA assesses an annual fee, set to rise from $170 to $192 per vehicle on July 1, to reimburse insurers for no-fault claims that cost more than $555,000.

Most of El-Sayed’s auto insurance plans would require approval by the Legislature, which has debated reforms for decades but failed to find consensus on any single plan.

El-Sayed, who has never held elected office, said he would use leverage afforded by the governor’s office to push for change. The progressive Democrat thinks he is in a unique position to be a “fair arbiter” because he has not received contributions from the insurance industry, hospitals or trial lawyer groups.

“All three of these industries want to keep their choke hold on what is a cash cow for them,” he said. “It’s going to take all three of them being willing to put the people of Michigan first, and therefore all of their political clients – their politicians who have taken their money – to be able to put the people they serve first.”


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