Bankole: Politics preventing real no-fault reform

Bankole Thompson
The bill does nothing to address concerns regarding non-driving rating factors that result in insurance companies using unfair pricing schemes.

If you want to know why politicians can’t be trusted with real reform, look to Lansing this week, where a Republican-controlled Senate passed Senate Bill 1, designed to reform the state’s no-fault auto insurance law.

The legislation, which was opposed by many Democrats in the upper chamber, appears to be more like a gift to the insurance industry rather than a bold and compassionate stab at real reform that will ease the economic burden in places like Detroit.

The bill creates an insurance fraud authority, a central reform argument of the insurance industry, which is quick to blame fraud for high rates in urban centers. It will also determine how much hospitals could charge insurance companies for medical coverage.

But the bill offers no guarantee of rate reduction, limits the ability of consumers to hire attorneys to represent them in disputes with an insurance company, and takes away most of the insurance benefits that exist under the current law including allowing drivers to totally opt out of personal injury protection. 

The bill does nothing to address any of the serious concerns raised last week by Gov. Gretchen Whitmer regarding non-driving rating factors that result in insurance companies using unfair pricing schemes in setting rates. Whitmer has vowed to veto the bill, as should be expected of a governor who campaigned to protect people from the abuses of the system.

The bill is not the answer to the crisis facing majority-black cities like Detroit: redlining. At the heart of the cries for reform is the need to eliminate insurance redlining, the practice of subjecting Detroit drivers to higher monthly premiums by using non-driving factors such as credit.

Detroit Democratic Sens. Adam Hollier and Sylvia Santana voted for the bill that is worse than the current no-fault law. They should have been at the April 29 town hall I moderated to hear senior citizens, some of whom are barely making it, explain how they are struggling to choose between paying high auto insurance and other basic amenities.  

According to Whitmer, the action by the Senate not only creates more problems but “it preserves a corrupt system where insurance companies are allowed to unfairly discriminate in setting rates and the only cuts it guarantees are to drivers’ coverage.”

The Senate’s so-called remedies for reform underscore why public trust in government continues to decrease, and that it is difficult to bank on lawmakers regardless of party affiliation to do what is right. One of the primary responsibilities of government is to protect the public good and promote the welfare of the people it claims to serve. The bill does just the opposite.

“Lansing should devote more resources to properly regulating the automobile insurance industry as it does for the health insurance and public utility industries,” said Detroiter Ernest C. Browne III, a retired health insurance manager. “These two industries must provide substantial document and rationale for the rates that they charge and any subsequent rate increases." 

The Senate bill is now headed to the House.

“The House of Representatives has a chance to be the responsible leader here. The House has a chance to recognize that we have a bipartisan government and that positive changes to auto insurance in Michigan must come from embracing smart reform ideas from all sides of the debate, and not just from those aligned with the insurance industry,” said Stephen Sinas of the Coalition for Protecting Auto No-Fault.

For Browne: “The state needs to establish regional risk pools for auto insurance which will spread the risk of a loss over a larger group of drivers. For example, a Southeast Michigan Risk Pool consisting of the drivers living in the counties comprising SEMCOG. This should address the issue of redlining.”