LaSata: Senate approves major auto insurance reforms

LANSING, Mich. — A comprehensive plan to lower auto insurance rates in the state was approved on Tuesday, said Sen. Kim LaSata.

“My constituents, along with all Michigan drivers, pay the highest auto insurance premiums in the nation, by far,” said LaSata, R-Bainbridge Township, who is a member of the Senate Insurance and Banking Committee. “Auto insurance is a burden on all of our budgets, and while these costs strain many, some forgo auto insurance entirely, compounding the problem.

“Auto insurance is an increasingly burdensome, expensive problem we all share, and the reforms in this plan will help all of us save money. I consistently hear from my constituents throughout Southwest Michigan about what they would do with their savings if auto insurance rates were lowered. I am excited to help provide them with a plan that will do just that.”

The Senate-approved plan will help lower auto insurance rates in Michigan by providing drivers more choice in coverage, getting tough on fraud and lawsuit abuse, and reducing inflated medical costs.

It would provide drivers with the ability to choose a personal injury protection (PIP) coverage plan that best meets their needs and budgets and depending on the choices they make, it could save modest amounts or as much as 90%. Also, residents would be able to use their health insurance, Medicaid, or Medicare to cover excess medical costs, which would help put an end to drivers being charged twice for auto insurance medical coverage.

To help stamp out fraud and abuse, the Senate plan includes the creation of an anti-fraud authority to be operated by the Michigan State Police to help combat the problem statewide. State insurance officials have indicated that fraud contributes to the rising costs of auto insurance rates, and that instances of fraud are on the rise.

Other measures in the plan include:

  • Changes to the Michigan Catastrophic Claims Association (MCCA) per vehicle assessment to reduce the annual fee by more than 80%;
  • Lowering out-of-control medical costs in the auto insurance system that are passed on to drivers; and
  • Reducing conflicts of interest to combat fraud.

“This is a reasonable and well thought out plan that, through months of public hearings and committee work, has been developed to change the auto insurance system for the better,” LaSata said. “This is a definite win for the residents of Southwest Michigan. Furthermore, it is a plan that will help all Michigan drivers save more of their hard-earned money.”

Senate Bill 1 now advances to the House of Representatives for consideration.