Reports: Michigan's 2019 no-fault overhaul is failing to lower rates and help Detroit drivers as promised
Evidence that 2019 Michigan's auto no-fault overhaul has failed to deliver on its promises continues to grow.
Insure.com, which ranks car insurance costs by state, says Michigan climbed back to most expensive for car insurance in the nation just a year after the changes were signed into law by Governor Gretchen Whitmer. That's after the state briefly dropped to the number two spot.
In addition, insurance company filings with the Department of Insurance and Financial Services (DIFS) reveal that a segment of drivers continue to pay dramatically higher rates for car insurance based on their incomes and where they live — if they can afford those higher premiums at all.
Data suggest discriminatory PIP rates based on lower income
Doug Heller, Director of Insurance for the Consumer Federation of America, combed through the past year's worth of insurance company auto premium rate filings with DIFS.
The filings show that low-income drivers on Medicaid pay more on average for the lowest personal injury protection (PIP) coverage level ($50,000) than other drivers pay for the highest coverage level (so-called "unlimited.")
PIP is just one portion of an insurance policy. It pays for treatment of injuries sustained in a crash.
The statewide average for PIP for drivers on Medicaid, who can choose $50,000 of PIP, was $591. The average for drivers who chose unlimited PIP was $478.
"If you are poor, you pay more to get less," Heller said. "If you do the math on PIP, somebody buying $50,000 of PIP is getting 8% of the coverage compared to full unlimited PIP. And yet you're paying 50% more. That's the second class citizenship that we've created through this law."
The different in price varied by insurance company. One company, State Farm, actually charged drivers on Medicaid $130 less for $50,000 PIP, compared to drivers paying for unlimited.
"If you are poor, you pay more to get less."
But Progressive charged the low income drivers $337 more for their $50,000 of PIP, compared to drivers choosing unlimited. And MEEMIC charged a whopping $530 more.
Heller said the filings show that rate relief promised for Detroiters and others hasn't happened.
"People on Medicaid — they're too broke to buy insurance," he said. "And when we have this persistent discriminatory pricing, they continue to be too broke to buy insurance. It (reform) didn't resolve the problem."
It's not just PIP — Detroit drivers still pay dramatically more for policies
Insurance companies in Michigan are not required by state law or by DIFS to disclose rates by zip code or census tract.
But Heller said it's easy to discover that drivers in the city of Detroit pay far more on average for their insurance than drivers elsewhere.
Heller compared two hypothetical drivers applying for insurance with Allstate, both with the same coverage level, same age, and type of vehicle (a 2016 Ford Fusion.)
What was different was the zip code. One of these hypothetical drivers lives in Northville; the other, just 30 miles away, in an East Detroit neighborhood.
Heller said the policy quotes differed dramatically, both in overall price, and PIP coverage levels. The Northville driver would be charged $394 per month by Allstate, including unlimited PIP. The Detroit driver would be charged $516 per month, including only $50,000 in PIP.
Heller said having the Detroit driver pay for unlimited would bring the policy cost up by hundreds of dollars per month.
The example is similar to one I did. My insurance company is AAA Michigan. I currently pay $110 a month for maximum coverage levels, including unlimited PIP, and no collision, for two cars (a 2007 Saturn Vue, and a 2010 Ford Focus.)
If I lived in an East Detroit neighborhood, my AAA insurance would more than triple to over $350 per month.
Rate hikes on the way — and a return of penalties for those not continuously insured
Proposed rate hikes starting this spring are likely to keep Michigan secure in its number-one-most-expensive ranking in the U.S.
DIFS approved a 12% rate increase for Allstate in March. DIFS also approved Allstate's 20% penalty surcharge for drivers who did not continuously maintain car insurance.
Safeco has been approved for an 11.4% hike, starting May 28; Auto Club, 9%, effective July 1; Michigan Insurance Company's request for a 9% hike is pending.
Other insurance companies have asked for lower increases, including Citizens, which has requested a total of 1.8% in rate hikes this year. But buried in that request is the company's plan to lower rates in southern central Michigan by more than 10% — and increase them more than 10% in urban southeastern Michigan — namely, Detroit.
Insurance Alliance of Michigan continues to insist reform is working
IAM, the lobbying group for insurance companies in Michigan, continues to decline our numerous requests for interviews.
The group also continues to claim that the law is "driving the costs down for consumers."
Meanwhile, the law is also driving multiple home care agencies that care for auto accident patients out of business — and leaving vulnerable crash victims without care. That's because fee cuts in the law allow insurance companies to pay far less than the cost of care.
IAM has remained silent about car crash patients losing their medical care.
DIFS did not respond to a request for comment for this story.