Defeat of no fault auto insurance overhaul doesn’t end the debate over high rates

Nov. 04--LANSING -- A proposal to overhaul Michigan's no fault auto insurance system may have been delivered a death blow in the state House of Representatives, but it certainly won't be the end of the discussion.

Lawmakers and Detroit Mayor Mike Duggan, who pushed the proposal hard, are saying they'll be back with more proposals next year that will deliver insurance rate reductions to Michigan drivers.

"We'll come back next year and the year after that and try again until we get rate cuts for everybody," Duggan said following the 45-63 vote on the auto insurance proposal Thursday night. "We've got more ideas and we'll be back because I'm not going to quit until we get something through."

He enlisted Detroit's business community to get involved in the fight and they lobbied Democratic lawmakers in an attempt to get the 10-15 votes that were needed to compensate for the 22 Republican votes against the overhaul.

"The business community in Detroit understands the perverse influence of the special interests on this issue," Duggan said. "So we're going to come back with a bigger coalition next time."

Sen. Arlan Meekhof, R-West Olive, didn't support the House plan because of the demand for mandatory insurance rate rollbacks, which he compared to price-fixing. He said he has other ideas of how to tackle auto insurance reform that don't have to be all encompassing in order for customers to realize rate relief.

There are three areas that could help, he said, including: limits on what caregivers are paid; creating an authority to root out fraud by both insurance companies and customers, and capping benefits for uninsured drivers, passengers or pedestrians.

More: Michigan's no-fault auto insurance reform defeated in House of Representatives

More: No-fault fixes? How other states reined in auto insurance costs

"I like the ideas that we have put forward that do have the potential for savings without impacting people's medical coverage if they're in a catastrophic accident," he said. "That's a good place to start."

Democrats would like to see the Legislature take on the issue of territorial rates that insurance companies use to take non-driving-related factors -- such as ZIP codes, credit scores and educational attainment -- into account when setting rates. The practice is hard on urban drivers, especially in Detroit, who find their premiums running thousands of dollars higher than their suburban neighbors.

"We have a plan that brings down costs and doesn't force people into bankruptcy," said House Minority Leader Sam Singh, D-East Lansing. "I am committed to coming back next week and taking a look at the bills that are still in committee and making sure they get a fair hearing."

But the issue of prohibiting companies from using non-driving factors in setting rates is a nonstarter for many lawmakers because bringing down rates in urban areas like Detroit would mean raising rates for other drivers across the state.

"It's not a cost savings, it's a cost shift," Speaker of the House Tom Leonard, R-DeWitt, said after the vote. "There's no way I could ask members who represent rural districts to vote on something that would raise rates in their areas. I'm willing to do everything I can to reduce rates for drivers in the city of Detroit, but I'm not willing to do so at the expense of driving up rates for the drivers in my district or across the rest of the state."

And Duggan said even though he'd like to see the same rates for drivers across the state, he knows that's not a solution because it would cause rates to go up for drivers across the state.

"Everybody knows as soon as you propose it, that it won't pass," he said. "We wanted to do something that was politically possible."

Leonard says he's ready to move on to other issues.

"This is an issue we've been working diligently on for the last month and it's sucked a lot of oxygen out of the room," he said. "The issue is not dead, but I do need to start working on other issues."

The plan that failed would have guaranteed a 40% reduction in insurance rates for people who choose a lower level of coverage -- $250,000 in personal injury protection, which would be split between $225,000 in hospital coverage and $25,000 in after-care costs. People who chose $500,000 in PIP coverage would get a 20% cut and drivers who decided to continue with unlimited medical coverage would get a 10% reduction The reductions would only be realized on the personal injury protection portion of insurance premiums.

Supporters of the legislation were trying to address Michigan's highest insurance rates in the nation, in part, because of the unlimited medical benefits for people who are catastrophically injured in car accidents that is a part of the state's no-fault auto insurance law. Those benefits, along with insurance companies' ability to charge different rates based on where people live, make auto insurance unaffordable for many people, especially in Detroit.

Opponents said the bill didn't guarantee rate reduction because it allowed insurance companies to get an exemption from the state if they could prove they couldn't make money under the reduced rates. And that the reductions would only be in effect for five years.

Contact Kathleen Gray: 313-223-4430, kgray99@freepress.com or on Twitter @michpoligal

How the House of Representative voted on no fault auto insurance overhaul -- HB 5013

Republicans voting yes: Thomas Albert of Lowell, Julie Alexander of Hanover, Sue Allor of Wolverine, Tom Barrett of Potterville, Joseph Bellino of Monroe, John Bizon of Battle Creek, Julie Calley of Portland, Ed Canfield of Sebewaing, Lee Chatfield of Levering, Tristan Cole of Mancelona, Diana Farrington of Utica, Gary Glenn of Williams Township, Beth Griffin of Mattawan, Roger Hauck of Union Township, Shane Hernandez of Port Huron, Michele Hoitenga of Manton, Pamela Hornberger of Chesterfield Township, Holly Hughes of Montague, Steven Johnson of Wayland, Bronna Kahle of Adrian, Tim Kelly of Saginaw Township, Beau LaFave of Iron Mountain, Kim LaSata of Bainbridge Township, Dan Lauwers of Brockway Township, Tom Leonard of DeWitt, Eric Leutheuser of Hillsdale, Jim Lilly of Park Township, James Lower of Cedar Lake, Aaron Miller of Sturgis, Jeff Noble of Plymouth, Dave Pagel of Berrien Springs, John Reilly of Oakland Township, Daire Rendon of Lake City, Jason Sheppard of Temperance, Lana Theis of Brighton, Curt VanderWall of Ludington, Scott VanSingel of Grant, Hank Vaupel of Handy Township, Roger Victory of Georgetown Township, Jason Wentworth of Clare, Mary Whiteford of Casco Township.

Republicans voting no: Chris Afendoulis of Grand Rapids Township, Tommy Brann of Wyoming, Laura Cox of Livonia, Kathy Crawford of Novi, Ben Frederick of Owosso, Daniela Garcia of Holland, Joseph Graves of Linden, Gary Howell of North Branch, Martin Howrylak of Troy, Brandt Iden of Oshtemo Township, Larry Inman of Williamsburg, Klint Kesto of Commerce Township, Peter Lucido of Shelby Township, Steve Marino of Harrison Township, David Maturen of Vicksburg, Michael McCready of Bloomfield Hills, Brett Roberts of Eaton Township, Jim Runestad of White Lake, Jim Tedder of Clarkston, Robert VerHeulen of Walker, Michael Webber of Rochester Hills, Jeff Yaroch of Richmond.

Democrats voting yes: Wendell Byrd, Leslie Love, Sylvia Santana, Bettie Cook Scott, all of Detroit.

Democrats voting no: Winnie Brinks of Grand Rapids, Darrin Camilleri of Brownstown Township, Stephanie Chang of Detroit, John Chirkun of Roseville, Cara Clemente of Lincoln Park, Tom Cochran of Mason, Scott Dianda of Calumet, Fred Durhal III of Detroit, Brian Elder of Bay City, Jim Ellison of Royal Oak, Pam Faris of Clio, LaTanya Garrett of Detroit, Sherry Gay-Dagnogo of Detroit, Erika Geiss of Taylor, Patrick Green of Warren, Christine Greig of Farmington Hills, Tim Greimel of Auburn Hills, Vanessa Guerra of Saginaw, Abdullah Hammoud of Dearborn, Kevin Hertel of St. Clair Shores, Jon Hoadley of Kalamazoo, Jewell Jones of Inkster, Robert Kosowski of Westland, David LaGrand of Grand Rapids, Donna Lasinski of Scio Township, Frank Liberati of Allen Park, Jeremy Moss of Southfield, Sheldon Neeley of Flint, Kristy Pagan of Canton Township, Ronnie Peterson of Ypsilanti, Phil Phelps of Flushing, Yousef Rabhi of Ann Arbor, Rose Mary Robinson of Detroit, Terry Sabo of Muskegon, Andy Schor of Lansing, Sam Singh of East Lansing, Tim Sneller of Burton, William Sowerby of Clinton Township, Robert Wittenberg of Oak Park, Henry Yanez of Sterling Heights, Adam Zemke of Ann Arbor.

___

(c)2017 the Detroit Free Press

Visit the Detroit Free Press at www.freep.com

Distributed by Tribune Content Agency, LLC.