Auto insurance reform in the city of Detroit and Michigan will have to wait until another day, if it happens at all.
According to a report in Crain’s, after intense lobbying a bi-partisan plan spearheaded by Detroit Mayor Mike Duggan failed 45-63.
Aligned against the plan were lobbyists from hospitals, medical systems like Henry Ford Health Systems and the Detroit Medical Center as well as personal injury attorneys. Their efforts managed to make it so that only four Democrats signed on. Out-state democrats were against the bill as well as some Detroit ones.
The bill would have given people the option to buy auto insurance with a capped benefits at $250,000 between post-hospitalization and emergency services, as well as a host of other details that the Freep has here.
Critics believed the bill didn’t address redlining, where rates are higher in poor or areas with more people of color. Some also believe that we should keep unlimited medical benefits after an accident (Michigan is the only state in the nation to offer them), and some wanted a hard guarantee that the bill would lower rates.
Our Quick Take: Yes, redlining is an issue. But until costs are somehow control on the medical care side (a lot of people think the cost of insurance is high in Detroit because of theft, it’s not, it’s the medical care portion), we’re never going to see significantly lower auto insurance rates and Michigan will continue to have the highest rates in the nation and be the most expensive state to own a car.
This bill had issues, but down the line something has to give to reduce the costs and it seems there’s little will to give anything and compromise. There’s also lot of money being made by a lot of people along the chain, so there’s a lot of incentive to keep the system as it is.
Despite Duggan saying he’s going to push again next year, auto insurance reform (more than a few percent around for the edges) through legislative means is probably a dead duck for the foreseeable future.