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Governor, Republican leaders reach deal to cut auto insurance premiums

Published  May 24, 2019 5:48pm EDT
News
FOX 2 Detroit

(FOX 2) - UPDATE (5 p.m.): The bill was approved 34-4 in the Senate Friday afternoon, reports Tim Skubick. It now goes to Gov. Gretchen Whitmer's desk to be signed.

Whitmer released a statement about the historic move:

"We've accomplished more in the last five months than in the last five years. This vote demonstrates that when both parties work together and build bridges, we can solve problems and make life better for the people of Michigan. 
 
“This plan will help drivers from Detroit all the way to the U.P. It guarantees lower auto insurance rates for eight years, protects people’s choice to pick their own insurance and coverage options while preserving the safety net, and bans insurance companies from using discriminatory non-driving factors when setting rates.  
 
“We still have more important work ahead of us to build a stronger Michigan for everyone. Now we must seize on this momentum to pass a strong, bipartisan budget that raises the revenue we need to improve education and skills training, clean up our drinking water, and fix the damn roads. Let’s get to work, and let’s get it done.” 

Democratic Gov. Gretchen Whitmer and Republican leaders have reached a deal to cut the state's high car insurance premiums.

The Legislature convened for a rare Friday session, when a bill was scheduled for a vote in the House and then the Senate.

Whitmer released the following statement: 

 

Michigan is the only state to require that drivers buy unlimited personal injury protection benefits with their auto insurance policy. Lawmakers wanted to let motorists forego full coverage if they have other health insurance to handle their crash injuries, and to stop forcing car insurers to reimburse much more for treatment than health insurers do.

Speaker of the House Lee Chatfield and Senate Majority Leader Mike Shirkey said in a statement that the wait now is over after decades of inaction in Michigan.

“Today’s vote will be a significant victory for the hard-working people of Michigan that will finally fix our broken car insurance system and deliver real, meaningful rate relief for families, seniors and household budgets all over the state,” they said.

 

Detroit Mayor Mike Duggan called the agreement "outstanding." 

"It will cut rates for Michigan drivers significantly, and we congratulate Governor Whitmer and the Republican and Democratic leadership for coming up with an excellent bipartisan deal," he said in a statement.

The details of the deal are still pending.

Earlier this week, billionaire businessman Dan Gilbert announced a potential ballot drive as a "failsafe" in case Michigan lawmakers couldn't reach a deal. On Monday, Quicken Loans vice president of government affairs Jared Fleisher said it'd be best if legislators and Whitmer enact a law to reduce rates by letting people opt out of mandatory unlimited medical benefits. But he said signature-gathering must begin soon as a backup. 

Earlier this month, the Michigan House and Senate both passed bills that were aimed at cutting the country's highest average auto insurance premiums by eliminating a requirement that drivers buy unlimited medical benefits to cover crash injuries. Whitmer said she would veto the legislation because it falls short in her eyes. 

The Democratic governor said a state House-passed plan would not guarantee savings for motorists or go far enough in ending the use of non-driving factors to set rates. The GOP-controlled state Senate also approved a bill this week following years of legislative stalemates over the issue.

The House legislation would allow motorists with health insurance to forego mandatory unlimited personal injury protection, or PIP, which only Michigan currently requires. Insurers would have to cut PIP rates, which can make up about half of a customer's bill, by between 10% and 100% for five years, depending on the coverage chosen between $0 and $500,000. That could amount to an estimated $120 and $1,200 in savings for someone paying $2,400 annually per car, assuming the PIP fee accounts for half their bill, according to Republican projections.

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The Associated Press contributed to this report.