Auto insurance deal finally reached ‘in concept’

Gov. Gretchen Whitmer gets ready to begin her first State of the State address with Senate Majority Leader Mike Shirkey and Lt. Gov. Garlin Gilchrist standing by | Casey Hull

Gov. Gretchen Whitmer and top Republicans in the Legislature announced a tentative deal this morning on a no-fault auto insurance reform after weeks of private negotiations.

According to the governor, the deal “guarantees rate relief for every Michigan driver; provides a choice in coverage levels; establishes more uniform and structured compensation levels for medical providers; and removes the ability of insurance companies to discriminate based on non-driving factors.”

Chatfield and Shirkey
Lee Chatfield (left) and Mike Shirkey (right)

In a joint statement, state House Speaker Lee Chatfield (R-Levering) and Senate Majority Leader Mike Shirkey (R-Clarklake) said that Michigan voters “have been waiting decades for state government leaders to step up and deliver results. Today, that wait is over.”

But Whitmer’s statement is more cautious in tone than the Republican leaders’, calling the deal an “agreement in concept.” She said she looks forward to “working with the Legislature” to pass and sign the bill, while Republicans say that there is “an agreement on a bipartisan plan that will be signed into law.”

However, this is not a done deal. Lawmakers still need to vote on the deal and are scheduled to do so in a special private session.

The deal includes medical coverage options for drivers including the traditional unlimited plan, a $500,000 cap, a $250,000 cap, a $50,000 cap for those on Medicaid and an opt-out for seniors on Medicare and those who have “qualifying private health insurance.”

It includes a new fee schedule for medical providers to be implemented July 1, 2021, based on the percentage of Medicare reimbursement that will be phased in for 2 years after its implementation date. It also bans seven different non-driving factors in rate-setting, including the use of sex, marital status, ZIP codes, credit score, homeownership (except for bundling), and education level or occupation (excluding group discounts).

Dan Gilbert

Negotiations over the bills accelerated this week after a weekend announcement from a lobbyist for Quicken Loans founder Dan Gilbert that he would introduce a ballot initiative for reforms similar to the GOP’s plan should the Legislature fail to strike a deal.

This week saw numerous meetings between Whitmer and the four legislative caucus leaders as they sought to reach a deal acceptable to all parties, with Whitmer saying she was “not going to be bullied into doing something and I don’t think the Legislature is either” with regard to Gilbert’s potential ballot initiative.

The provisions of the deal outlined in the governor’s statement seem to meet the primary demands of both Republicans concerned about drivers being forced to purchase excessive health coverage and Democrats concerned about non-driving factors used to discriminate in rate-setting.

But some Democrats from Detroit, which has the highest of the state’s highest-in-the-nation rates, still aren’t satisfied at first glance.

“I still think it’s terrible without some important tweaks,” state Rep. Isaac Robinson (D-Detroit) told the Advance Tuesday morning. Robinson, along with a group of fellow Detroit state lawmakers, introduced a package of bills on Wednesday aimed squarely at banning the “discriminatory practices” they say make auto insurance unaffordable in their city.

Robinson says that by banning the use of ZIP codes and credit scores in rate-setting, the deal leaves the door open for other ways in which insurers can discriminate by non-driving factors — including, crucially, location.

Rep. Isaac Robinson
Isaac Robinson

A GOP spokesperson told reporters Friday morning that insurers will still be free to set rates by “territory,” which can be “defined more broadly than ZIP code.” They said there would be “parameters” around how those territories may be defined, but stressed that the bill is still being drafted and those parameters are not yet defined.

“All this talk, all this energy and nothing is delivered for people who have been red-locked,” Robinson said, using a term that compares discriminatory rate-setting to the racist housing practice of “redlining.”

“It’s so disrespectful, the governor did not meet with representatives from urban areas before signing off on this deal, and I think she had good intentions but this loophole language banning ZIP codes and banning credit score, people more familiar and more passionate about the issue would have been able to flag them and say ‘this has to be tweaked,'” Robinson said.

“The people who elected Whitmer are from these urban areas, and they have been sold out so she can go get a headline at Mackinac. But we’ve been sold out under the present bill.”

State Rep. and House Democratic floor leader Yousef Rabhi (D-Ann Arbor) criticized the deal via Twitter Friday morning along similar lines.

Senate Democratic leadership, however, was pleased, including those from other urban areas — state Senate Minority Leader Jim Ananich released a statement this morning praising the deal and saying “the end result will relieve rates for drivers while still providing them with a broad range of coverage options, and it shows how, when we work together, we can find common ground.”

Duggan and Whitmer
Mayor Mike Duggan and Gov. Gretchen Whitmer at FCA announcement, Feb. 26, 2019 | Ken Coleman

Detroit Mayor Mike Duggan released a statement today as well, calling the tentative deal “outstanding” and saying “It will cut rates for Michigan drivers significantly… we congratulate Governor Whitmer and the Republican and Democratic leadership for coming up with an excellent bipartisan deal.”

This is a developing story and will be updated with additional information.

Derek Robertson
Derek Robertson covers local government, education, health care and the social safety net, and LGBTQ issues. Previously, he wrote for Politico Magazine in Washington, and before that covered local politics in Chicago. He is a Genesee County native and graduate of both Wayne State University, where he studied history, and the Medill School of Journalism at Northwestern University. He enjoys film, the Detroit Pistons and his cat. He once competed in the National Spelling Bee, but was eliminated before any potential ESPN appearances.

1 COMMENT

  1. No mention of savings to consumers. Allowing opt out destroys the no fault concept and financially benefits insurance companies. “It is generally accepted that people do not always act in their best interest, particularly when it comes to making decisions about risk assessment and protection. A study released by the Insurance Research Council shows that following repeal of Colorado’s no-fault legislation, more than half of the policyholders who chose to voluntarily purchase personal protection insurance purchased coverage of $5,000 or less—which would not even cover the average cost of one day in a hospital. If the level of required PIP coverage is reduced in Michigan, it is likely that many people will elect to purchase the minimum level of coverage required, leaving them without protection against the risk of catastrophic economic loss. “
    An unnecessarily complicated deal that protects the insurance companies profits and leaves all the risk at the consumers feet. A bad deal.

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