Has Michigan’s Car Insurance Reform Really Saved Us Money? A look at the facts

Years ago, Wendy had a TV commercial. A wonderfully ironic grandmother named Clara Peller would exclaim in full force, “Where’s the beef?” Looking back at Senate Bill 1 in 2019, we’re left to ask something like that.

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To steal a replica from Governor Whitmer, where’s the damn beef? When she signed the guilt-free reform bill on a sunny May afternoon on Makinak Island, a smiling crowd of Democrats and Republicans greeted them proudly. The change without guilt has been elusive for more than two generations. In this “reform,” they announced, we Michigan drivers will achieve huge cost savings. They made us believe that our highest car insurance premiums in the country are a thing of the past.


Here is the reality. Zebra.com, considered a car insurance body today, tells us in its 2022 ranking for U.S. car insurance: Michigan noted that the following average annual rates dropped from $ 3096 in 2019 to $ 2535 in 2020, 18% decline. But rates rose four percent in 2021 from $ 2535 to $ 2639.

So at best, we saw marginal savings.

Digging into the report, Michigan retains its dubious award for the highest percentages everywhere. On an individual basis, Zebra reports Michigan with the highest individual car insurance rates in the country and Detroit, the city with the highest car insurance rates in the country. Once again we ask “where is the beef?”

And what happened?

We signed up with Amanda Nothaft, Ph.D. She does much of the idea for poverty solutions at the University of Michigan. The legislature relies on Poverty Solution data to try to work out this reform without guilt. Dr Nottaft told Local 4 that “the law is a really great first attempt at this”, but added that “there is still work to be done”. We will discuss this part in a moment.


Why we did not see a drop in interest rates as promised is a three-point problem. Dr. Nothaft says three things need to change in order for our tariffs to fall to the territory of “there’s beef.”

1. The bill does not eliminate lifelong, long-term medical benefits under so-called PIP or injury protection. Instead, most Michigan residents chose to keep it. This set the stage for how low rates can fall. Nothaft says of this development: “A road accident of this magnitude is a very low probability event, but people want to protect themselves and are used to having this coverage.” “I think there are people who are just waiting to see how all this will develop, how the reforms are going, before choosing lower coverage. To get a window on how much coverage we buy, New Jersey is the next closest state to PIP and its upper limit is $ 250,000 per coverage.

2. Senate Bill 1 eliminates the use of non-driving factors, such as zip codes and credit scores. Great idea. The reality, however, is that insurance companies have developed so-called “territories” and “insurance results”. They maintain high prices for many buyers. Nothaft believes that “These territories may be, probably reflect the affected postal codes, because the law does not dictate how the territories are defined. An insurance rating is simply a credit rating with a different weighting.


3. Senate Bill 1 limits medical spending. This is done due to misuse of medical invoicing. The system is rife with inflated medical costs. The bill uses Medicare as a guide to pay benefits. This had severe unintended consequences. With less money coming into the system, many health care providers serving victims of severe accidents in need of long-term care find themselves scraping to cope or even shut down. With this, these patients, perhaps the most famous being former Detroit Red Wing defender Vladimir Konstantinov, lose the daily care on which they have depended for years. There is a pending lawsuit against this corner of the law. Nothaft believes this is the biggest shortcoming of Senate Bill 1: “The law needs to be rethought about the cost of long-term care and to provide providers with some relief or protection when they feel what they are being reimbursed for.” with the care they provide. “


Now, of course, insurance companies are not always the bad person here. No fault insurance in itself is extremely expensive as a system. People still steal cars and trucks wholesale in Michigan and certainly in Detroit. This increases costs.

Many of them still drive without insurance, which also increases costs. Here, too, medical providers are not always bad. The development of the Gordian knot, created by the Insurance Act of 1970, is difficult. He came with all the right intentions, but progressed to all the wrong results. The reform has left many of those most in need in trouble. These long-term patients desperately need help.

While House Speaker Jason Wentworth said he did not expect new or major legislation this year to address the issue, it did not stop representatives on both sides of the aisle from working on solutions. Where this will go in the coming days, everyone can guess. But we would all like to see a better solution, given that petrol prices and inflation have long eaten up all and all of those meager 18% that the legislature and the governor so proudly promised three years ago.

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