Lansing— Michigan's Republican-led Senate on Tuesday unveiled and quickly approved a sweeping no-fault auto insurance reform plan supporters say could significantly reduce rates that rank among the highest in the nation.
But Democrats blasted the proposal because it would not mandate insurers to reduce rates, and Gov. Gretchen Whitmer threatened to veto the legislation if it reaches her desk in its current form.
The plan would end a long-standing requirement that Michigan auto insurance policies guarantee unlimited lifetime medical coverage for injured motorists. It would also cap reimbursement rates for hospitals and other medical providers.
The legislation would empower Michigan residents “to choose the level of coverage that fits their budget and their needs, instead of having the state dictate to them what level of coverage they are required to have,” said sponsoring Sen. Aric Nesbitt, R-Lawton.
The current system is in a "death spiral," he argued, with higher rates make it increasingly impossible for residents to afford required auto insurance, and fewer insured motorists leading to higher rates.
Republicans rejected Democratic amendments that would have required insurers to cut rates by 50 percent and prohibit them from using non-driving factors like ZIP codes to set rates, a practice critics contend contributes to sky-high rates in cities like Detroit.
The Senate plan "creates more problems than it solves," Whitmer said in a statement, signalling she does not think the proposal adequately protects consumers.
"It preserves a corrupt system where insurance companies are allowed to unfairly discriminate in setting rates, and the only cuts it guarantees are to drivers' coverage," the governor said.
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