A Michigan lawmaker has proposed legislation that would mandate auto insurance premium reductions of at least 10% on any new or renewed policy, a bill that the American Property Casualty Insurance Association (APCIA) says would destabilize the state’s market.
SB 328, introduced by Senator Jeff Irwin on May 29, would require any insurer that issues or renews an auto insurance policy to reduce the total premium by 10% across the board without reducing benefits. An accompanying bill, SB 329, would prohibit insurance companies from charging a reinstatement fee or higher rate as a result of a lapse in coverage.
Joe Roth, APCIA assistant vice president for state government relations, said SB 328 would undo progress the Michigan insurance market has made since 2019 when the state put no-fault reforms into place.
“The most recent NAIC data shows that the market is improving in Michigan, although insurers are still averaging $1.04 in claims and expenses for every dollar of premium, a roll back would abruptly send the positive trend in to reverse,” said Roth. “Now is not the time to put Michigan on the same path towards a disrupted insurance market like California.”
Irwin, a Democrat from Ann Arbor, said the bills are a way to reign in insurer profits as consumers pay higher prices for auto insurance coverage.
“It’s time for the Legislature to stand up to these unjustifiably high car insurance rates,” Irwin said.
SB 328 is sponsored by eight other Democrats and one Republican in the Senate. The bill was referred to the Committee On Finance, Insurance, And Consumer Protection and has yet to receiving a hearing.
The APCIA warned that the bill would undo progress the state has made at bringing down the cost of auto insurance. The trade association pointed to a recent study by AM Best that found from 2019-2022, the average of personal auto insurance in Michigan went down 12%, while the national average increased by 5%.
“The bill will raise costs for Michigan drivers and hurt working families,” said Roth. “The 2019 reforms helped Michiganders by lowering claims costs and bringing insurers back into the market, providing consumers with more choices. SB 328 will destabilize the market and harm drivers.”
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