Whitmer orders examination of Michigan auto insurance rates

Gov. Gretchen Whitmer wants the state’s Department of Insurance and Financial Services (DIFS) to look into Michigan’s sky-high auto insurance rates.

In a news release on Wednesday, the Democratic governor directed the agency to examine how insurance providers in Michigan use non-driving factors like ZIP codes, credit scores and educational attainment as a way of setting rates.

As part of Whitmer’s directive, DIFS will also examine the use of coordinated policies, which can allow for auto insurance to be bundled with health insurance and lower the risk for auto insurers. Whitmer wants to know whether that practice is actually leading to lower premiums for ratepayers.

A March study by the University of Michigan determined that the state’s auto insurance rates lead to a “cycle of poverty” and are almost double the national average.

“Michiganders continue to pay the highest auto insurance rates in the nation and are feeling the pressure of those rates,” said Whitmer. “I’m committed to using the power of my office to increase transparency, strengthen consumer protections, and better determine how we can provide relief to motorists.”

DIFS will begin its examination immediately and produce a report as soon as possible, according to the governor’s office.

“Drivers deserve to understand how auto policies are priced so that they can make informed decisions,” Anita Fox, director of DIFS, said in a statement. “Governor Whitmer’s order to examine these issues will provide greater transparency, identify possible avenues for administrative action, and shed further light on the need for legislative reform.”

The directive by Whitmer to put auto insurance under a microscope was hailed by several groups.

John Cornack, president of the Coalition Protecting Auto No-Fault (CPAN), called it an “excellent first step toward lowering auto insurance premiums for consumers in our state while protecting essential care for accident victims.

“Setting rates based on non-driving factors like gender, job title, home ownership, credit score, and ZIP code is pure discrimination, and we need to hold insurance companies accountable for these unfair practices,” he said.

Lonnie Scott, executive director of Progress Michigan, agreed.

“Insurance companies have been able to discriminate and redline communities and force high prices on people,” he said. “It’s time we got a full sense of the problem so the state can take appropriate action to hold the insurance industry accountable and lower the damn insurance rates.”

Both chambers of the Michigan Legislature have identified reforming the state’s “no-fault” auto insurance law as key priorities this term. Part of that push includes a special committee to examine the matter.

In late March Whitmer ordered an audit of the Michigan Catastrophic Claims Association (MCCA), a Livonia nonprofit that collects an annual from every driver to cover long-term Personal Injury Protection (PIP) claims. The organization had just announced a fee increase when Whitmer announced the audit.

The issue of Michigan’s surging auto insurance rates has also gotten attention on Capitol Hill, as the Advance reported earlier on Wednesday. U.S. Rep. Rashida Tlaib (D-Detroit) used her position on the U.S. House Financial Services Subcommittee on Oversight & Investigations to grill witnesses on Michigan’s insurance rates.

Both Tlaib and Whitmer want to know how non-driving factors are used in setting rates.

“Auto insurance rates must be fair and reasonable,” Whitmer said on Wednesday. “We must take a hard look at how auto insurers are setting rates to ensure these practices are lawful and to determine how we can achieve complete and lasting reform for Michiganders.”