APCIA claims Michigan bill to cut insurance premiums would ‘disrupt’ auto insurance market
The American Property Casualty Insurance Association (APCIA) is claiming a Michigan bill to cut auto insurance premiums by 10% would “disrupt” the auto insurance market in the state.
Senate Bill 328, filed by Sen. Jeff Irwin (D-District 15), would also ban insurers from reducing coverage for policyholders because of the price reduction.
The bill was filed and referred to the Committee on Finance, Insurance and Consumer Protection on May 29. It has not been picked up for discussion.
“SB 328 is detached from the reality of the current market in Michigan,” said Joe Roth, APCIA assistant vice president for state government relations, in a press release. “While Michigan is feeling inflation’s impact on auto insurance, the market is still improving since the 2019 no-fault reforms.”
Michigan passed no-fault auto insurance legislation in 2019 that allowed drivers to reduce their premiums for the medical portion of their personal injury protection by relying on their own health insurance for their medical bills, according to the Michigan Department of Insurance and Financial Services website.
Roth says that insurers have paid $1.14 in claims for every dollar they’ve received in premiums for the past 10 years in the state. However, he said the number is trending down because of the reform, with insurers spending $1.04 for every dollar they’ve received in premiums in 2023.
“Ultimately, SB 328 will destabilize Michigan’s auto insurance market, upset the consumer savings generated by the 2019 reforms and potentially deprive Michigan consumers of the insurance they need,” Roth said. “The most recent NAIC [National Association of Insurance Commissioners] 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 rollback would abruptly send the positive trend into reverse. Now is not the time to put Michigan on the same path towards a disrupted insurance market like California.”
The release states that SB 328 doesn’t address the “underlying inflationary and legal system abuse” that costs drivers. It notes it won’t lower the cost of cars, car parts, and labor, all of which are paid for in auto insurance premiums.
APCIA adds that a 2024 study by the Insurance Research Council found the reforms have “markedly improved” coverage affordability for Michigan drivers and that prior to 2019, Michigan drivers spent 2.4% of their income on car insurance, making the state the third-least affordable state for auto coverage. It also points to an AM Best report that says from 2019 to 2022, the average cost of personal auto insurance in Michigan went down 12%, while the national average increased 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. Legislators should vote No on SB 328.”
At the time of introducing the bill, Irwin said in a press release that it would provide direct cost relief for drivers.
“Car insurance rates in Michigan are too high,” Irwin said in the release. “Insurance company profits are soaring, along with our costs as consumers. It’s time for the Legislature to stand up to these unjustifiably high car insurance rates. People shouldn’t be penalized for having a lapse in coverage because they are sick or otherwise unable to drive. For people coming back into the market for car insurance, we need to make it easier, not harder, for them to pay into the system.”
Nationally, car insurance costs increased by 24% in 2023 and 15% in 2024, according to a recent report by Insurify. It states an additional 5% increase is expected this year.
The average annual cost of car insurance in 2024 was $2,313, the report says. It projects the annual 2025 cost to reach $2,435.
Insurify lists Michigan in the second-highest tier for insurance rates, with the state costing, on average, $105 per month for full coverage and $59 for liability.
In May, Sen. Josh Hawley (R-Missouri) grilled Allstate and State Farm executives during a subcommittee hearing about evidence that he said made it appear the companies were “running a racket” in their response to natural disasters. In contrast, their executives were paid in the millions.
“I have to notice that your profits have never been better, they’re really quite extraordinary,” Hawley said. “Fiscal year ’24, Allstate had $64 billion in revenue; that’s 12% above the previous year. You made $4.6 billion in profits, and your CEO, Tom Wilson, last year was paid $26 million, while Miss Migal can’t get her claim paid out, but Tom Wilson, whoever the heck he is, gets $26 million.”
The top five paid property and casualty insurance executives made more than $114 million in 2024, according to a list compiled by Business Insurance.
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