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Michigan Senate To Approve Plan To Cut Car Insurance Rates

Cars on freeway

Michigan's Senate was poised to pass legislation Tuesday aimed at cutting the country's highest average auto insurance premiums by eliminating a requirement that drivers buy unlimited medical benefits to cover crash injuries.

No other U.S. state has such a mandate. Motorists could instead choose among lower levels of personal injury protection, including no coverage if they have other qualifying health insurance.

The Republican-backed measures, which are expected to win approval in a committee and from the full Senate, face an uncertain future following legislative stalemates in recent years.

"The current system's really failing Michigan drivers and families," said Republican Sen. Aric Nesbitt of Lawton, a bill sponsor who pointed to a recent study showing that the state's estimated annual premium of $2,610 is almost double the national average. "Thousands of Michiganders have been priced out of driving, and thousands more risk driving without insurance."

Measures also would curtail how car insurers must pay much more than health insurers do for the same medical services — another factor driving overall claim costs — crack down on fraud and make other changes related to no-fault lawsuits.

The Republican-led House is working to craft legislation, too, while Democratic Gov. Gretchen Whitmer has ordered her administration to study how insurers use non-driving factors such as education levels and credit scores to set premiums. The Republican-led House is working to craft legislation t

The Senate plan is sure to face Democratic criticism because it would not include a mandated rate rollback. Nesbitt said a government-ordered reduction is not needed because insurers' costs would be lowered under the proposed law and they would have to justify their new rates to the state Department of Insurance and Financial Services.

It would be "foolish," he said, to force an "arbitrary" rate reduction without knowing how people would select their level of PIP benefits.

But a group of health providers, plaintiffs' lawyers and patient advocates opposed the legislation, calling it a "giveaway" to the insurance industry.

"The auto insurance industry in Michigan is weakly regulated compared to other states. Until that changes, drivers will continue to pay exorbitant rates with no relief in sight," said John Cornack, president of the Coalition Protecting Auto No-Fault. "Instead of rushing to eliminate essential care for critically injured accident victims, Michigan legislators should be looking at increasing consumer protections and holding the auto insurance industry accountable for its discriminatory practices."

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