Report finds Michigan auto insurance coverage charges stay excessive regardless of reform regulation


Continue reading: Michigan’s landmark auto insurance reform law enters into force

According to the new report, the state’s average auto insurance rate fell from $ 3,106 in 2019 to $ 2,535 last year. During the reporting period, Detroit auto awards fell from $ 6,314 to $ 5,146, the same rate of decline (18%).

However, average tariffs in the city still accounted for 18% of median residents’ income, well above the 2% threshold the US Department of Transportation set for auto insurance to be affordable.

The 2019 law also prohibits insurance companies from calculating premiums based on zip codes and other non-driving factors such as race, gender, marital status, and creditworthiness. Even so, the analysts found that insurance rates were still “strongly correlated with race, rather than geography”.

According to the report, the average premiums for the 37 Michigan zip codes where the majority of residents are black were $ 5,500 before the law went into effect. The amount was well above the national average of $ 3,106.

Continue reading: Bill could prevent Michigan auto insurers from using non-driving factors

“The 2019 Reform Act was a first step, but lawmakers shouldn’t be happy,” said Amanda Nothaft, senior data and evaluation manager at Poverty Solutions and co-author of the report. “More needs to be done to eliminate discriminatory tariff-setting practices and further reduce premiums.”

“We also need to consider the impact on people catastrophically injured in car accidents and ensure that long-term care healthcare professionals are adequately reimbursed,” she added.

The Reform Act also removed the mandatory unlimited personal injury protection (PIP) and enforced fee limits for medical care related to insurable accidents.

According to the analysts, the method of capping medical fees may be unnecessarily strict and inconsistent with national counterparts, creating a crisis in access to care for victims of catastrophic accidents that occurred before the reform.

The authors also made recommendations to further reduce premiums and address the unintended consequences of the reform, which resulted in some accident victims losing access to medical care.

“Although unlimited personal injury protection is no longer mandatory, Michigan is still an outlier in the amount of PIP drivers have to buy,” the analysts wrote. “Offering more PIP coverage options would help lower tariffs overall.”

To address the racial disparities in car insurance rates, the researchers suggested that the factors insurers use to set premiums be “more regulated” by laying down mandatory driving-related factors that are weighted in the calculation.

The 2019 reform banned the use of certain non-driving factors, but insurance companies can still use proxies for those factors – like ‘territories’ instead of zip codes and insurance scores that include a credit score component – that do the redlining by reinforcing insurance, “the researcher noted.

Continue reading: Uninsured drivers in Michigan were asked to use the amnesty for auto insurance

The analysts also urged policymakers to reconsider reimbursement rates for medical procedures that are not on Medicare’s fee schedule.

“Curbing medical costs for car accident victims is key to lowering car insurance costs, but the drastic cut in reimbursement rates for certain services as part of the 2019 reform has put some health care providers out of business and put access to long-term care in some disasters at risk.” wrote the researchers.

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