Michigan governor and Republicans at impasse on auto insurance reform bills

Gov. Gretchen Whitmer, a Democrat, reiterated a promise to veto auto insurance reforms bills proposed by House and Senate Republicans after signing legislation to reform the state’s civil asset forfeiture law Thursday. Speaker of the House Lee Chatfield (right) said he’s “disappointed” to see opposition from Democrats on policy he says will save voters money. (Bridge photo by Riley Beggin)

May 24, 2019: Bipartisan Michigan auto insurance deal reached between Whitmer, GOP
May 14, 2019: Gov. Whitmer, Republicans see path to deal on Michigan auto insurance reform

LANSING — Democratic Gov. Gretchen Whitmer promised Thursday to veto legislation passed by the Michigan House and Senate this week that would bring big changes to an auto insurance system that has made Michigan’s rates the most expensive in the nation.

The Republican-backed bills, she argued, “serve a corrupt system where insurance companies are allowed to unfairly discriminate in setting rates.” Any bill she would consider must guarantee long-term savings for consumers and prohibit “discrimination in rate setting.”

Republican leaders Sen. Mike Shirkey and Rep. Lee Chatfield counter that they can guarantee the bills they passed would increase consumer choice and save Michigan drivers “a bucket of money,” as Shirkey put it. Republicans promised up to 80 percent savings under the Senate bill, and up to $1,200 under the House bill. 

“We’d be willing to talk to her about any changes she might recommend,” Shirkey told reporters Thursday. “But there aren’t going to be any guarantees of that for heaven sakes, it’s part of the (negotiating) process.”

Gov. Gretchen Whitmer discusses car insurance reform bills

Whitmer’s strong opposition, even following passage of a House bill early Thursday morning that added several elements favored by Democrats, sets up a high-stakes standoff between the new Democratic governor and a Legislature long controlled by Republicans.

If Republicans want Whitmer's signature on a reform bill, they should engage the governor’s office now, before the two chambers merge the bills into one, said Democratic political consultant Adrian Hemond, CEO of Grassroots Midwest.

If the goal is to negotiate with the governor, you don’t just slap it on her desk,” he said.

Republican leaders have pitched auto reform as a top priority this session, and it’s an issue that has been important to Democrats as well. But Whitmer and other Democrats have said reaching a budget deal that provides $2 billion-plus in funding needed to fix the state’s roads and bridges is their top priority. GOP leaders want road fixes as well, but balk at Whitmer’s solution of raising the state’s gas tax by 45 cents per gallon.

In criticizing Republican insurance proposals Thursday, Whitmer spokeswoman Tiffany Brown seemed to hint that reaching a deal on insurance reform might involve finding a solution for road funding.

"The governor has made it very clear that she is only interested in signing a reform bill that is reasonable, fair and provides strong consumer protections and immediate financial relief," Brown said of the auto insurance bills. “In their current form, neither bill passed by the Legislature meets that standard. The governor has also been very clear that passing a budget that fixes the damn roads is her first priority."

House Majority Leader Lee Chatfield

But State Rep. Jason Sheppard, R-Temperance, said the GOP won’t trade auto insurance reform for the gas tax.

“We’re not going to be held hostage on insurance rate relief,” said Sheppard, one of the main architects of the House reform bill.

Although the Senate has passed insurance reform in the past, the House hadn't in the 40 years preceding Thursday morning. It finally happened, Sheppard said, because the dynamics have changed: Some anti-reform GOP members were replaced by pro-reform Republicans and others voted for the reform bills this week after previously opposing them.

Those changes are driven by polling that shows a large majority of the public wants major rate reductions, Sheppard said. He has said it’s the No. 1 topic when he talks for voters in his Monroe County district.

Michigan law requires drivers to purchase unlimited, lifetime medical benefits known as personal injury protection, or PIP, as a part of their car insurance. That’s one of the reasons it’s so expensive — the cost of PIP is about half of most insurance bills, a Bridge analysis found. Michigan’s car insurance rates are 83 percent higher on average than the rest of the country. In Detroit, rates are more than four times the national average.

The Senate plan, first released Tuesday morning and passed out of committee and the full Senate that afternoon, would allow drivers to choose between four tiers of PIP coverage, including eschewing it altogether if they have health insurance that covers car crash injuries. It would also require hospitals charge only the rates used for worker’s compensation claims, rather than charge more to treat car crash injuries.  

Democrats argued that the Senate plan does nothing to address the cost some drivers face — particularly in Detroit and surrounding areas — because insurance companies are allowed to charge more depending on where the driver lives. Other “non-driving factors” Democrats oppose are the use of gender, marital status, occupation and credit scores in determining insurance rates.

Senate Majority Leader Mike Shirkey

Opponents of the Senate bill also said it didn’t guarantee rate reductions and instead put the onus on insurance companies to pass along the savings that cutting PIP would provide.

“There’s a tremendous amount of trust in this chamber of insurance companies” and most drivers “don't have the same brimming cup of trust of insurance companies,” said Sen. Jeff Irwin, D-Ann Arbor, on the Senate floor Tuesday.

The House introduced its own plan Wednesday evening by adding an 82-page amendment to an existing bill and then passing it just after 2 a.m. Thursday. That plan also offers multiple options of PIP coverage and added some changes Chatfield said were requested by Democrats:

  • A requirement that insurers reduce premiums on PIP coverage for five years.

  • A requirement that insurance regulators identify non-driving factors used to determine rates (as Whitmer ordered last month) and then prohibit insurers from using them.

Further, the House plan includes a requirement that insurers offer unlimited PIP coverage (which the Senate plan did not require), but also allows them to offer other tiered levels of coverage or no PIP coverage for those with health insurance covering car crash injuries.

Democrats say the House changes don’t go far enough to guarantee rate cuts after the five-year window or prevent use of non-driving factors, which they say contributes to redlining in places like Detroit, which is both the nation’s poorest big city and the city with the nation’s highest auto rates.

“In order to guarantee savings for people we have to have the full force of the law. And these bills don’t cut it,” Whitmer said.
Chatfield countered that Republicans offered “hallmark things that (Democrats) asked us to put in legislation… There is some confusion because we’ve given them everything that they’ve asked for in this bill.”

Senate Minority Leader Jim Ananich

Democrats also have raised concerns about the speed and opacity of the legislative process, as both bills were passed quickly by Republican majorities, with little time for public testimony on the specific proposals. Republicans counter that state lawmakers have heard hours of testimony on the topic of auto insurance reform generally and felt a vote was appropriate because they knew they had the support for the bills.

The impasse comes in the shadow of a larger battle over the state budget, and some politicos have speculated Whitmer may be using the threat of a veto on auto insurance to gain leverage for her proposal to raise gas taxes 45 cents a gallon.  

Chatfield implied Thursday he’s not willing to condition passage of the auto insurance bills on passing Whitmer’s road plan. “I have said from day one that I’m not going to trade good policy for bad,” he said.

But some Democrats saw this week’s events as an indication of positive change to come.

Senate Minority Leader Jim Ananich said that while he doesn’t support the House proposal as written, he sees Republicans’ willingness to add some Democrat-requested policies as an indicator there’s a path for compromise. He hopes Democratic and Republican legislative leaders will have a final plan they can agree on by the end of the month, he said.

“There’s still an opportunity to go forward,” Ananich said. “We have a framework where Republicans moved towards us.”

Bridge reporter Mike Wilkinson contributed to this report.

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Kevin Grand
Fri, 05/10/2019 - 7:18am

It should be plainly clear that Gov. Whitmer doesn't really know what she wants regarding this and just about every other issue the campaigned on last year.

This is, after all, a politician who did not have any significant legislation introduced by her, signed into law during her tenure in the Michigan Legislature.

The democrats complain about redlining. The recently passed bills addressed that issue along with other issues democrats campaigned on.

Gov. Whitmer balks. Just like Lucy promising to Charlie Brown that she won't pull away the football when he goes to kick it, only to lie and pull it away at the last second.

It should also be plainly obvious that The Second Lost Decade is beginning to take shape quite nicely.

Fri, 05/10/2019 - 10:47am

None of the bill address long term savings . They have a 5 year life then go away . None deliver an immediate savings . PIP is not the most expensive part of insuring a vehicle . Take a look at insurance coverage . It is collision portion that is the most costly unless you choose a high deductible .

Kevin Grand
Sat, 05/11/2019 - 6:45am

While, I totally agree with you on the five year argument, I haven't had any success in finding anything else introduced in the Legislature to complement what has already been passed.

PIP may not be the largest portion, but it certainly grew the fastest, and with no way to ascertain whether or not those costs were even justified.

Given the track record with the Michigan Legislature on this issue, for the moment, any savings that we can get is a good start.

Fri, 05/10/2019 - 1:14pm

'This is, after all, a politician who did not have any significant legislation introduced by her, signed into law during her tenure in the Michigan Legislature.'
You do realize that (through gerrymandering) the Republicans (via gerrymandering) held trifecta control of state government from 1995 to 1996, 1999 to 2002, and again from 2011 to 2017? No point in introducing for the minority party to introduce legislation that will be DOA and never even discussed or signed during that time.
Sorry you missed that but here are the facts. Whether you care to recognize them or not.

Kevin Grand
Sat, 05/11/2019 - 6:26am

Anything prior to 2000 doesn't mean diddly squat in this case since she wasn't even elected to the Michigan legislature before then.

'03 through '10? That should've been plenty of time to put something worthwhile together and have it voted in and signed into law by then Gov. Granholm.

You remember her, right?

She was then democrat.

If you want to argue facts here, Rick, I'm game.

Bill H
Mon, 05/13/2019 - 12:18pm


From 2001 to 2006, the House was controlled by the Republicans. from 1992 to today, the Senate was controlled by Republicans. That is simple Ballotpedia stats. Do you really think any Dem bill would have made it to Granholm with Republican control of the both Legislatures?

Bob Potocki
Fri, 05/10/2019 - 8:46am

How can you regulate industries like Insurance and Health Care and not control prices? I mean its basic economics. These industries will raise prices as high as possible with no relation to cost of service. Its just simple math.
Somebody needs to look at the relationship between price and cost.
If you are going to force us to h

Cliff Krimmel
Fri, 05/10/2019 - 10:30am

I agree to some extent. However I'd point out the the consumer has more direct affect on insurance prices than the health industry. When insurance pays for our procedures there the patient isn't directly engaged in how much it costs. If and insurance company raises my rates I can look at rates of other companies. The big healthcare Companies Like Henry Ford etc. could pretty much charge what they want. Why should the same procedure cost several times more because a patient is in the long term Catastrophic Fund?

Fri, 05/10/2019 - 9:12am

Imagine that...politicians acting like politicians...so much for campaign promises ! The gasoline prices have already risen well over the 45 cent proposed increase and nothing but the cost to the consumer has changed.

Chuck Fellows
Fri, 05/10/2019 - 9:37am

Any no fault reform bill must do the following: preserve catastrophic care,; set fee schedules for medical, professional service, pharmaceutical, medical devices and attendant care; change "file in use" to "prior review"; set rates based upon driving record only; make insurers subject to anti-trust and FOIA. These lawful actions will bring additional auto insurers into the Michigan Market creating greater competition which will drive lower rates. These actions address the real factors that are the root cause of outrageous premiums. That's what the evidence presented to our legislators over the last decade proves. (see www.crcmich.org) Instead republicans choose to ignore the facts. Why they do this is up to you to decide.

Marco Menezes
Fri, 05/10/2019 - 10:15am

Lee Chatfield: “I have said from day one that I’m not going to trade good policy for bad." "Good" vs "bad" policy being a matter of opinon, what Mr. Chatfield means to say is that he is unwilling to compromise.

Fri, 05/10/2019 - 10:42am

They need to explain very clearly how the reduction in PIP will save some people 80% . PIP is less than a quarter of my insurance . Collision coverage is the biggest portion .

George Thompson
Fri, 05/10/2019 - 11:16am

Your article suggested that a Bridge analysis showed that about half of the cost of car insurance is PIP. Last week, you quoted figures from AAA and others suggesting PIP is 88% or more of the cost of premiums. How about some clarification?

John S.
Fri, 05/10/2019 - 11:46am

"Fair and reasonable" are words open to different understandings. I'd think that the professional actuaries at insurance companies have the education and skills to identify factors correlated with risk. A multiple regression equation that is properly specified would do the trick. Is it absurd to think that people who don't pay their bills on time and have a lousy credit rating are also somewhat irresponsible in other areas of life, like driving? Insurance companies face the problem of adverse selection. They will simply charge higher premiums for all drivers (safe drivers included) if the governor limits the information they can use for experience rating. Do those who vote Democratic have lower credit scores and are they worse drivers? Perhaps the governor wants Republican voters to subsidize auto insurance for Democratic voters. That would make political sense.

Fri, 05/10/2019 - 2:18pm

Did your rate go up this year so if this passed in current form you go back to what you were paying ! How is that rate reduction they must be lining your pocket. Since this is about the people you put together a plan and we the people Vote on it.

Fri, 05/10/2019 - 2:18pm

Did your rate go up this year so if this passed in current form you go back to what you were paying ! How is that rate reduction they must be lining your pocket. Since this is about the people you put together a plan and we the people Vote on it.