Detroit isn’t alone. Car insurance sky-high throughout Michigan, data show

May 24, 2019: Bipartisan Michigan auto insurance deal reached between Whitmer, GOP

Think about this: If Michigan Gov. Gretchen Whitmer and the Legislature make radical changes to car insurance, every motorist in the state could save hundreds if not thousands of dollars a year.

Yes, thousands.

Michigan not only has the highest average rates for car insurance, $2,693, but premiums in all 900-plus ZIP Codes in the state are considerably higher than the national average of $1,470 per year, according to data from The Zebra, a for-profit search engine, reviewed by Bridge Magazine.

Michigan’s unique blend of no-fault coverage and unlimited benefits –  no state offers both – has made state premiums tops in the nation for at least five years.

That’s spurred calls for auto insurance reform that intensified this week when Whitmer, a Democrat, called for an audit of the Michigan Catastrophic Claims Association, a private-public group that covers medical care for victims after costs exceed $550,000. The group announced a plan to raise the annual per-vehicle annual fee by $28 to $220 to cover rising costs.

“I've not spoken to a group that doesn’t want to see change,” said state Rep. Jason Wentworth, R-Clare, who is heading the committee charged with reform. “They’re no longer requesting we do something, they’re demanding it.”

The data from The Zebra, which was analyzed by Bridge, contradict oft-repeated claims that high insurance is simply a Detroit or southeast Michigan problem.

Make no mistake: Detroit’s rates are astronomical, averaging $5,464 per year, the highest in the nation.

But even the least expensive ZIP Code, 48649 in Midland, still pays an average of $2,112 per year.

That’s $642 and 43 percent higher than the national average. In the 48205 ZIP in northeast Detroit, the average bill is $6,282 –  more than four times higher than the national average. Detroit Mayor Mike Duggan has long pushed for reform and is challenging the current system in federal court.

‘It’s a big deal’

In western Michigan, Holland resident Chris Streling pays more than $7,000 a year to insure five vehicles for himself, his wife and two of their children, ages 19 and 23.

“It’s a big deal. When you spend almost $600 a month on insurance, it does take away from the economy in other ways. That money could be used somewhere else,” he said.

Streling lives in the 49423 ZIP Code, which according to Zebra has an average bill of $2,227, well below Michigan’s average but well above the national average.

He’s a salesman and former financial planner who says that, while his family can afford the payments, they’d be “crippling” for many other families.

That’s why GOP legislators have made auto insurance reform a priority. Senate Republicans launched a website this week asking residents what they’d do with the money if premium costs were slashed.

Whitmer and fellow Democrats are upset that insurers use non-driving factors like credit score and geography to set rates. They consider that redlining and have pushed bills to end the practice. 

Whitmer has said she wants to tackle reform. She has not offered specifics but she supports funding for an anti-fraud unit.

State Rep. Jason Sheppard, R-Temperance, said his annual bill is over $4,200 for the two vehicles he and his wife drive. He said he asked his insurance agent what his bill would be if he lived at his sister’s house in Ohio, just a few miles south of his Monroe County home: About $1,300 a year.

“So the question becomes, to my eyes, what is working there (Ohio) that makes it not a problem? I don’t hear the citizens of Ohio wanting Michigan’s insurance,” Sheppard said.

“If they’re doing it better and doing it cheaply why aren’t we going to that?”

Sheppard lives in the 48182 ZIP, where the average rate is $2,669, just a bit below the Michigan average but nearly $1,200 above the national average.

$20 billion in assets

Whitmer’s call for an audit of the catastrophic claims group highlights ongoing frustration about the agency, which is not subject to the state’s Freedom of Information Act.

The group’s  most recent annual financial report shows it had assets of nearly $20.6 billion last year.

But the 15 percent increase in the MCCA fee is not the driving force behind the state’s high rates. Instead it’s the unique-to-Michigan unlimited coverage for health care for injuries sustained in an accident.

Defenders of the state’s system have long touted those lifetime benefits as reasons to retain them: If you are critically injured, your recovery is covered in full. It is those benefits that have pushed the state’s rates so high. Far more than collision or theft costs, the amount set aside to cover personal injury protection (PIP) is half of insurance bills, Bridge analysis has found.

For AAA customers, for instance, PIP accounts for nearly 90 percent of base premiums –  no matter whether drivers live in Detroit or Kalkaska, according to company filings with the state.

One of the biggest proponents of the existing system has been Oakland County Executive L. Brooks Patterson, who was seriously injured in a 2012 car accident (but whose care is covered by worker’s compensation).

In 2013, Patterson said the extra cost was worth the added care. He put the extra amount at $22 over the national average: “In exchange for that slight nick when you buy your insurance, you get in return unlimited coverage."

In reality, the rates are far higher.

Average premiums of nearly $2,700 for a 30-year-old single man driving a 2014 Honda Accord, according to The Zebra, are 83 percent higher than the national average and well above Ohio ($1,032), Wisconsin ($1,070) and Indiana ($1,150).

Sheppard is calling for complete reform and eliminating no-fault, a practice adopted by Michigan in 1979 in which insurance companies of drivers involved in collisions cover accident costs regardless of which driver is at fault.

Wentworth, who was tapped to lead the House Select Committee on Reducing Car Insurance Rates, said he intends to bring all groups together –  health care providers, insurers, attorneys, citizens – to find solutions.

He said he’s aware lobbyists are poised to attack any proposed bill. But Wentworth said he hopes his committee can work to find solutions before crafting a piece of legislation. Helping push the effort forward, he said, is a recognition that, Detroit aside, rates are high everywhere.

“People are recognizing Michigan is No. 1 in the nation, and it’s deemed unaffordable,” he said.