Gov. Whitmer, Republicans see path to deal on Michigan auto insurance reform

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

Gov. Gretchen Whitmer said Tuesday she and Republican legislative leaders are no closer to a deal on no-fault auto insurance reform than they were last week, when the House and Senate approved bills allowing drivers to opt out of Michigan’s mandatory unlimited medical benefits.

But Whitmer, a Democrat, said she believes there is a path to compromise — albeit an uncertain one, adding that it remains too early to say what an agreement might look like.

“We’re talking,” she told reporters Tuesday after speaking at an infrastructure summit in Lansing. “I said I’m going to veto the bills that they passed. They’re not sending them to me yet. So the fact that there is a conversation at the staff level proceeding, I think, should give everyone the sense that there’s potential.”

House and Senate legislative leaders have not committed to taking action on no-fault auto insurance reform yet this week as they and their policy staffers work with Whitmer and her administration on a potential compromise, though legislative action on long-sought changes to Michigan’s sky-high auto insurance rates remains possible.

Amber McCann, a spokeswoman for Senate Majority Leader Mike Shirkey, R-Clarklake, on Tuesday described the timeline as fluid.

Whitmer met this week with Shirkey and House Speaker Lee Chatfield, R-Levering, to discuss the no-fault bills. Representatives for both legislative leaders described the talks as productive, though they would not divulge details.

“We’re very close to getting it done,” said Gideon D’Assandro, a spokesman for Chatfield. “It’s an important issue, so he’s glad that they’re continuing to work on it.”

He said it is too soon to say whether House Republicans ultimately will send their bill, which comes far closer to meeting Democratic demands than the measure approved by the Senate, to Whitmer’s desk.

The House and Senate both will hold committee hearings Wednesday related to auto insurance, including a bill from Democratic Sen. Adam Hollier, of Detroit, that would prohibit the use of credit scores in setting drivers’ premiums and redlining practices. While the state’s auto insurance is high, Detroit’s is the nation’s highest.

The Senate adopted a no-fault reform bill a week ago, followed more than a day later by the House in a marathon session that wrapped up overnight Thursday. Both Shirkey and Chatfield have said that lowering car insurance rates by reforming Michigan’s unique requirement that all drivers buy unlimited medical coverage is a top priority this term.

“We are going to move a bill, and nobody should have any doubt about that,” Shirkey told Bridge Tuesday, adding that negotiations will continue to see if they can win over Whitmer on a compromise. “It’s going to be days, not weeks, before we do so.”

Car insurance, however, is not one of Whitmer’s top goals. The first-term governor said Tuesday that she’s putting her energy into fixing the state’s crumbling roads. She did not directly say that she would only consider no-fault reform along with a plan to raise roads revenue, but urged lawmakers to quickly pass a budget that addresses a need for more than $2 billion a year in added revenue for road repairs.

“People want our roads fixed. That is the No. 1 issue, and there (are) crickets at the Capitol right now on that front,” Whitmer told reporters, referring to Republicans. “These guys have got to get off the dime and get moving on actually fixing the damn roads.”

Whether differences over auto insurance reform and road repairs become a stalemate remains uncertain, though both sides are keenly aware of voters’ disgust over political inaction in Lansing.

Both the Senate and House versions of the bill include different tiers of personal injury protection, or PIP, coverage that drivers could choose, including opting out of it altogether if they had other health insurance. The House also added language that requires PIP rate rollbacks for five years, and would prevent auto insurers from using non-driving factors to determine rates once they’re identified by state insurance regulators as part of a study Whitmer ordered last month.

Groups that represent auto insurers and medical providers both say they’re unhappy with provisions in the bill. The Michigan Health & Hospital Association, for one, says it has never embraced a fee schedule that limits what hospitals can charge for care to workers’ compensation rates, as the bills would require. The group also says it opposes allowing drivers to opt out completely from PIP coverage, adding that people should be required to maintain a minimum level of coverage to reduce the risk that people, particularly those with high-deductible health plans, will face surprise high medical bills if they’re badly injured in a crash.

The Insurance Alliance of Michigan, which represents insurers, wants legislators to loosen some of the provisions requiring insurance companies to reduce drivers’ PIP costs and prevent them from using so-called non-driving factors when setting rates, which insurers say help assess risk.

Democrats in the House offered the rate rollback and non-driving factors provisions, though most Democrats opposed the bill on the floor.

Several Democrats in both chambers say the bill language doesn’t guarantee insurers will lower rates after five years, nor does it apply to a driver’s total car insurance cost — adding, for instance, that if insurers are required to reduce PIP premiums, nothing in the bill would keep them from raising rates for another portion of a car insurance policy.

Neither Whitmer nor GOP legislative leaders would offer specific details of the major sticking points between the parties, though Whitmer said neither bill would reduce rates in a way that was enforceable or transparent.

“It would be problematic if politics kept us from moving forward, but I’m serious about the various issues that I care about,” she told reporters. “If there’s something we can do, we will know in short order, I would imagine.”

Hollier, who was one of two Democrats to vote for the Republican Senate bill, said he voted for it anticipating that it would be improved in the House. He said he expects it will be improved again before it goes to Whitmer’s desk.

He said his separate bill related to credit scores and redlining in setting rates, in committee Wednesday, is an opportunity to have another discussion as negotiations continue.

“For the process to work, the bill needed to come out of the Senate the way it did and go through the House the way it did,” Hollier told Bridge. “The bill that she signs into law ultimately will be the best and the most comprehensive auto reform package that we’ve ever gotten.”