A new survey is showing the 2019 auto insurance reform package approved by the Michigan Legislature hasn’t led to the big savings that lawmakers hoped for.
The Coalition Protecting Auto No-Fault says the poll conducted by the Glengariff Group for the Detroit Regional Chamber has found 60% of Michigan residents are spending more on insurance this year.
Consumer Federation of America Director of Insurance Doug Heller tells us lawmakers had the right idea when they set out to reduce costs, but the package they passed is filled with loopholes. A big one allows a customer’s rate to be based on their credit score.
“It can be about as much of a point of pain for consumers as somebody who has a drunk driving conviction on their record, if you can believe that,” Heller said. “In other words, auto insurance companies care more about your credit history than your driving record.”
The 2019 law banned the use of credit scores, but it still allows the use of the same data that go into credit scores to be used to set rates. As for changing the requirement that everyone carry unlimited catastrophic injury coverage, that hasn’t really helped.
“On average, people who have dropped down their coverage to those really low auto no fault coverages instead of the unlimited actually pay more on average.”
Heller says that’s because the drivers who choose to drop the unlimited coverage tend to have lower incomes and lower credit ratings. He notes insurers also use the location of a customer to set their rates, although the 2019 law banned using zip code.
Heller says lawmakers should go back to the drawing board.
