The Michigan Senate is currently considering two new bills aimed at reducing auto insurance costs. Bills 328 and 329, proposed by Senator Jeff Irwin (D-Ann Arbor), are currently under review by the Senate’s Finance, Insurance and Consumer Protection Committee. They aim to provide mandatory discounts for policyholders and eliminate reinstatement fees.
SB 328 requires auto insurance companies to offer at least a 10% discount for new policies and first-time renewals, and this discount must not be achieved by reducing the coverage. Irving stated that this bill aims to enhance insurance affordability while maintaining consumer protection standards. However, the American Property and Casualty Insurance Association (APCIA) opposes the proposal, arguing that it ignores fundamental issues such as medical inflation and litigation costs, and may undermine the progress made since the 2019 no-fault reform.
SB 329 prohibits insurance companies from charging reinstatement fees or increasing premiums for customers who reapply for insurance after the policy lapses. Irving pointed out that this measure helps alleviate the burden on consumers who temporarily lose insurance due to health or financial issues. State data shows that during the period when the penalty for suspension of insurance was suspended from 2020 to 2022, the proportion of uninsured drivers decreased by 6%, indicating that this policy may increase the insurance participation rate and reduce overall premiums.
The insurance industry believes that SB 328 fails to address the cost drivers and may disrupt the market. Joe Roth, the assistant vice president of APCIA, said that the Michigan auto insurance market is still digesting the impact of the 2019 reforms, and mandatory discounts may have the opposite effect. However, legislators believe that the two bills will help low-income and vulnerable groups have easier access to insurance.
The two bills are still under discussion in the committee and have not yet been submitted to the full assembly for voting. If passed, they may become new additions to Michigan’s auto insurance reform, further influencing the state’s insurance market and consumers’ rights and interests.
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