A recently introduced legislative proposal in Michigan has drawn significant attention and criticism from the American Property Casualty Insurance Association (APCIA), which cautions that the bill could severely destabilize the state’s auto insurance market and ultimately lead to increased costs for consumers.
Senator Jeff Irwin, a Democrat representing Ann Arbor, introduced Senate Bill 328 (SB 328) on May 29. This bill mandates that any auto insurance policy issued or renewed within Michigan must have its total premium reduced by at least 10%, without allowing insurers to cut back on the benefits provided. A companion bill, Senate Bill 329 (SB 329), would prohibit insurance companies from charging reinstatement fees or higher premiums resulting from a lapse in coverage.
Joe Roth, APCIA’s Assistant Vice President for State Government Relations, has voiced strong opposition to SB 328, arguing that it would negate the positive advancements Michigan’s auto insurance market has achieved following reforms enacted in 2019 aimed at improving the state’s no-fault insurance system.
According to Roth, “Recent data from the National Association of Insurance Commissioners (NAIC) indicates that Michigan’s insurance market has been steadily improving. Insurers currently face an average of $1.04 in claims and expenses for every dollar of premium collected, reflecting a much healthier balance than in the past. However, enacting SB 328 would reverse these gains abruptly and place Michigan’s market back on an unstable trajectory similar to what California has experienced.”
Senator Irwin defends the bills as necessary measures to address what he and his fellow supporters view as unjustifiably high auto insurance rates burdening Michigan drivers. He asserts that legislative intervention is crucial to curbing insurer profits and providing relief to consumers paying elevated premiums.
“It is time for the Legislature to step up and confront the issue of excessively high car insurance costs in Michigan,” Irwin stated. SB 328 currently enjoys the backing of eight other Democratic senators and one Republican senator. The bill has been referred to the Committee on Finance, Insurance, and Consumer Protection but has not yet been scheduled for a hearing.
The APCIA emphasizes that these legislative efforts risk undoing the important progress made since the 2019 reforms. The association references a recent study conducted by AM Best, which found that between 2019 and 2022, the average cost of personal auto insurance in Michigan declined by 12%, while the national average rose by 5% over the same period.
“The legislation, if passed, would increase insurance costs for Michigan drivers and disproportionately harm working families,” Roth warned. “The 2019 reforms successfully reduced claims costs and incentivized insurers to remain active in the Michigan market, thereby offering consumers a wider array of options. SB 328 threatens to destabilize this delicate balance and inflict harm on drivers throughout the state.”
As debate continues, stakeholders and consumers alike are closely watching how these bills will shape the future of auto insurance affordability and market stability in Michigan.