The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Michigan Politicians Pass Fake Auto Insurance “Reform”

Jun 10, 2019

Michigan Governor Gretchen Whitmer, a Democrat, came to an agreement with Republican state legislators and signed a new auto insurance “reform” law. Politicians from both parties trumpeted it as “historic,” with fanfare about all the benefits it will bring.

It certainly is true that most of the state’s residents have been clamoring for relief from auto insurance rates. The state currently has the highest rates in the country. State law allows auto insurers to use non-driving related factors when setting rates, like education level, credit scores and zip code.

That’s resulted in people in the poorest areas, in cities like Detroit and Flint, paying the highest rates. Detroiters pay an average of $5,414 per year, twice as much as the state as a whole and four times the national average.

The law that passed will lessen coverage for drivers. It encourages drivers to purchase lower Personal Injury Protection (PIP) levels, from no coverage to $500,000. This is potentially a death threat for Michigan drivers left with spinal cord or brain injuries, of which there currently are at least 16,000. Those with lower PIP levels will have to depend on whatever coverage their own medical insurance covers, and many will be pushed into Medicaid, which covers practically none of the specialized care like physical therapy that severely injured patients require. The politicians claim the law lowers rates for PIP, but it does so only slightly and only for eight years.

The law supposedly bans the use of non-driving factors in setting rates, but this is smoke and mirrors. While it bans the use of zip code and credit scores to set rates, it still allows insurers to use “territories,” including areas like census tracts, which are smaller than zip codes, to set rates, and to use individual driver’s credit reports to look for previous accident claims. In other words, expect insurers to continue to redline and discriminate against the most vulnerable to maintain high rates!

The law reduces payments to medical providers, which is likely to force smaller traumatic brain injury providers out of business and make it difficult for accident victims to get the care they need. Health insurers will likely increase premiums to cover whatever auto insurance will no longer cover.

Meanwhile, profit-takers will continue to feed at the trough at every level of the game. Both auto insurance and health insurance companies will take their cuts, as will the bigger health care providers and the financial institutions. The new law may allow the auto insurers to gobble up the 20 billion dollars the Michigan Catastrophic Claims Association collected over the years to cover the severely injured, according to Mitch Albom of the Detroit Free Press.

This is the kind of “reform” we can expect if we leave it in the hands of the politicians of the bosses’ two parties, the Republicans and the Democrats. Stopping these kinds of insurance company rip-offs requires the working class to take matters into our own hands.