Quicken, Lear and DTE lobbying for auto insurance reform – Crain’s Detroit Business

Posted: Wednesday, November 01, 2017

Simoncini said Michigan’s highest-in-the-nation auto insurance rates have become a cost-of-living issue Lear Corp. has to navigate with prospective employees, especially those who want to live in Detroit and work at the company’s downtown innovation center in Capitol Park.

“It’s a huge hurdle for getting people to become residents of Detroit,” Simoncini said. “They just register (their car) someplace else. It’s a mortgage payment.”

Michigan’s statewide average auto insurance premium of $2,394 was 82 percent higher than the national average and 25 percent higher than the next closest state — Louisiana — in Insure.com’s recent state-by-state comparison of rates. 

In Detroit, auto insurance premiums are often double and sometimes triple what the average driver pays elsewhere in Michigan.

“We’ve got something that sticks out like a sore thumb when we’re trying to bring jobs to Detroit,” said Jared Fleisher, vice president of government relations at Quicken Loans, which is urging passage of House Bill 5013. “The status quo is unacceptable.”

The full-court press from Lear, Quicken and other businesses comes as the Michigan House could vote this week on legislation backed by Mayor Mike Duggan that would end the state’s mandatory unlimited medical coverage for auto insurance coverage. 

House Bill 5013 would create a three-tier system designed to lower premiums and impose significant cost-containment measures on medical and long-term care costs.

Business leaders in favor of the legislation are arguing that the escalating medical costs and litigation are not sustainable for motorists and have become a deterrent to economic development and out-of-state talent attraction.

“It has all kinds of implications from people not buying cars to people using suburban addresses to avoid the high rates to people driving without insurance, which impacts all of us,” said Dave Meador, vice chairman and chief administrative officer of DTE Energy Co.

Meador, who also has been calling legislators, said DTE is not advocating specifically for House Bill 5013. 

But the Detroit-based energy company wants lawmakers to take action to lower auto insurance costs in the state, Meador said.

“It’s not a healthy situation,” he said. “It really needs to be addressed.”

Duggan and his Republican legislative partners have proposed allowing drivers opt out of unlimited coverage and purchase $500,000 or $250,000 of personal injury protection in exchange for mandatory rollbacks in the personal injury protection portion of their premiums.

“Letting folks choose the amount of coverage is the only way to get a significant, guaranteed rate reduction,” said Fleisher, the Quicken Loans lobbyist. “And that’s the ballgame here.” 

Quicken Loans Chairman Dan Gilbert has been a vocal critic of the role personal injury attorneys have played in driving up the cost of auto insurance through litigation that has escalated in recent years. His online mortgage company and other holdings have 4,000 employees who live in Detroit out of 17,000 who work in the city.

The Michigan Chamber of Commerce has been actively lobbying for weeks in favor of House Bill 5013.

“When you mandate that everyone purchase unlimited medical benefits and then as a practical matter there are few or no restraints on those benefits, it’s not surprising we have the most expensive auto insurance rates in the country,” said Rich Studley, president and CEO of the state chamber group. “Further inaction really threatens the future of the no-fault system.”

The Michigan Manufacturing Association is considering joining the fray and was surveying its members Tuesday about whether to take an official position, said Chuck Hadden, president and CEO of the trade group.

“It was off our radar until a couple of our members called and said you should look into this,” Hadden said. “But I’d hate to jump off a cliff without our members behind me.”

Not all business groups are lining up against the medical providers and trial attorneys.

The Detroit Regional Chamber is taking no position on the legislation, in part, because of divisions in its membership ranks, which includes hospitals and law firms that work in the auto insurance industry.

“We’ve got members with differing opinions about what the solutions are,” said Sandy Baruah, president and CEO of the Detroit Regional Chamber.

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