Michigan Lawmakers Try to Address High Insurance Costs Again

It looks like Michigan’s drivers are about to be betrayed by their state legislature yet again. The latest attempt to fix the state’s imbecilic auto insurance fails to take any meaningful action to bring down the nation’s highest car premiums.

A bill that would “reform” auto coverage in Michigan leaves the state’s no-fault insurance system, which makes it impossible for insurers to raise rates for bad drivers intact, The Detroit Free Press reported. To make matters worse, nothing is being done to curb the Michigan Catastrophic Claims Association (or MCCA), a bureaucracy that guarantees medical care for catastrophically injured accident victims for life.

The MCCA is one of the reasons why auto insurance rates in Michigan are so high. Every driver in the state has to contribute $186 a year to it, an amount that is added to premiums.

The current legislation would replace the MCCA with a state-run commission that would do pretty much the same thing. The legislature would also reduce the charge on insurance policies to $150.

The bureaucracy’s defenders claim it is needed to “care” for accident victims. What’s interesting is that nobody is asking three important questions about this fund. These questions are:

  • How are accident victims in America’s 49 other states able to get by without such a fund?


  • Wouldn’t low income accident victims who could not work be covered by Social Security Disability and Medicaid? Meaning that they already receive a monthly check from Uncle Sam and free health care.


Interestingly enough, the main people speaking against the bill seem to be “home healthcare providers” that profit from the status quo.

Sadly enough, true insurance reform, which might actually reduce insurance premiums in Michigan, is nowhere to be seen. The controversial proposals in Lansing would reduce insurance premiums by around 16.9%, which means that the average resident of Detroit who currently pays around $5,000 would pay $4,155 for insurance. Not surprisingly, that is out of reach for many residents of Detroit, one of America’s poorest cities.

Solutions that would actually drive down insurance rates to reasonable levels the working poor could afford, such as abolishing no-fault and lifetime benefits, are not on the table.


To his credit, State Senator Virgil Smith (D-Detroit) introduced a bill that would allow insurers to allow low cost alternatives to residents of the Motor City. The alternatives would be outside Michigan’s exorbitant car insurance system. In other words, Smith wants Detroit residents to have access to the same kind of auto insurance as most Americans.

It is doubtful if that bill will pass, given the special interests lined up to preserve the status quo. That means large numbers of Detroit residents will simply continue to ignore the system and drive without auto insurance they cannot afford, driving up policy costs for everybody else.

One has to wonder how people that can allow a system that gouges the average person and hurts the poor can call themselves public servants. All Americans need to carefully examine Michigan’s auto insurance system; it is an example of what not to do.