(FOX 2) - Democratic Gov. Gretchen Whitmer and Republican leaders have reached a deal to cut the state's high car insurance premiums and the bill is expected to be passed by the legislature on Friday.
The Legislature convened for a rare Friday session, when a bill was scheduled for a vote in the House and then the Senate.
The bill discussed would cut the country's highest auto insurance premiums by letting drivers forego a one-of-a-kind requirement to buy unlimited medical coverage for crash injuries.
Whitmer said the legislation would guarantee rate reductions for every motorist and offer choice among personal injury protection, or PIP, levels. PIP, on average, makes up half of car premiums.
The measure also would prohibit the use of several non-driving factors in setting rates and scale back reimbursements for health providers that treat accident victims.
Unlike several other no-fault states, Michigan does not have a fee schedule for care covered by auto insurers. They pay much more for the same services than is paid by employer plans or government insurance such as Medicare or Medicaid.
PIP REDUCTION AVAILABLE FOR ALL
A driver choosing to stick with unlimited coverage would see a 10% PIP reduction.
Someone who fully opted out would get a 100% cut, if they have health insurance.
People on Medicaid would have to get at least $50,000 in benefits and would pay 45% less. People picking $250,000 or $500,000 of coverage would see a 35% or 20% reduction.
The rollback in PIP rates would start in July 2020 and last for eight years.
Whitmer released the following statement, applauding the deal:
"After constructive conversations over the past week, I am pleased to announce that we have reached an agreement in concept on bipartisan auto no-fault reform legislation that will lower costs and protect coverage for Michigan drivers. The deal: guarantees rate relief for every Michigan driver; provides a choice in coverage levels; establishes more uniform and structured compensation levels for medical providers; and removes the ability of insurance companies to discriminate based on non-driving factors. I look forward to working with the legislature to pass and sign this important legislation into law."
This bipartisan auto no-fault reform plan guarantees lower rates for every Michigander, protects people’s choice, & strengthens consumer protections.— Governor Gretchen Whitmer (@GovWhitmer) May 24, 2019
It’s simple: when we work together, we solve problems. I look forward to working with the legislature to pass this legislation.
Speaker of the House Lee Chatfield and Senate Majority Leader Mike Shirkey said in a statement that the wait now is over after decades of inaction in Michigan.
“Today’s vote will be a significant victory for the hard-working people of Michigan that will finally fix our broken car insurance system and deliver real, meaningful rate relief for families, seniors and household budgets all over the state,” they said.
Michigan - we have a deal! For too long, Michigan families have been forced to pay the highest car insurance rates. Now we are taking action. I'm proud to partner with @GovWhitmer & @SenMikeShirkey to reach a consensus & finally deliver a solution with real, mandated rate relief.— Lee Chatfield (@LeeChatfield) May 24, 2019
Detroit Mayor Mike Duggan, who had filed a lawsuit asking that the 1973 no-fault law be declared unconstitutional for failing to provide "fair and equitable" insurance rates, called the agreement "outstanding."
"It will cut rates for Michigan drivers significantly, and we congratulate Governor Whitmer and the Republican and Democratic leadership for coming up with an excellent bipartisan deal," he said in a statement.
Earlier this week, billionaire businessman Dan Gilbert announced a potential ballot drive as a "failsafe" in case Michigan lawmakers couldn't reach a deal. On Monday, Quicken Loans vice president of government affairs Jared Fleisher said it'd be best if legislators and Whitmer enact a law to reduce rates by letting people opt out of mandatory unlimited medical benefits. But he said signature-gathering must begin soon as a backup.
Earlier this month, the Michigan House and Senate both passed bills that were aimed at cutting the country's highest average auto insurance premiums by eliminating a requirement that drivers buy unlimited medical benefits to cover crash injuries. Whitmer said she would veto the legislation because it falls short in her eyes.
The Democratic governor said a state House-passed plan would not guarantee savings for motorists or go far enough in ending the use of non-driving factors to set rates. The GOP-controlled state Senate also approved a bill this week following years of legislative stalemates over the issue.
The House legislation would allow motorists with health insurance to forego mandatory unlimited personal injury protection, or PIP, which only Michigan currently requires. Insurers would have to cut PIP rates, which can make up about half of a customer's bill, by between 10% and 100% for five years, depending on the coverage chosen between $0 and $500,000. That could amount to an estimated $120 and $1,200 in savings for someone paying $2,400 annually per car, assuming the PIP fee accounts for half their bill, according to Republican projections.
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The Associated Press contributed to this report.