Did auto insurance overhaul help Michigan motorists? Depends who you ask.

Auto insurance rates up slightly since Michigan reforms took effect, but state report concludes changes kept costs from climbing higher
Critics contend the state’s interpretation of the data is misleading, argue drivers are paying more than they were for less coverage
Michigan is no longer considered the most expensive auto insurance in the US, though Detroit drivers still pay highest average premiums

It’s been more than six years since Michigan officials approved bipartisan reforms aimed at driving down sky-high auto insurance costs. Yet the question remains: was it a net positive for Michigan drivers?

A recent report on the law’s impact commissioned by Michigan’s Department of Insurance and Financial Services suggests it may still be too early for a victory lap, though Gov. Gretchen Whitmer and other supporters of the 2019 law lauded its findings.

Using data pulled from state records and insurance companies, the Dec. 1 report from Milliman, a Seattle-based actuarial and consulting firm, estimates that changes resulted in drivers spending an average of $357 per year less than they would have had the reforms not taken effect.

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Milliman analysts attributed the bulk of those savings to new provisions allowing drivers to choose lower levels of personal injury protection as an alternative to what had been mandatory lifetime care coverage.

The 2019 legislation also cut medical provider reimbursement rates as part of a larger attempt to reduce auto insurance premium costs.

“In 2019, Democrats and Republicans in the Legislature and I came together to deliver historic, bipartisan auto insurance reform that lowered costs for Michiganders,” Whitmer said in a recent statement. “We’re still seeing the positive impact of that reform and how it’s working for Michiganders across the state.”

Michigan auto insurance rate graphic — Michigan’s average auto insurance premium has gone up slightly since reforms took effect — but a new report commissioned by the state suggests drivers would be hundreds of dollars more now if not for the changes. (Courtesy Department of Insurance and Financial Services)

Drivers may not be noticing the distinction in their bank accounts, however.

Though there was a slight decrease in Michigan’s average per-vehicle premiums in 2021 following the COVID-19 pandemic, the report shows insurance rate hikes in 2023 and 2024 means drivers are paying roughly $200 more on insurance per car than they were in 2019.

The report’s authors suggest that pre- and post-pandemic auto insurance rates would be an apples-to-oranges comparison, instead basing their analysis on assumptions of how rates would have been adjusted for inflation and other factors under the state’s previous policy.

Longtime critics of Michigan’s auto insurance policies argue that’s a misleading way to look at the data.

“Michigan drivers pay more today for their auto insurance, with the state’s lowest income drivers bearing more burden than the report is willing to acknowledge,” Doug Heller, director of insurance at the nonprofit Consumer Federation America, said in a statement.

How Michigan’s rates compare

Since the 2019 changes, Michigan’s average auto insurance costs went from worst in the nation to…slightly less worse.

Nationwide analyses continue to rank Michigan in the top 10 most expensive states to insure a car, though states like New York, Louisiana and Florida have since surpassed Michigan’s average premiums.

Car insurance rates have been on the rise nationwide. According to the US Bureau of Labor Statistics, the national average car insurance premium is 55% percent higher than pre-pandemic levels.

Graphic of unlimited auto insurance coverage in michigan — The number of people opting out of unlimited personal injury protection has steadily increased since Michigan’s auto insurance reforms took effect. (Courtesy Department of Insurance and Financial Services)

An August estimate from the insurance comparison site Insurify projected Michigan drivers would see a 16% or higher increase in average premiums by year’s end compared to 2024 — though other states are experiencing even higher increases due to inflation, tariffs, weather and other factors.

Price controls in Michigan’s 2019 auto insurance overhaul “did not make Michigan immune to the inflationary economic environment,” the Milliman report notes, though its authors added that Michigan’s average rate increase lagged behind nation’s, “which suggests that (the 2019 laws) suppressed costs and resulting rate changes during this period.”

Groups like the Insurance Alliance of Michigan — which represents the state’s major insurance providers — are taking that as a win.

“It’s important to let the reforms continue to work to drive down insurance costs and build upon the success of these important changes so we provide even more relief to Michigan drivers struggling with the high cost of everything,” Erin McDonough, executive director of the Insurance Alliance of Michigan, said in a recent statement.

Prices may vary

Statewide averages are one thing — what Michigan drivers actually pay to insure their vehicles can still vary widely.

The Milliman report found the average premium for personal injury protection coverage decreased by $369 per insured vehicle as more drivers choose lower levels of coverage. A majority of drivers still choose the unlimited coverage option, though the report determined that nearly 30% of drivers had chosen a lower coverage limit as of 2024.

Michigan’s current law goes further than most states in prohibiting insurers from setting rates based on factors like gender, marital status, home ownership, education level, occupation, zip codes or credit scores.

A person’s driving record is still taken into account, and there is no language banning insurers from using aspects of a person’s credit history to set rates. Insurers are also allowed to group auto insurance risks by territory, which some critics have said negates the ban against using zip codes to guide rates.

Detroit drivers have long complained of sky-high insurance costs compared to the rest of the state, prompting some residents to register their vehicles in a cheaper city or forego insurance altogether.

That dynamic hasn’t changed much in the years since Michigan overhauled its auto insurance laws.

One estimate from CarInsurance.com listed Detroit and neighboring Hamtramck as the two most expensive US cities to get auto insurance in the country, noting Detroit drivers pay as much as $1,500 per year more for auto insurance than drivers in neighboring Dearborn and $2,480 more than drivers in Warren.

What about uninsured drivers?

The Milliman report showed the estimated number of uninsured motorists in Michigan increased from 17.2% in 2019 to more than 20% in 2020. Michigan’s uninsured motorist rate has decreased slightly since then, but as of 2024 remained higher than it was pre-pandemic.

Despite the uptick, the report suggests that reforms and the state’s amnesty period for uninsured drivers to resume coverage without penalties “may have had an impact on suppressing” an increase in uninsured drivers.

Michigan uninsured drivers graphic — Michigan’s number of uninsured drivers has gone up slightly in recent years and remains higher than the national rate, though a state-commissioned report noted the gap between the state and national rate is getting smaller. (Courtesy Department of Insurance and Financial Services)

Michigan’s rate of uninsured motorists was 5.4% higher than the national rate prior to the reforms. It is now 3.9% higher than the last known national rate.

Some lawmakers are advocating for change to bring those numbers down. A proposal from Sen. Jeff Irwin, D-Ann Arbor, that passed a Senate committee in October would permanently prevent insurers from charging a reinstatement fee or higher rates to drivers whose coverage lapsed.

Irwin said his plan would help make it easier for drivers who are having trouble making ends meet to get back into the system.

“Furthermore, all Michigan drivers pay more for these uninsured drivers,” he said in a statement. “For the sake of all drivers’ rates, we need to make it easier, not harder, to buy insurance.”

Other proposed changes

Various interest groups have lobbied — mostly unsuccessfully — to edit state auto insurance laws since their initial passage.

Crash survivors and their health providers have long argued the system is untenable, putting too many restrictions on medical expenses and slashing the amounts insurers are required to pay by as much as 45 percent.

Legislation introduced last session would have increased reimbursement rates for medical providers caring for seriously injured motorists and lifted a payment cap for care provided by family members. It got bipartisan support in the Senate, but was opposed by the Whitmer administration and didn’t gain traction in the House.

Insurance carriers, meanwhile, are backing a House package aimed at reducing auto insurance fraud and argue the state could lower costs further by reducing bodily injury liability requirements.