Legislators Join Forces to Hold Auto Insurance Companies Accountable

LANSING — Sen. Betty Jean Alexander (D-Detroit), Sen. Jeremy Moss (D-Southfield)and Sen. Winnie Brinks (D-Grand Rapids) today introduced legislation to protect consumers from predatory auto insurance rate-setting loopholes. 

Senate Bill 499, introduced by Sen. Alexander, would implement a lasting ban on redlining in Michigan. Public Act 21 of 2019 prohibits the use of ZIP codes in rate-setting, but the new law still allows insurance companies to consider ‘territories’ — a gimmick that could continue to allow unfair rates based on a person’s address. 

“People in Detroit and surrounding areas are already paying far too much for auto insurance because these companies are permitted to discriminate based on non-driving related factors,” Sen. Alexander said. “It’s unfair and unreasonable for companies to target communities of color and charge them inflated premiums simply because of where a person chooses to live.” 

Senate Bill 498, sponsored by Sen. Moss, would ban the practice of price optimization — a method by which auto insurance companies set rates or award discounts based on what they believe the consumer will tolerate paying. The practice often penalizes loyal customers who are unlikely to shop around and leave their current policy and reward those they believe will leave their plan. 

“Price optimization is a billing scam that uses non-driving factors to set rates — and actually keeps loyal policyholders trapped with high insurance costs. Michigan must join the roughly 20 other states that outlaw this shady business practice,” Sen. Moss said. “These bills will tackle some the shortcomings of the insurance reform signed into law earlier this year that neglected to hold insurance companies accountable. Michigan consumers deserve more transparency about how their rates are set.” 

Senate Bill 500, sponsored by Sen. Brinks, would create a one-stop online information hub where residents could compare standard auto and home insurance premiums. 

“Just as we are accountable to the people we serve, residents deserve an auto insurance system that gives them the ability to understand what they are paying for, get the coverage they need when they need it and have the ability to choose an option that works for them,” Sen. Brinks said. “Together, this legislation will give Michiganders insurance options and information to help them get the right coverage at the best price.” 

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