A new legislative push in Michigan aims to reduce auto insurance premiums for consumers and eliminate financial penalties tied to lapses in coverage.
Sen. Jeff Irwin, a Democrat from Ann Arbor, introduced two bills - Senate Bill 328 and Senate Bill 329 - that would impose new requirements on insurers writing auto policies in the state.
Under SB 328, insurance carriers would be required to provide a minimum 10% discount from the approved rate on both new policies and the first renewal. The bill also prohibits insurers from cutting policy benefits as a tradeoff for offering the reduced rates.
The insurance industry has pushed back, arguing the bill fails to address core pricing issues.
“SB 328 is detached from the reality of the current market in Michigan,” said Joe Roth, assistant vice president for state government relations at the American Property Casualty Insurance Association (APCIA). “While Michigan is feeling inflation’s impact on auto insurance, the market is still improving since the 2019 no-fault reforms.”
The 2019 reform package overhauled Michigan’s auto insurance system, ending the mandate for unlimited personal injury protection and implementing caps on home care coverage, adjustments to Medicare-based fee schedules, and standardized provider reimbursement rates. Since those reforms, the Insurance Research Council has reported notable improvements in auto insurance affordability.
The companion measure, SB 329, seeks to remove reinstatement fees and rate hikes for motorists returning to the insurance market after a lapse in coverage. The bill maintains Michigan’s requirement for continuous coverage but aims to ease financial reentry for drivers who may have lost insurance due to health issues or economic hardship.
“People shouldn’t be penalized for having a lapse in coverage because they are sick or otherwise unable to drive,” Irwin said in a statement. “For people coming back into the market for car insurance, we need to make it easier, not harder, for them to pay into the system.”
Irwin cited data from a temporary policy in effect between 2020 and 2022, which eliminated lapse-related penalties and contributed to a 6% drop in the state’s uninsured driver rate during that period.
Both proposals are now under consideration by the Senate Committee on Finance, Insurance and Consumer Protection.
According to BestLink data, the five largest private passenger auto insurers in Michigan by direct premiums written in 2024 were Progressive Insurance Group (21.25%), State Farm Group (17.53%), Auto Club Group (14.46%), Auto-Owners Insurance Group (12.59%), and Allstate Insurance Group (5.94%).
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