Policy Documents

Michigan Auto Insurance Reform: The Case for Choice and Consumer Power

Eli Lehrer –
June 16, 2010

State law requires Michigan residents to buy automobile insurance. As a result of political wrangling and rising medical costs, however, the system under which they buy it has some problems and is at risk of developing more. Several current legislative and executive proposals could exacerbate these problems.

If Michigan policymakers want a better system for auto insurance, they should empower consumers.This paper describes how the legislature, insurers, and Michigan citizens could make the system better, increase choice, and reduce auto insurance costs.

The paper consists of four parts. Part 1 provides background on automobile insurance in general and describes the ways Michigan residents currently purchase it. Part 2 discusses some flaws and common complaints about the current system. Part 3 presents an agenda for reforming Michigan’s auto insurance system to offer consumers more choice, decrease costs for many residents, and boost the state’s economy. Part 4 offers a summary and concluding remarks.

If Michigan policymakers want a better system for auto insurance, they should empower consumers by allowing insurers to offer a broader range of auto insurance options and improve the regulatory framework in which insurers operate.