Reps. Introduce Auto Insurance Reform Legislation

Bill would prohibit insurers using credit checks to determine premium
Wednesday, February 4, 2015

LANSING – State Representatives Sherry Gay-Dagnogo (D-Detroit) and Alberta Tinsley-Talabi (D-Detroit) announced a legislative package today that would reform Michigan insurance law and protect consumers. House Bill 4116 would enforce that overcharges to policyholders must be reimbursed. HB 4117 prohibits determining a person’s rate by certain factors, including their form of employment, education, credit history or residency. HB 4127 outright prohibits insurers from using credit scores to determine premiums for drivers in Michigan. Michigan has some of the highest insurance premiums in the Midwest.

“A person's credit score has absolutely nothing to do with how they drive, but their score can dramatically affect their auto insurance rate – this is simply unacceptable," Gay-Dagnogo said. "Our plan would protect consumers and prohibit auto insurance companies from using a person's credit score in determining insurance premiums.”

Tinsley-Talabi was pleased to join Gay-Dagnogo in drafting this legislative package, having previously sponsored HB 4116 and 4117 on Jan. 20. Both represent areas of Detroit, where residents have paid an average 165 percent more than the rest of the country. Prior to serving in the legislature, Gay-Dagnogo was a staffer for the Detroit City Council while Tinsley-Talabi was a member.

“The cost of automobile insurance in Detroit has proven to be a financial hardship for far too many Detroit families,” said Tinsley-Talabi. “Money spent on insurance is a cost that deprives families of needed items and makes it extremely difficult for them to manage their auto insurance payments along with the rest of their household expenses.”

State Representative Tom Cochran (D-Mason), a former fire chief and Democratic vice chairman of the House Insurance Committee, co-sponsored HB 4127. He realizes that because of unfair practices like using credit scores, people are driving without insurance.

“This is a threat to public safety,” Cochran said. “In the event someone is in an accident but doesn’t have insurance, others involved in the accident are put at risk as well.”