(LANSING, MI) — Insurance agents, auto insurance carriers, business and grassroots organizations today in Lansing announced formation of a coalition to oppose an $80 million/$40 per car insurance tax on auto insurance consumers that is being pushed by the Governor and some state lawmakers.
The Snyder Administration and Michigan State Rep. Al Pscholka (R-Stevensville) have indicated they will propose legislation to eliminate a tax credit that currently helps offset costs associated with covering individuals who are hurt in accidents caused by uninsured drivers.
Since 2013, auto insurance companies have used this credit to reduce premiums to law abiding drivers.
“The tax credit allows the cost of uninsured motorists to be spread to everyone, not just to auto insurance consumers who are operating their vehicles lawfully and properly,” said Pete Kuhnmuench, Executive Director, Insurance Institute of Michigan.
Michigan already has some of the highest auto insurance premiums in the country because of the state mandate that everyone purchase unlimited, lifetime medical benefits without controls over medical costs.
“If the credit is eliminated, it is the insuring public that will pay through higher auto insurance premiums,” said Bev Barney, Chief Executive Officer of the Michigan Association of Insurance Agents.
A recent poll, conducted by MRG, found that 73 percent of Michigan voters opposed eliminating the credit if it meant paying higher auto insurance rates, while only 18 percent supported eliminating the credit.
“Michigan drivers and taxpayers have absolutely no appetite for higher auto insurance taxes that will increase the cost of insuring their cars,” said Tom Shields, spokesperson for the Michigan Insurance Coalition. “The high cost of No-Fault insurance in Michigan has pushed drivers to their limits.”
The insurance industry helps support $37.1 billion in spending and $6.3 billion in wages throughout Michigan, according to a recent study by Anderson Economic Group, LLC.
The insurance industry has been a staple in Michigan’s economy, providing over 114,000 jobs and $6.3 billion in wages in the state,” said Tricia Kinley, Senior Director of Tax & Regulatory Reform for the Michigan Chamber of Commerce. “This is an unfair targeting of an industry that provides thousands of good, stable jobs across the state and a hidden cost to the Michigan drivers that are actually following the law. Meanwhile the Michigan legislature refuses to act on the root cause of the problem; too many drivers in Michigan refuse to follow the law and buy auto insurance.”
Eliminating the credit will increase an already hefty tax burden on auto insurance premiums. In 2014, the insurance industry paid 41 percent of the total business tax assessed in the state.
“Insurance costs are already a big expense item for small business in Michigan. Our auto insurance rates are already among the highest in the nation because of the failure to address out of control unlimited No-Fault medical coverage. Adding another $40 per vehicle will put even more pressure on our small business job providers,” said Charles Owens, Michigan Director of the National Federation of Independent Business.
The Stop the Car Insurance Tax Coalition includes: Americans for Prosperity – Michigan, the Insurance Institute of Michigan, Lansing Regional Chamber of Commerce, Michigan Association of Insurance Agents, Michigan Insurance Coalition, Michigan Chamber of Commerce and National Federation of Independent Business.