Ballot proposal to slash car insurance rates gains ground

Mark Hornbeck / Detroit News Lansing Bureau

Lansing -- The petition form for a 2010 ballot initiative calling for a 20 percent cut in auto insurance rates won approval of a state elections panel today.

The proposal also would slash rates by another 20 percent for good drivers who have no points on their driving record in the past six years and bar insurance companies from "unfairly" canceling coverage.

The Board of State Canvassers voted 4-0 to approve the petition form, which does not imply the panel approved the substance of the initiative.

"The purpose ... is to protect consumers from unfair insurance rates and practices, to encourage a competitive insurance marketplace, to empower consumers with legal rights and to ensure that insurance is affordable for all residents," says an explanation on the petition.

Kim Bowman, an aide to Sen. Hansen Clarke, D-Detroit, who is backing the proposal, said the "inability to do anything through the Legislature" on this issue is part of the reason he's moving ahead with a ballot initiative.

"Mainly, though, everyone in the state right now can benefit from lower insurance rates," Bowman said.

She could not comment on when petition circulation would begin or whether the coalition behind the proposal called Fair and Accountable Insurance Rates would hire a firm to collect signatures.

More than 304,000 valid signatures are required, according to the Secretary of State's office.

Insurance industry representatives oppose the initiative, calling the 20 percent reduction "arbitrary" and saying any plan that cuts rates without cutting costs will cause hardship for insurers.

"This is an unrealistic proposal," said Pete Kuhnmuench, executive director of the Insurance Institute of Michigan. "A 20 percent rate reduction puts solvency (of insurers) at risk. Let's sit down and talk about real reform."

He acknowledged that the initiative would be "tough to fight" if it gets on the ballot.

The state's $1,067 average annual premium ranks 14th nationally, Kuhnmuench said.

mhornbeck@detnews.com (313) 222-2470