Lana Theis, Representative to the Michigan Legislature for the 42nd District (Brighton area), spoke at Dexter Rotary’s weekly breakfast last Thursday about Michigan’s runaway auto insurance premiums and her efforts to end them.
After an introduction by Karl Fink, Lana took the podium and told the group, “You guys are a little overwhelming in how happy you are when you come in. It’s a little intimidating.” More laughter from the twenty or so folks gathered in Terry B’s. Rotarians are a fun group.
Rep Theis briefly recounted what drew her into politics. “I got started when they passed a tree ordinance that was going to cost me forty-thousand dollars before I could start adding on to my home. We were only going to cut five trees, but the way they had written the ordinance that’s what was going to happen.”
It was a real eye-opener for Lana as to how government can unrealistically burden people. She says, “At that point I saw what government really looked like and how it was overstepping its bounds. We ran a referendum and won two-thirds of the votes. Now you still have to go to the township if you want to clear cut your property but it’s not going to cost you forty-thousand to remove your trees.”
Her big lesson in regards to political officials being irresponsible came when she was recruited to go work for her township. Lana saw they had seven million dollars in a bank account that only insured one-hundred thousand. This was back in 2007 when a lot of banks were struggling. A lot of money was at risk. As township treasurer, she moved the funds into accounts that were either collateralized or insured. “Safety is the big issue when you’re responsible for public funds,” she said.
In 2014, Lana was elected to her first term in the Michigan State Legislature and she officially became Representative Theis. Now in her second term, as Chairperson for the House Committee on Insurance, she’s been leading the charge on fixing or reforming Michigan’s auto insurance.
“Insurance is where my heart is,” she tells Rotary. “How many of you think you’re not paying enough for auto insurance?” (Laughter) “My goal is to get choice into the system and to get some price control into the system. It’s pretty much schizophrenic how they run everything.”
Rep Theis told the group that there was legislation coming out of the state house soon that will do away with no-fault altogether. She doesn’t expect the effort to go anywhere however. The introduction of the bill is more of a calibration to see where lawmakers fall and gauge public response to the idea of eliminating no-fault.
Rep Theis explains “There are two very definitive camps” regarding Michigan’s auto insurance. One side is there to protect no-fault. The other side believes reform needs to be done. “We have undoubtedly the most expensive car insurance in the country,” she says, which is due to the “blank check” that’s being allowed when it comes to care provided via auto insurance.
Auto insurance is paying for things such as aroma therapy, equine therapy and paying property taxes. “Because if somebody has to change their property because now they need a wheelchair, their property taxes change and the insurance is required to pay those property taxes,” she explains.
She continues, “The escalating cost of medicine is significant. As an auto insurer, you pay more than you would as a health insurer for the exact same medicine in the exact same location.”
As an example, Rep Theis told the story of a father whose son had a traumatic brain injury due to a car crash. As a result, he has a tremor. The father found a special pen for him to use so he could write. It cost $110. When the father told the company the insurance would be paying for it, they told him “Oh, then the price is $340.” Another example is the price of an MRI with Medicare is less than $500. With auto insurance it is over $3,000. “Same location, same machine, same radiologist,” she says.
Rep Theis surprised the Rotarians by saying that auto insurance has lost money seven of the past ten years. Insurance companies make their money on life, home, and other insurance. Auto insurance is a lost leader for them and that’s why they want to bundle it with other policies. “So even with all the money they’re charging us, they’re still losing money,” she explains.
In a recent Op Ed for Crain’s Detroit Business, Rep Theis explains the driving force to keep Michigan’s current auto insurance laws in place is “a special interest group whose members are comprised of health providers, trial attorneys, and other groups which profit directly from Michigan’s current system.”
Rep Theis elaborates, “So we’re dropping this bill that does away with it altogether and like most states do is we’d go back to the litigation process. Sounds bad but forty-two percent of litigation right now is tied up in no-fault. Before we started no-fault there was only seventeen percent that was tied up in auto.”
She adds, “Being able to convince people of that is not an easy thing to do and an awful lot of people are very frustrated.”
There are a lot of different ideas as to what the solution is and so her approach right now “is to bring choice into Michigan’s auto insurance.” She explains, “You can have unlimited coverage if you want to, but if you don’t, you don’t have to.”
If you would like to read more on Rep Theis’s view and work on reforming Michigan auto insurance laws, you can read her recent Op Ed in Crain’s Detroit Business.