Michigan voters could decide whether to reduce automobile, home and business insurance premiums by 20 percent if a proposal qualifies for the 2010 statewide ballot.

The form of a legislative initiative submitted by a group called Fair Affordable Insurance Rates was approved Monday by the Board of State Canvassers. Supporters still must collect more than 304,000 valid voter signatures and clear other procedural hurdles to put the measure on next November's ballot.

"This initiative will lower the cost of insurance for everyone in the state," said Kim Bowman, chief of staff to state Sen. Hansen Clarke, D-Detroit, who is backing the proposal. "Those who aren't insured can afford insurance and those who are paying too much can experience savings."

The insurance industry said the "unrealistic" ballot measure, if approved, would kill jobs because insurers will not do business if they cannot price their policies appropriately.

"A 20 percent rate reduction puts us at risk with regard to solvency," said Pete Kuhnmuench, executive director of the Insurance Institute of Michigan. "How does any business operate with 20 percent less in income when it can't affect the expense side? We still have the obligation to pay those claims."

The state's regulatory insurance commissioner has the power to reject rate increases, though not until after they take effect. Critics say they have turned to the ballot initiative in part because state law has been so weakened, it is nearly impossible for state regulators to influence rates.

Bowman said insurance companies are making "windfall" profits. She said other individuals or groups will be involved with the ballot drive but said she could not disclose them right now. It takes money if supporters decide to hire a firm to gather signatures.

"I don't believe getting signatures will be an issue on this one," Bowman said.

In 2006, Democratic Gov. Jennifer Granholm called for legislation to roll back insurance rates by 20 percent. It went nowhere in a Legislature that was then completely controlled by Republicans.

The ballot proposal would cut insurance premiums for good drivers another 20 percent on top of the original 20 percent rollback. Insurers could no longer base premiums on drivers' credit history, occupation or education. The measure also includes various consumer protections.

Kuhnmuench acknowledged it would be a challenge fighting the proposal should it be on the ballot, though another industry spokesman thought it would not be tough to defeat at all -- arguing the measure as a whole would help drivers in Detroit and other urban areas at the expense of suburban motorists and residents elsewhere in the state.

Michigan's $1,067 average annual auto premium ranks 14th-highest nationally, Kuhnmuench said. A state insurance advocate appointed by Granholm has said the average premium ranks second-highest, however.

It is the only state to require unlimited personal injury protection benefits, which policyholders pay for through a per-vehicle annual fee. The insurance industry has unsuccessfully called for lawmakers to let drivers choose less medical coverage.

Copyright 2009 Associated Press. All rights reserved.