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The truth about Michigan No Fault insurance reform

April 30, 2013 by Steven M. Gursten

New insurance information resource center explains the proposals to change Michigan’s No Fault Laws

What do the proposals to change the state’s 40-year-old No-Fault auto insurance system really mean? How would these proposals affect you and your family if they become law?

To help people  better understand the truth behind the insurance industry’s proposals to change Michigan’s No Fault insurance system – and what HB 4612 and other legislative proposals would do if they become law – our No Fault insurance attorneys have created a new information resource center:

Michigan No Fault Reform: Everything You Need to Know

Our resource center explains the latest legal developments in the battle to change No Fault.

Last week, Gov. Rick Snyder and Rep. Pete Lund introduced the most recent and most controversial proposal to change No Fault:  HB 4612 would eliminate lifetime care, and dismantle the Michigan Catastrophic Claims Association.

HB 4612 also changes the current eligibility for allowable expense benefits, and limits rehabilitation benefits for the seriously injured.  It would slash attendant care (in-home nursing) benefits, which would likely result in the “warehousing” and institutionalizing of seriously injured auto accident victims in Medicaid-funded nursing homes. The bill slashes home modifications and special transportation vehicles for spinal cord injury victims.

The bill would likely also slash the quality of medical care throughout the state and significantly hurt the doctors and hospitals that treat auto accident injury victims by imposing  medical fee schedules.  The bill also singles out motorcyclists, further reducing their PIP medical coverage to $250,000 for people injured in motorcycle accidents.

Most disturbing is the bill threatens the constitutional right to jury trials. Many have noted that too many Republicans today, and apparently this now includes Gov. Snyder and Rep. Lund, only seem to care about the 2nd Amendment to the Constitution, but are willing to disregard the guaranteed freedoms of the 7th Amendment and the Right to Jury Trial.    The bill replaces the right to jury trial by taking away all questions with whether a medical charge or medical expense is reasonable by giving this power to a judge, not a jury, to decide these questions.

Gov. Snyder and the auto insurance industry are pushing No Fault reform under the guise that it will save Michigan drivers money on their premiums. But under HB 4612, drivers may actually end up paying more money for car insurance.

In 1626, it is said that the Indians traded the island of Manhattan for $24 of beads.  These proposed No Fault “reforms” seems an equally bad trade. All of these incredibly valuable protections would be taken away from Michigan residents injured in automobile accidents, and we would either be seeing (under the best of circumstances) around a $150 in savings in auto premiums a year, or more likely, end up paying more for car insurance.  And all for the privilege of losing the best insurance system in the nation.  It seems a monumentally bad trade for the people of this state.

At least the Indians got to keep the beads after giving away Manhattan.

For more information, click here to read a comprehensive analysis of Michigan No Fault reform and the latest developments.

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3 Replies to “The truth about Michigan No Fault insurance reform”

  1. In the no-fault debate we’re being bombarded with conflicting opinions and talking points from various parties, some of whom having a financial interest in the outcome of the debate. For the sake of clarity maybe we should start by simply asking a few questions, look for reasonable answers then maybe we might be in a better position to craft a more informed opinion. The following are a few questions the answers to which might help in cutting through all the political and media chatter:
    1. Has the no-fault experiment been a success in Michigan
    2. Isn’t the unlimited medical the best benefit you can get?
    3. Why does the Governor want to shut down the MCCA and cap medical benefits?
    4. Is the MCCA insolvent in the amount of $59 Billion dollars?
    5. The purchase of no-fault is mandatory under Michigan law yet it’s estimated that between 20% and 30% of Michigan drivers go without coverage during any year. Why isn’t the law being enforced?
    When 20% to 30% of the population intentionally breaks a specific law suggest that that law is fundamentally flawed?
    6. Does no-fault discriminate against poor people?
    7. Since 20% to 30% of Michigan car owners are breaking the law by going without insurance coupled with our governments inability [or lack of desire] to enforce the law why don’t we just eliminate the “mandatory” part of no-fault?

    Let me offer a few opinions and a few comments, asking that you draw your own conclusions but reminding that the financial and actuarial aspects of this issue are rather arcane. So, don’t draw rash conclusions without understanding the issues:

    1. No-fault was sold to Michigan voters as a way to control and reduce auto insurance premiums. Auto premiums have increased more than 300% since no-fault went into effect. It’s rather hard to say it’s been a success.
    2. Yes, unlimited medical is the best you can get. But, can we afford it. Each of us should do a cost benefit analysis and figure out of it’s worth it. But, we have to understand that the fat lady (so to speak) hasn’t sung yet. The reality is that as high as our premiums to MCCA have been, we should actually have been paying more. (see answer # 4 for the explanation)
    3. They have probably concluded that MCCA is being plundered, that’s it’s insolvent and the best thing for Michigan drivers is to get rid of it. Other administrations have either ignored the problem or been complicit in creating it. Kicking the can down the road will only make the pain worse in the future.
    4. According to the MCCA auditor, Price Waterhouse and their actuary, MCCA is insolvent.If you don’t believe me, take a look at the MCCA financial statement. It’s online for all to see. [http://www.michigancatastrophic.com/LinkClick.aspx?fileticket=DS9FtlWhVtY%3d&tabid=2935] Go to page 14 of the full report and you will note this: “SAP NAIC ($56,050,270,119). Let me decipher. The SAP means Standard Accounting Principles and NAIC is the National Association of Insurance Commissioners. And what this means is this. By the rules of the Financial Accounting Standards Board (FASB) and the financial rules of the National Association of Insurance Commissioners the MCCA, as of June 30, 2012, was insolvent in the amount of $56,050,270,119. That’s $56 BILLION dollars that Michigan drivers owe. And why is that? Because past MCCA losses have been much higher than anticipated and Michigan drivers should actually have been paying more into the MCCA. The tragedy of this for future Michigan drivers is that they will have to pay off that $56 billion dollar deficit.
    5. Why isn’t the law being enforced regarding those that choose to go without insurance? That’s a really good (political?) question.
    6. It just has to be a bad law when somewhere between 600,000 to Over 1,700,000 citizens knowingly break the law?
    7. Many poor need a car to make a living. If the choice is food for the family or car insurance? Let the poor off the hook. They’re going without insurance now. Let’s stop making it a crime.
    8. Look at #7 above.

    Your auto insurance company does not provide unlimited medical coverage. It is the Michigan Catastrophic Claims Association (MCCA) that provides the unlimited coverage. MCCA is a government sponsored agency that was established after the legislature put unlimited medical coverage into the law but failed to understand that insurance regulations preclude auto insurance companies from providing unlimited coverage. (I’m not making this up)

  2. I own two older vehicles both more than 10 years old, because I can’t afford new ones, one of them is my son’s car, on which there is no collision coverage only liability, that he uses for work and the other is my vehicle that I use for work. The cost of just the medical insurance on both vehicle is $920.00 per year which is approximately 63% of the total $1,450.00 premium for the year. It is rediculous that 63% of my insurance premimum goes to the MCCA. We need to end this failed no-fault experiment as soon as possible.

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