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Attorney Steve Gursten on NPR: Will changes to No Fault auto insurance cost more than they save?

May 15, 2013 by Steven M. Gursten

I recently had the pleasure of being a guest on the Lester Graham Show, on NPR Michigan Radio. We talked about Gov. Rick Snyder’s efforts to enact No Fault “reform” to Michigan’s  insurance system.

Here’s the full story on NPR Michigan Radio:

Could changes to auto Personal Injury Protection cost more than they save?

For more information, you can also check out our Michigan No Fault Reform Resource Center. No Fault reform proposals include capping necessary medical benefits from anywhere from $50,000 (Reps. Virgil Smith and Joseph Hune) to $1 million (Rep. Pete Lund and Gov. Snyder).

But the math just doesn’t add up. The reality is that PIP portion of auto insurance is only 5% higher than national average, according to the Insurance Information Institute. So for what likely will be a one-time savings for one year of $125 dollars (as proposed by Snyder), we are going to dismantle the best No fault auto insurance law in the nation.

And running the numbers under Snyder’s proposal, HB 4612, Michigan drivers may even end up paying more for auto insurance after the one year is up, since the legislation only guarantees one year of savings.

While insurance companies get to pocket the savings, the burden gets shifted to all of us as taxpayers, because auto accident victims with catastrophic injuries beyond the cap amounts will still need medical care and treatment.  Only now they will get pushed onto tax payer-funded Medicaid after they lose their life savings.

Further, people who require 24-hour care would lose attendant care benefits and will find the quality of care slashed. And with rate and hour caps for attendant care, these auto accident victims will  be institutionalized into low-quality care nursing homes that bill Medicaid to receive their around-the-clock nursing care.

The NPR story backs up my point: “If people had to depend on Medicaid, they’d have to spend all their assets, basically go broke to qualify, and then taxpayers pick up the bill.”

And all of this will be lost, for the sake of a one-time savings of $125 for our  auto no fault insurance?

What is undisputed is that Michigan has the best insurance law in the nation. We are being asked to give up everything, in exchange for the benefit of giving up all of these fantastic protections AND paying more within one year.

That’s a really bad deal.

Even Pete Kuhnmuench, executive director of the Insurance Institute of Michigan, calls Michigan’s no fault law an amazing jewel for the people of this state. Mr. Kuhnmuench had quite a lot of wonderful things to say about Michigan’s No Fault insurance laws and the necessary lifetime medical care it provides injured auto accident victims BEFORE the insurance industry started the aggressive push to change the law.

As I told Mr. Graham, the current no fault reform proposals will do nothing to reduce the cost of auto insurance in the long run.

“For, really, a promise of one-time savings for one year of basically between $125 and $150, we’re going to essentially dismantle the crown jewel of insurance systems in the United States with absolutely no guarantee that rates will be lower starting a year from now.”

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