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Will No Fault denials, cutoffs further rise under GOP ‘reform’ plan?

February 17, 2015 by Steven M. Gursten

Despite 192% increase in No Fault denials & cut-offs and meager, unfulfilled guarantees of temporary consumer savings, House Republicans promise new “Action Plan”

No Fault benefits deniedNo Fault benefits denied

What do Republicans in the Michigan House of Representatives have planned for “reforming auto No Fault to make auto insurance more affordable while providing quality care to auto accident victims”?

We don’t know yet.

But whatever the House GOP’s recently announced “Action Plan” includes, consumers, auto accident victims and lawmakers will be watching to see how it affects the following issues:

  • Meaningful, long-term savings for Michigan auto insurance consumers: Past No Fault plans’ guarantees of savings have been paltry and extremely temporary compared to the extensive and permanent changes to No Fault benefits and protections being proposed.
  • Auto accident victims’ ability to obtain the No Fault benefits they need and are entitled to: At a time when denials and cut-offs of No Fault benefits to auto accident victims have increased by 192%, access to needed care and protections doesn’t need to be made more difficult.

In the “2015-16 House Republican Action Plan,” which was released on February 5, 2015, the Republicans in the Michigan House of Representative stated the following goals for changing Michigan’s No Fault auto insurance system:

  • “This session, we will reform and streamline government regulations by … reforming auto no-fault to make auto insurance more affordable while providing quality care to auto accident victims.” (See Page 18 of the “2015-16 House Republican Action Plan”)
  • “Reforming Auto No-Fault: Michigan has the second-highest car insurance premiums in the country and is one of less than a dozen that operate under a no-fault system of insurance liability. Reforms to Michigan auto no-fault must be made to control costs for motorists.” (See Page 18 of the “2015-16 House Republican Action Plan”)

Additionally, on February 2, 2015, WKZO 590 AM reported that House Insurance Committee chairman Rep. Tom Leonard (R-Clinton County) had “express[ed] confidence that Michigan’s comprehensive no-fault auto insurance system can be reformed this session.”

WKZO noted that Rep. Leonard admitted that a plan to change No Fault is “‘complicated but possible.’”

Meaningful, long-term savings for consumers

Meaningful, long-term savings on auto insurance is an important issue for consumers and it should be for lawmakers, too.

Although the notion of making auto insurance “more affordable” has been the stated goal of past No Fault plans, the extensive, complex and thoroughly-detailed plans have had little to offer in the way of savings for consumers.

Of the four major, Republican-backed No Fault “reform” plans during the 2013-14 legislative session, two completely ignored the issue of consumer savings – Senate Bills 818 and 1148.

The other two guaranteed what could at best, be called “modest” savings for consumers.

In return for extensive and permanent changes to No Fault benefits and protections, the 67-page House Bill 4612 promised – what the Detroit Free Press called “paltry” – $125 “premium” savings for one year (The $125 amount was later changed to $150).

Similarly, in return for the extensive and permanent No Fault changes under then-Speaker Jase Bolger (R-Marshall)’s and House Republicans’ 91-page draft bill (substitute for HB 4612), consumers were guaranteed savings of no more than 10% for two years.

192% increase in No Fault denials and cut-offs

The effects of proposed No Fault changes are critically important to current and future auto accident victims, because it’s already difficult enough for victims to get the benefits and protections they need and deserve. They don’t need any more roadblocks.

Specifically, Michigan’s auto insurance companies have increased their denials and cut-offs of auto accident victims’ No Fault benefits by approximately 192% over the last 12 years.

For instance, No Fault denials and cut-offs increased from 2,701 in 2002 to 7,898 in 2013, according to data reported in the Statistical Supplements contained in the Annual Report of the Michigan State Courts.

(Note: The above calculation is based on the “New Filings” data for “No-Fault Automobile Insurance” lawsuits, which are generally only filed by auto accident victims/insureds to recoup unpaid and overdue No Fault benefits after a denial or cut-off of benefits by an auto insurer.)

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