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Michigan auto attorney Brandon Hewitt on No-Fault reform

May 5, 2017 by Steven M. Gursten

Brandon Hewitt talks about lack of MCCA transparency, how vehicle repairs are really the huge driver of costs in appearance on WZZM-Grand Rapids news story

As talk of Michigan No-Fault reform has again begun, Michigan Auto Law attorney and COO Brandon Hewitt recently told a Grand Rapids news station about the benefits and obstacles in getting an ideal solution for everyone.

A May 3 WZZM news story broke down what one insurance stakeholder calls “the Cadillac system” of insurance benefits, and how efforts to reform it have been, to put it best, problematic.

Brandon highlighted some of the biggest problems within what I — as both an auto accident attorney and a car insurance subscriber — have always considered a life-saving and indispensable system:

  • A lack of transparency from the Michigan Catastrophic Claims Association;
  • How all of this talk of reform is motivated by a powerful insurance industry;
  • The fact that no one is talking about how vehicle repairs are really the huge driver of costs; and
  • How, compared to other states’ insurance laws, Michigan provides the absolute best coverage for catastrophic injuries.

Would No-Fault reform jeopardize a good thing?

That last point proved a poignant one for the WZZM report, which profiled Marcus Fairfield, a 29-year-old West Michigan man who suffered severe spinal injuries in a car crash.

If he would have been living in Ohio, he would have been paying around $900 for his annual car insurance. That’s less than what the National Association of Insurance Commissioners estimated at $1,350 a year for Michigan — the third highest premiums in the country — and way less than Insure.com’s estimated Michigan figure of more than $2,700.

But Ohio’s car insurance system would not have provided Fairfield with lifetime benefits. With the cost of catastrophically injury recovery easily reaching $1 million, he would have lost his business. His savings would be wiped out. He would declare personal bankruptcy. He’d be on Medicaid and receiving less medical care and less quality medical care than he is receiving now.

Michigan’s system is different. Anyone who is catastrophically injured gets unlimited lifetime medical care. We are the only state in the U.S. that offers this — and it’s the law for everyone here. As Brandon said:

“[No-Fault] was established to guarantee: if you’re at fault or not at fault, you know you’re going to be protected if you’re hurt. That’s the bottom line.”

Stakeholders want different things in No-Fault reform

But the insurance industry is more concerned with its own bottom line. All the talk of No-Fault reform — such as Rep. Jason Sheppard (R-Temperance)’s new auto No-Fault insurance “reform” proposal (House Bill 4488) — are little more than efforts to pass costs from already profitable auto insurance companies to taxpayers in order to boost insurance industry profit margins.

The insurance industry is claiming the no-fault system is broken, and that high-tech auto repairs and more accidents due to distracted driving are to blame. But there are more stakeholders than the insurance industry, and they’re wanting different things in No-Fault reform.

For example, the Insurance Alliance of Michigan is seeking fee schedules for medical costs, which is a reasonable request.

Yet, Brandon noted, most of the money in insurance premiums is going toward collision coverage and not medical coverage. In showing WZZM his insurance statement, Brandon said:

“Only $45 is going to PIP, $160 to MCCA, but the largest chunk is the collision coverage. So maybe a solution is a hybrid system.”

Get the MCCA to open books as part of No-Fault reform

Now, let’s get to the MCCA, the No-Fault arm that reimburses insurance companies for Personal Injury Protection claims over $545,000.

Come July 1, drivers will have to pay $170 in MCCA fees for each vehicle — a $10 increase from 2016. But no one is allowed to see the MCCA’s books, even though it is a public entity. That means we won’t know the MCCA’s process for determining, setting and increasing its annual assessments, which No-Fault auto insurers pass along to consumers in the form of higher car insurance prices.

It’s not enough to get a media statement from the MCCA that simply claims:

“An independent actuarial consultant evaluates medical cost inflation, economic conditions, investment returns and the number of claims.”

As I wrote earlier this year, there are ways to lower car insurance rates and preserve No-Fault benefits — one of which is to require transparency into the MCCA, which Brandon echoed my sentiments to WZZM.

As the WZZM reports, there are others who want to know what the MCCA is hiding from us. One of them is Fairfield. And he happens to own an insurance agency.

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