Is No-Fault reform good for Michigan? Or just good for the auto insurance companies?
14 truths about No-Fault “reform” in Michigan
Truth #1: Michigan’s auto insurance companies are already “highly profitable” and “significantly more profitable than the national average.”
- Michigan auto insurance industry ‘highly profitable,’ according to former insurance commissioner
- “An Analysis of the Profitability and Performance of the Michigan Auto Insurance Market,” Jay Angoff, former Missouri Insurance Commissioner, May 30, 2007
Truth #2: The insurance companies refuse to guarantee that Michigan No-Fault “reform” will actually lower auto insurance premiums.
Truth #3: Michigan auto insurance companies collected $2 billion more in premiums in 2011 than they paid out in claims.
- Detroit Free Press editorial by Michigan Auto Law: “Two billion reasons to reform Michigan No-Fault.”
Truth #4: The Insurance Institute of Michigan is on record that “[a]uto insurance prices in Michigan are reasonable” and that Michigan’s No-Fault Law “is generally recognized as… the most efficient and effective auto insurance law in the United States.”
- Michigan’s No-Fault system is incredibly valuable… just ask Peter Kuhnmuench of the Insurance Institute Of Michigan
Truth #5: Michigan auto insurance rates are lower than in previous years, according to the most recent statistics reported by the Insurance Institute of Michigan and the Insurance Information Institute.
Truth #6: Insurance rates fluctuate widely from $934 to $4,490, mainly due to a lack of information. This causes higher prices on auto insurance for consumers.
This lack of transparency problem about insurance prices is exacerbated the Michigan’s Insurance Commissioner’s failure (refusal?) to publish its “Buyers’ Guide to Auto Insurance.” This valuable guide has in the past provided consumers with great information on prices for about 60 auto insurers in 16 major Michigan cities, including Detroit and Grand Rapids.
It has been four years since the last “Buyers’ Guide” was published by the Michigan Insurance Commissioner.
- An open letter to Gov. Snyder regarding Michigan No-Fault reform
- Bridge Magazine: Eight Steps That Will Lower Auto Insurance Rates,” Guest Column, February 21, 2013
Truth #8: Instituting caps on No-Fault, and especially on medical benefits, will cost Michigan taxpayers more.
Truth #9: Taxpayers’ Medicaid burden will increase by an additional $30 million annually if No-Fault’s guarantee of paying for all necessary medical care for seriously and catastrophically injured Michigan auto accident victims is “reformed” out of existence.
- “The Impact of Reducing PIP Coverage in Michigan,” Prepared by Public Sector Consultants for the Michigan Brain Injury Provider Council, August 2011.
Truth #10: There is no Michigan Catastrophic Claims Association (MCCA) “crisis:” In 2012, the MCCA had $69 million in assessment income left over after paying out on claims, and it had an average annual reserve (which is used to pay present and future catastrophic claims) of $14,243,649,000.
- Is the MCCA committing a massive fraud upon us with billions in its reserves?
- Michigan Catastrophic Claims Association Annual Report to the Commissioner Fiscal Year Ended June 30, 2012
- Michigan Catastrophic Claims Association Annual Report to the Commissioner Fiscal Year Ended June 30, 2011
Truth #11: Should Senate Bill 251 close the Michigan Catastrophic Claims Association, any leftover funds in the MCCA’s coffers will not be refunded to the consumers who’ve paid into and bankrolled the MCCA fund. The legislation intends that the billions of dollars in the MCCA go instead to Michigan’s auto insurance companies.
Truth #12: So-called No-Fault “reform” will clog our courts with tens of thousands of small and unnecessary lawsuits for medical bills, even though such lawsuits are notorious for being “incomplete, inequitable, inefficient and slow … [at] providing for seriously injured auto accident victims.” (In fact, such lawsuits clogging our courts was the reason Michigan adopted its No-Fault law 40 years ago).
- “No-Fault Insurance In Michigan: Consumer Attitudes And Performance,” Thomas C. Jones, Michigan Insurance Commissioner, April 10, 1978, Pages 76-77
- “No-Fault Insurance After Three Years,” Thomas C. Jones, Michigan Insurance Commissioner, October 6,1976, Opening Letter, Introduction, Page 12.
Truth #13: Want to quickly lower the price of insurance? Mandate a state version of the federal Affordable Care Act, requiring Michigan’s auto insurance companies to rebate money to their customers when they fail to spend 80% of insurance premiums on claims.
Truth #14: People need more protection from insurance companies now.
With no meaningful “Bad Faith” law in Michigan, auto insurers mistreat thousands of people every year with impunity. Auto insurers are under no “duty to deal fairly and in good faith,” nor can they be held “liable for compensatory, consequential, and exemplary damages.” Michigan consumers also have no recourse under the Michigan Consumer Protection Act (MCPA) against insurance companies who engage in “[u]nfair, unconscionable, or deceptive” business practices. And Michigan is one of only five states in the U.S. where insurance companies are protected from punitive damages, even after egregious wrongdoing that has resulted in extraordinary harm to innocent people.