Michigan Chamber of Commerce: Reforms Needed to Protect No-Fault Auto Insurance

September 8, 2011

The Michigan Chamber of Commerce announced a study showing significant reforms are needed to protect Michigan’s no-fault automobile insurance system from collapse and keep premiums competitive with other states.

The Chamber-sponsored study determined that no-fault reforms are needed to prevent a cost crisis that could destroy Michigan’s no-fault system. The study identified four primary recommendations for reform:

  1. Place upper limits on no-fault benefits;
  2. Allow consumers to choose the level of benefits they receive;
  3. Enact cost controls for medical and long-term care through a fee schedule similar to that used for systems such as worker’s compensation; and
  4. Introduce a coordinated response to claims fraud.

“Michigan’s current auto no-fault system is by far the most generous of all 50 states. This doesn’t translate into good news for Michigan citizens or job providers purchasing insurance for commercial fleets of vehicles,” said Michigan Chamber President and CEO Rich Studley.

Premiums in Michigan rose by 30.5 percent over the last decade, compared to 13.7 percent nationwide.

“This trend line puts Michigan at a competitive disadvantage,” noted Studley. He said costs need to be contained and tighter controls over the system should be introduced.

One of the key reforms the study explored was providing drivers with coverage choice. Drivers currently pay among the highest auto insurance premiums in the nation in exchange for unlimited medical coverage they may neither want nor need, according to the Chamber.

“Allowing coverage choice is good for Michigan drivers and for Michigan job providers,” said Wendy Block, Director of Health Policy & Human Resources for the Michigan Chamber. “Reforms like coverage choice will help preserve our no-fault system, and save insurance purchasers money at a time when every dollar counts.”

Source: Michigan Chamber of Commerce

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