Will Small Business Support Changes to Michigan’s No-Fault Law?

NoFaultConsumers and businesses alike have complained about the high costs of no-fault insurance required under Michigan’s no-fault auto insurance system. One of the features of Michigan’s no-fault law that critics claim is responsible for the higher cost is the unlimited lifetime medical and rehabilitative benefits for personal injury protection (PIP) that exist in the law. There is also debate over no-fault auto insurance medical payments being more generous than similar payments made under other insurance plans such as workers compensation and health insurance.

The Michigan Catastrophic Claims Association (MCCA) reimburses no-fault auto insurers for amounts paid in excess of $500,000 per claim under PIP and this is divided among all drivers with a per vehicle charge on their insurance policies every year. The 2012 assessment was $175 per vehicle.

In an effort to reduce the cost of no-fault insurance, proposals debated in the last legislative session would have changed Michigan’s no-fault auto law by eliminating the unlimited lifetime medical and rehabilitative benefits for personal injury protection (PIP) and replacing it with a single PIP limit of $1 million and placing limits on payments for lifetime medical care provided by a family member. The proposed changes also included requiring medical claims to conform to the “reasonable and customary” standard found in other insurance coverages such as workers compensation and health insurance.

Supporters of these changes point out that Michigan is the only state that offers unlimited medical treatment under its PIP coverage and that a million dollar limit would cover 99 percent of all medical claims under no-fault. After that, they say, other insurance – such as health insurance, Medicare, Medicaid etc. – would kick in to provide further coverage. Supporters also say that business owners subsidize the high cost of unlimited PIP coverage because they pay the per-vehicle charge, but most work related claims are covered under workers compensation and not no-fault. Supporters claim that if these changes are implemented the savings on the no-fault PIP charge would be $100 per vehicle.

Opponents of these changes say that Michigan’s big insurance companies are behind the efforts to cap PIP benefits and that these companies refuse to guarantee the cost savings they claim. They argue that drivers will have to purchase more insurance to protect themselves from underinsured drivers and that seriously injured drivers will end up on welfare programs to pay for their care after they exhaust their auto insurance limits. Opponents claim that the insurance companies refuse to publicly disclose how they calculate the PIP assessment on every vehicle because they want to hide their profits from public view.

So will small business support the proposed changes to Michigan’s no-fault auto insurance law when they resurface this session? NFIB/Michigan will be surveying our small business members with the arguments laid out in this post to find out.

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About Charles Owens

Charles Owens has been advocating the interests of small business in the Michigan Legislature for over 25 years, beginning with his tenure at the Michigan Institute of Laundering and Dry-cleaning and currently with the National Federation of Independent Business / Michigan. As the State Director of one of Michigan's most respected small business organizations, Owens is responsible for directing the NFIB in its mission to maintain the viability of small business in the face of expanded legislative and regulatory challenges. Owens has been an active participant in the legislative debate over numerous landmark Michigan issues including: the Michigan Environmental Protection Act, inheritance tax, tort liability reform, Unemployment Insurance reform, Workers’ Compensation, and Michigan Occupational Safety & Health Act (MIOSHA) issues. Owens and the NFIB spearheaded the efforts of other small business groups in the fight for fairness and equity for small business in the debate over the repeal and replacement for the Michigan Business Tax. Owens is a 25 year member of the Capitol Club, a dedicated group of association executives committed to the advancement of legislative advocacy for their respective organizations. In 2005 he was elected by his peers to be President of the organization. In 2006, Owens was ranked as number five of the top ten single interest individual lobbyists in Michigan by Inside Michigan Politics. Under his leadership, NFIB was also ranked in the top twenty lobbyist organizations and top ten single interest lobbying organizations by the same publication. Originally a native of Rockford, Illinois, Owens graduated from Northern Illinois University with a Bachelors Degree in Finance and Business Administration. follow on twitter: @OwensNFIB
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2 Responses to Will Small Business Support Changes to Michigan’s No-Fault Law?

  1. It’s good news that NFIB and other business organizations in Michigan are taking a serious look at No-Fault reform. The cost saving benefits of a no-fault system that reduces the need for lawsuits is being eroded by the high cost of unlimited medical benefits mandated by our current system. Commons sense dictates that that a system without limits is not sustainable. The cost to cover unlimited medical coverage has soared by over 3100% in the last twelve years, forcing Michigan auto insurance rates to grow faster than the rest of the country. High rates have forced 20% of drivers to drive uninsured. And many drivers are being forced to pay twice for coverage they don’t even need. Reforming no-fault could save Michigan drivers around $1 billion a year and that’s money that could be better used to buy Michigan goods and services people need.

    Tom Shields
    Michigan Insurance Coalition

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