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Auto No-Fault

May 20, 2019

Letter from the President

By Brian Calley

There are so many things happening in the political world that it’s hard to know where to begin. I’ll focus this week on the biggest thing happening in our state’s political and policymaking world: No-fault auto insurance reform.

The Senate shocked the political system when they passed a very substantial no-fault auto insurance reform package. Not to be outdone, the House followed suit with their own no-fault reform legislation.

While some of these concepts have been passed by one of the two legislative chambers in the past, this is the first time such significant changes have passed both the House and the Senate since the original law went into effect in the 1970s.

At the heart of this debate are the issues of whether to require unlimited lifetime medical coverage on automobile insurance policies and how to control the billing rates of medical services charged to the auto insurance system.

Proponents of the reform legislation say drivers should have more choices on coverage levels and lower insurance premiums. Opponents of these reform packages argue that Michigan has the best healthcare system for auto accidents in the nation because this coverage is required on all policies.

Even though the House and Senate have both passed significant reform legislation, there are differences between the two legislative bodies. It is not difficult to imagine those differences being resolved given how closely the leadership of the House and the Senate are working together. The real question is: What does the governor do with this legislation?

Governor Whitmer has signaled the willingness to accept some changes to the no-fault insurance system. Based on her public comments, it appears as though she is open to choices of coverage levels rather than requiring unlimited lifetime medical coverage on all policies. Although, it does appear that her minimum coverage requirements would be much higher than the minimums passed by the legislature.

The real sticking point in the negotiations may come down to what factors are used to set rates and how those factors are approved (i.e. credit scores, driving record, zip codes). I could write a whole different letter on that subject alone.

Adding pressure to the situation, Detroit businessman Dan Gilbert has filed paperwork to bring this issue to the ballot. This clearly sends a signal that if the political system is unable to pass a reform package into law, there are external forces willing to bring it directly to the people.

Clearly this issue will be heavily debated and perhaps even dominate the political landscape this year. We at the Small Business Association of Michigan will be here to help you sort it all out.

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