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Coalition of House lawmakers unveil auto insurance reform

September 19, 2017

Courtesy of MIRS News Service

Fifteen House members Thursday unveiled their auto insurance reform plan, a package called the “Fair and Affordable No-Fault Reform Package” that they claim will reduce auto insurance rates 20 to 30 percent without cutting benefits.

“Michigan’s auto insurance system is among the very best in the world when it comes to providing coverage to auto accident victims,” said Rep. Ben Frederick (R-Owosso) at the press conference Thursday. “If you are injured in an auto accident in Michigan and you have insurance, you are covered for as long as that injury exists. This is especially important for those who suffer from traumatic brain injury and other catastrophic injuries in a car accident. A benefit like this deserves to be preserved even as the overall system is reformed.” 

Currently being drafted, Frederick said the package consists of 12 bills and is expected to submitted in the next week or two. 

“We believe that by addressing fraud prevention, including fee schedules, coordinating policies with health insurance, reforming non-driving factors and by making sure that we are putting reasonable regulations in place for home health care, that we can guarantee a rate reduction of 20 to 30 percent for Michigan drivers without reducing benefits,” said Rep. Tim Greimel (D-Auburn Hills). 

Unveiling the package were Frederick and Greimel, as well as Reps. Donna Lasinski (D-Scio Township), Joe Graves (R-Argentine Township), Sherry Gay-Dagnogo (D-Detroit), Michael Webber (R-Rochester), Edward Canfield (R-Sebewaing), Steve Marino (R-Mt. Clemens), Robert Wittenberg (D-Oak Park), Jeff Yaroch (R-Richmond), John Bizon (R-Battle Creek), Peter Lucido (R-Shelby Twp.), Patrick Green (D-Warren), Daire Rendon (R-Lake City) and Abdullah Hammoud (D-Dearborn). 

The press conference was held in the Lansing Center in conjunction with the Brain Injury Association of Michigan’s annual fall conference. A crowd of about 200 people gathered for the press conference. The association’s president and CEO Tom Constand joined lawmakers for the press conference to speak in support of the bills. He said his organization supported the bills to preserve the lifetime benefits contained in no-fault. Initially, the association had been opposed to the adoption of a fee schedule, but ended up conceding for the larger good.

“Everybody should give a little to get something this big done. That’s my hope,” Frederick said. 

The Coalition Protecting Auto No-Fault issued a statement in support. 

“While we have not yet seen the final bills, this is the closest we have seen to a complete no-fault reform package in a long, long time,” said CPAN President John Cornack. “The proposals unveiled today would bring dramatic and lasting improvements to Michigan’s insurance system that all sides would benefit from. Whether you are a driver, an accident survivor, a health care provider or even an insurance company, there is something to like in this package.” 

House Speaker Tom Leonard (R-Dewitt) was not a part of the package. He’s been working on his own version of auto insurance reform with Detroit Mayor Mike Duggan. But he said he was glad to see the group bring forward proposals to get the process of insurance reform started. 

Canfield explained the fee schedule will tie reimbursement for treatment and services to 185 percent of workman’s compensation, but it will also require prompt payment and electronic billing. 

“This will provide fair reimbursement for the care and service for individuals who have been in catastrophic accidents while also reasonably compensating those who provide that care,” Canfield said. 

Lasinski said her bill will coordinate auto insurance coverage and health care coverage, which is duplicative and ends up straining family budgets. By streamlining the claims, she said the cost of care can be limited. 

Gay-Dagnogo said her piece of the package will end the practice of insurance companies setting rates based on factors unrelated to driving. A recent study indicated insurance companies charge higher rates to women. 

“Are you working, a blue-collar worker? You pay more,” Gay-Dagnogo said in the most impassioned speech of the gathering. “Have you been in tough financial situation and have a poor credit score? You’re paying more. Do you live on the wrong side of Eight Mile? You’re paying more? Has your spouse recently passed? God forbid, you’re paying more. Are you a woman? You’re paying more? Not a single one of these things have a thing to do with how good a driver you are or how expensive your vehicle is to fix, so why should insurance companies be allowed to lack transparency and charge us more? These discriminatory practices have to stop and that is exactly what the Fair and Affordable No-Fault Reform package is going to do.” 

Webber said his bill will add transparency to how fees are set. 

“Our insurance system can’t truly be fair and affordable unless it also transparent,” he said. “The Michigan Catastrophic Claims Association (MCCA) is the backbone of our auto insurance system and the guaranteed lifetime coverage provided to accident victims. It is responsible for reimbursing auto insurance companies for medical claims that exceed $555,000. The MCCA holds roughly $20 billion in assets to cover about 16,000 full-benefit claims. It currently assesses every auto insurance policy in this state a $170 fee to fund its operations. This organization was created by the state Legislature yet it is controlled entirely by insurance companies. We have no idea how they determine the annual surcharge.” 

He said his bill will make rate-setting data subject to the Freedom of Information Act and MCCA board meetings subject to the Open Meetings Act. 

Greimel contended the package also must correct several bad court rulings.

“The court ruled in such a way that insurance companies are using that opinion to deny paying no-fault benefits, legitimate expenses, needed by auto accident victims like handicapped, disabled accessible transportation and even food. We can’t say that we are making no-fault fairer for Michigan drivers without addressing these shortcomings. And this package will put an end to this kind of miscarriage of justice.”

Responding to today’s development, House Insurance Committee Chair Lana Theis (R-Brighton) said she was “encouraged” her House colleagues are taking action on the state’s high auto insurance rates, but fears that parts of the package will add costs to the system.

“I look forward to working with all of my colleagues on reforms to address major cost drivers like a fee schedule, choice and fraud, along with other areas of our auto no-fault law,” Theis said. “From the beginning my mission has been to ensure Michigan drivers get relief by reducing their insurance premiums; and to hear my colleagues agree with this principle is encouraging.”

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