September 26, 2017 (Lansing, MI) – The state’s leading small business organization, the National Federation of Independent Business (NFIB), announced support for the latest no-fault auto insurance reform proposal unveiled today. The proposal was the subject of a press conference held today by House Speaker Tom Leonard, Detroit Mayor Mike Duggan, and House Insurance Committee Chair Representative Lana Theis.
“Other proposals put forth this session make the unrealistic promise of keeping the status quo no-fault insurance coverages mostly unchanged while claiming cost reductions to consumers,” said NFIB State Director Charlie Owens. “This proposal recognizes that no significant cost savings can be achieved unless the underlying drivers of those costs are addressed.”
The new proposal would give consumers a choice of a $250,000 lifetime cap, a $500,000 lifetime cap, or the current unlimited benefits on medical costs. Currently, the only option available is unlimited medical coverage and this has been the primary reason why Michigan’s auto insurance rates are the highest in the nation. The proposal would also allow senior citizens that are covered by Medicare, and those covered by retiree health insurance, to completely opt out of the medical coverage under no-fault personal injury protection. In those cases, their Medicare or retiree health insurance would cover the medical cost of an auto accident. In addition, medical costs charged by health care providers would be subject to a fee schedule tied to Medicare reimbursement rates. Now, hospitals and other care providers can charge much higher rates for services from no-fault auto insurance companies than they do for other insurance programs such as workers compensation, Medicaid, Medicare, and private health insurance. Critics of the current system point this out as another factor in driving up Michigan’s auto insurance costs.
If the plan is passed by the legislature in its current form and signed into law, it could result in savings to consumers of anywhere from 30 to 50 percent from current rates depending on the options selected.
“We’re the only state in the country to have unlimited medical benefits for auto insurance and that distinction is reflected in the high premiums that we pay,” said Owens. “Consumers and small business owners should be given a choice that allows them to fit this mandated coverage into their budgets instead of it being dictated as an all or none choice.”
Owens said that NFIB has surveyed its members in the past on the state’s current no-fault auto insurance system and found that 76 percent of small business owners favor reforms like the proposal offered today.