SIDNEY — Michigan stands alone as the only state to provide the benefit of unlimited personal injury protection coverage, but a resurgent effort to overhaul the current no-fault auto insurance system and implement a cap is beginning to gain ground in Lansing.
Last Thursday, Michigan House Speaker Jase Bolger, R-Marshall, announced a proposal that, among other things, would create a cap on Michigan’s unlimited personal injury protection coverage at $10 million.
A similar proposal in April of 2013, which recommended a cap of $1 million, eventually died in the house after strong opposition from democrats and a lack of faith in the plan from some republicans.
According to Bolger, the cost of insurance premiums has reached a point where changes need to be made systematically.
“Michigan has the best auto insurance coverage in the nation, far and away, but we are also among the most expensive auto insurance in the country,” Bolger said Thursday in Lansing. “That escalation in auto premiums has continued to strangle our families. Our families are struggling to pay their auto insurance bills and as a result we are seeing a growing number of people who are driving uninsured.”
Michigan’s unlimited no-fault system is by far the most generous in the nation, with the next closest being New York, which implements a cap at $50,000.
The system is funded through the Michigan Catastrophic Claims Administration, which manages the lifetime benefits for people injured in car accidents.
Bolger said the mission is to revamp the system to create lower rates, but still leave a system in place that can be considered one of the best in the nation.
“Our goal … is to maintain the best coverage in the country but make it more affordable,” he said.
Bolger’s proposal would also create a mandatory two-year, 10 percent rate reduction, reduce reimbursement rates for auto-related injuries, create an authority to combat insurance fraud and open up the Michigan Catastrophic Claims Association (MCCA) to more transparency.
The proposal is opposed by the Coalition Protecting Auto No-Fault (CPAN) and most health care providers, who claim it would negatively affect accident survivors and move costs onto health insurers and taxpayers, a result they claim could see hospitals having to spend millions of dollars.
During Monday’s Legislative Update meeting at Montcalm Community College, Rep. Rick Outman, R-Six Lakes, spoke at length on the proposal.
Similar to last year when a no-fault proposal was issued, Outman said he hasn’t reached a decision on whether to support the current proposal or not.
“This is very preliminary, I’m hesitant to even talk about it, because it’s going to change,” he said. “(Auto insurance reform) keeps rearing its head, and perhaps rightfully so.”
While outman said he is still waiting for more concrete details on the proposal, he did agree that changes to the no-fault system must occur in the future.
“Is it perfect? I don’t know,” he said. “What I do know is we pay higher rates than anyone else. I hear it from people that move back to Michigan from other states. They are amazed. We have to do something.”
Outman said he still has questions that need answering, such as issues he has regarding a new “fix-it ticket” process being discussed for those who are caught driving without insurance.
Under the proposal, instead of motorists who are caught driving without insurance being issued a fine, they instead would be issued a “fix-it ticket.” Under that process, motorists would have the opportunity to then acquire insurance and, in return, have their fine waived.
But Outman said he believes that system would be abused, with motorists simply waiting to purchase auto insurance until they are caught without it.
“Sometimes it’s cheaper to wait for the ticket and then go fix it,” he said. “I understand the idea behind it, but what will be the motivation for people to get insured if they can just wait?”
Outman said he agrees with the majority of the proposal, mainly because of cost saving measures that are intended to be included.
“It will add efficiencies, payouts will be quicker, it will save everybody money,” he said.
Outman added that he believes it’s very important that the MCCA is viewed with more transparency.
“We have an inefficient claims process and the biggest thing that we see as a detriment to this, that we haven’t been able to get our hands on, is the MCCA,” he said. “We don’t think that they are transparent enough.”
Outman said the MCCA has admitted the system is unsustainable, but “refuses to open up their books” to the government.
Legislation of the proposal is expected to be drafted this week in Lansing.
The Associated Press contributed to this article.