OUR VIEW: Michigan’s no-fault insurance needs reform


By Daily News • Last Updated 3:07 pm on Tuesday, March 11, 2014

Michigan indisputably has the most generous auto insurance system in the nation.

Thanks to our state’s no-fault policy, unlimited lifetime benefits are available to those who are catastrophically injured in car crashes. Our system is funded through an assessment to the Michigan Catastrophic Claims Administration. All drivers are required to pay into the system.

Some people don’t think the system is fair.

House Republicans attempted to reform our state’s no-fault insurance last year by eliminating lifetime benefits and replacing them with a $1 million cap. However, the effort failed due to strong opposition from people who had been critically injured in car accidents and were benefitting from the system.

House Republicans haven’t given up. They are trying again to reform the no-fault system, this time with a proposal to eliminate lifetime benefits and replace them with a $10 million cap. The proposal would also require insurance companies to guarantee 10 percent savings on auto insurance premiums for the first two years. The proposal would also create an authority to combat insurance fraud and open up the Michigan Catastrophic Claims Association to more transparency.

Speaker of the House Jase Bolger says Michigan has the best auto insurance in the nation, but also one of the most expensive systems in the country. He said families are struggling to pay auto insurance bills and a growing number of people are driving without insurance as a result.

Bolger said a $10 million cap would save everyone money while still covering the majority of people injured in car accidents. He said the highest claim in Michigan was $12.7 million and only a small amount of people have filed a $10 million claim.

Of course, the proposed bill has been met with opposition. Oakland County Executive L. Brooks Patterson went so far as to call the new bill “a death sentence for individuals recovering from catastrophic injuries.”

Rep. Rick Outman, R-Six Lakes, addressed the proposal at last Monday’s legislative update gathering at Montcalm Community College. He doesn’t have an official stance on the proposal at this time, but he believes some changes must take place.

“Is it perfect? I don’t know,” Outman 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 does agree with the majority of the proposal, saying he believes it would create a more efficient system, payouts would be quicker and everyone would save money. He also thinks the Michigan Catastrophic Claims Association should be more transparent. He said associate officials have admitted their system is unsustainable, but they refuse to open up their books to the government.

Legislation of the proposal is expected to be drafted this week in Lansing.

Until we know more details about the proposal, we aren’t taking an official stance either, but we agree our state’s no-fault system needs reform. Michigan’s unlimited system is far and away the most generous in the nation. The next state that comes close (and it’s not even close) is New York, which has a cap of $50,000.

The idea of a system that hands out unlimited amounts of money to a few while all of us are forced to pay seems questionable. We’re glad our state’s auto insurance system is being questioned and we hope the debate will lead to a more sensible resolution for everyone.

Editorial opinions are the consensus of The Daily News editorial board.

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