Michigan drivers deserve transparency affordability from insurers

May 29, 2012
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There’s little to be gained from hiding behind numbers that don’t add up.

Nevertheless, in the May 14 Business Journal article “Crisis predicted in no-fault’s unlimited coverage,” the state’s auto insurance industry insists on blaming the auto no-fault system that, since being adopted into law by the Michigan Legislature 40 years ago, continues to effectively protect motorists against losses sustained in serious auto accidents.

Michigan drivers, however, are being penalized by a price hike in premiums and a $30 increase in the annual Michigan Catastrophic Claims Association assessment, even though financial records indicate the increase is unnecessary. Birny Birnbaum, former chief economist at the Texas Department of Insurance, recently reviewed MCCA’s ledger on behalf of the Coalition Protecting Auto No-Fault (CPAN) and determined over the past year association losses had declined by 33 percent while assets had increased by $2.4 billion.

According to Birnbaum’s review, MCCA’s loss reserves were virtually unchanged from 2010 to 2011: $13.6 billion to $13.7 billion. The stability of these funds hardly points to a crisis.

Clearly, the MCCA needs to prop open its books and explain the 21 percent rate increase taking effect July 1. The insurance industry’s justification of the hike — fund sustainability — is simply unfounded.

The personal injury protection benefit of the Michigan No-Fault Act is absolutely without equal in this country. Michigan drivers pay near the national average for personal injury protection coverage yet receive far more benefits. Because our no-fault system does not cap benefits, seriously injured motorists are kept off Medicare and Medicaid, and state taxpayers save millions.

For some reason, however, insurance industry officials want to remove this life-saving benefit even though they admit the move won’t save drivers a penny.

Plenty of cost controls are already in place. Michigan’s no-fault law requires that only “reasonably necessary” care is covered at “reasonable costs.” For example:

  • When an insurer questions a doctor’s recommended procedure, the insurer can — after consulting with the provider — request a second opinion from an independent medical authority.

  • Insurers frequently consult with case managers to evaluate a patient’s course of treatment.

  • Insurers can, and often do, deny certain treatments they deem unreasonable.

In exchange for the life-saving care provided by Michigan’s no-fault system, Michigan residents forfeit the right to sue the at-fault driver, except in extreme cases of injury. This tort threshold keeps thousands of cases from clogging our court system, saving both taxpayers and insurance companies money. Statistics show for every auto injury lawsuit in this state, eight lawsuits are filed in Ohio.

Michigan’s tort threshold language needs clarification by the legislature, but further restrictions would prevent seriously injured accident victims from holding drunk and negligent drivers accountable for their actions.

Michigan’s no-fault auto insurance system is the absolute best in the nation. It provides accident survivors with top quality care while saving state taxpayers millions every year. There are always improvements that can be made to the system, but the changes proposed by the insurance industry in HB 4936 will destroy no-fault as we know it.

Margaret Kroese is vice president of Hope Network.

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