Newly Proposed No-Fault Reforms Worthy of Strong Consideration
LANSING – State Representative and House Insurance Committee Minority Chairman Brian Banks (D-Detroit) today announced the introduction of two bills that would lower rates for Michigan drivers while maintaining the life-saving personal injury benefits provided by the current no-fault system.
“Michigan has been in need of comprehensive no-fault reform that reduces medical costs to insurers, addresses fraud in a balanced way and offers real savings to drivers,” said Coalition Protecting Auto No-Fault President John Cornack. “CPAN has not had the opportunity to review Rep. Banks’ proposals in full detail, but his legislation hits on all of those notes – and it maintains quality injury protection for catastrophic accident victims. We will be urging lawmakers to look at these bills as a real opportunity for compromise.”
The newly introduced legislation, which is modeled after a Texas program, offers a strong alternative to D-Insurance -- Detroit Mayor Mike Duggan's proposal for a low-cost / low-benefit auto insurance for Detroit residents. Instead, Rep. Banks' legislation proposes a 12 percent rate reduction of the average annual premium for consumers. Drivers are eligible if they meet one of the following requirements:
Reside in an area with a population of 500,000 or more
Live in rural or urban municipalities bordering the areas that meet the population criteria
Live in an city, township or village where 35 percent of drivers are uninsured;
Or live in a designated zip code or a community bordering a designated zip code.
Insurance companies that participate in the reduced rate auto insurance plans would receive a $500 tax credit for every previously uninsured household that signs up under the program. The legislation also allows Michigan auto insurers to require a co-pay for Personal Injury Protection (PIP) benefits, similar to those required under standard medical insurance.
The legislation also creates a fraud authority that would investigate both consumer fraud and the accusations of unfair claims practices by auto insurers. In addition, Rep. Banks’ legislation limits hospital reimbursement rates by auto insurers to no more than 80 percent of their standard charges. This limitation would apply only to licensed hospital facilities and not to independent medical practitioners or post-acute rehabilitation facilities.
