Michigan No Fault reform: Gov. Rick Snyder's proposal and the facts

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Attorney Steven Gursten of Michigan Auto Law discusses auto insurance rates, and how No Fault reform would affect Michigan auto accident victims

Fixing No Fault by the Insurance Institute of Michigan, chart used in Gov. Rick Snyder's April 18, 2013 press conference

Snyder is pushing his agenda under the guise that it will save drivers money on their premiums, but he's doing so with many unsubstantiated, inaccurate justifications.

Gov. Rick Snyder recently presented a new proposal for Michigan No Fault reform. According to a press release on Gov. Snyder's website (dated April 18, 2013), the proposal includes capping the currently unlimited, lifetime No Fault medical benefits for seriously injured accident victims; and dismantling the Michigan Catastrophic Claims Association, which covers accident-related medical costs for claims exceeding $500,000.

"Gov. Snyder and the Michigan auto insurance industry are pushing No Fault reform, and such measures would leave Michigan accident victims lacking critical medical care, and force them to turn to tax payer-funded Medicaid," said attorney Steven M. Gursten, head of Farmington Hills-based Michigan Auto Law. "Snyder is pushing this agenda under the guise that it will save drivers money on their premiums, but he's doing so with many unsubstantiated, inaccurate justifications."

Gursten says people deserve to know all of the information about Michigan's No Fault system and what they're paying for auto insurance — before No Fault is "reformed."

Below are the facts behind Gov. Snyder's latest No Fault reform proposal, according to cited insurance studies and published reports.

Snyder: No Fault reform will save Michigan auto insurance consumers $125 per vehicle in the first year.

FACT: "In return for the indefinite elimination of unlimited, lifetime No Fault medical benefits which could be worth millions and millions of dollars, auto insurance consumers have the Governor’s word that they will save $125 for a year. It’s just as crazy as it sounds," Gursten said.

Snyder: “Michiganders have seen their auto insurance rates rise faster than any other state in the country.”

FACT: Gursten said data and statistics from the Insurance Institute of Michigan (IIM) [Auto Rates, Premium Comparison by State, 1/13; Fact Checker, A Check of the Facts in the Michigan Automobile and Home Insurance Consumer Advocate Report to the Governor, 2009] and the Insurance Information Institute (III) [Auto Insurance, Costs and Expenditures show that Michigan auto insurance rates in recent years were lower than in previous years:

According to the Insurance Institute of Michigan, the average automobile insurance premium in Michigan was lower in 2010 than it was in 2003, 2004, and 2005:

  •     2010 average Michigan auto insurance premium: $1,073.52
  •     2003 average Michigan auto insurance premium: $1,088.15
  •     2004 average Michigan auto insurance premium: $1,128.16
  •     2005 average Michigan auto insurance premium: $1,088.97

In addition, the average Michigan auto insurance expenditure, i.e., “what [Michigan] consumers actually spend for insurance on each vehicle,” was lower in 2010 than it was in 2003 and 2004, according to the Insurance Information Institute:

  •     2010 average Michigan auto insurance expenditure: $934.60
  •     2003 average Michigan auto insurance expenditure: $950
  •     2004 average Michigan auto insurance expenditure: $980

For more information, read “The truth about Michigan auto insurance rates.”

Snyder: No Fault medical benefits must be capped because Michigan’s guarantee of unlimited, lifetime medical benefits for catastrophically injured auto accident victims is hiking up auto insurance prices.

FACT: The experience of other No Fault states proves that Michigan’s No Fault medical benefits are not to blame for the prices that Michigan auto insurers choose to charge, Gursten said.

"With its guarantee of unlimited, lifetime No Fault medical benefits, Michigan auto insurance is cheaper by at least $100 per year than auto insurance in other No Fault states where the caps on medical benefits are drastically lower," Gursten said, noting data from the IIM (which was also used in one of Gov. Snyder’s exhibits at a press conference announcing his plan).

  • According to IIM, Michigan’s average annual auto insurance premium is $1,073.
  • However, in New York, where No Fault medical benefits are capped at $50,000, auto insurance costs $1,207.
  • Similarly, in the District of Columbia and in New Jersey, where No Fault medical benefits are capped at $25,000 and $15,000, respectively, the prices of auto insurance are $1,277 and $1,276, respectively.

For more information, read, “The Insurance Industry’s Top 4 Myths About Michigan No Fault Insurance Reform.”

Snyder: Auto insurance prices in Michigan are exorbitant when compared to the prices in neighboring states, such as Illinois, Indiana, Wisconsin and Ohio.

FACT: "This is not an apples to apples comparison because Michigan is a No Fault state, yet the other states are “tort liability” states," Gursten said, adding that the negatives of tort liability systems, which are notorious for causing long delays in getting medical treatment, necessitating high-volume, costly lawsuits and slow handling of claims for accident-related medical benefits, are what prompted Michigan to convert to a No Fault system in 1973.

Gursten added that recent comments by Lynne McChristian, a spokesperson for the Insurance Information Institute (III) provide the proper perspective for considering the auto insurance price differential between Michigan and the other four states, all of which rely on tort systems for resolving auto accident-related medical benefits claims:

In an April 5, 2013 interview with the South Florida Sun-Sentinel, "PIP: reform it or get rid of it?" on the possibility of Florida dropping its No Fault auto insurance system and going to a tort system, McChristian identified the following “negatives for the consumer”: slower handling of claims; delays in getting medical treatment; and, “[t]here is likely to be more lawsuits.”

Click here to read a comprehensive analysis of Michigan No Fault reform and the latest developments.

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About Steven M. Gursten: Steven M. Gursten is an attorney and head of Michigan Auto Law. He is president of the Motor Vehicle Trial Lawyers Association and serves as an executive board member of the American Association for Justice (AAJ) Traumatic Brain Injury Lawyer Group.
Gursten is also past co-chair of the Michigan Association for Justice Automobile Accident No-Fault Committee and past-president of the AAJ Truck Accident Litigation Group. He speaks at legal seminars across the country on insurance, No-Fault litigation and helping auto accident victims. Gursten is available for comment.

About Michigan Auto Law: Michigan Auto Law has 18 lawyers exclusively handling auto accident and No-Fault insurance litigation throughout the state. The law firm has received the top-reported jury verdict for a car or truck accident victim for the past five years, according to published reports by Michigan Lawyers Weekly. Michigan Auto Law has offices in Farmington Hills, Sterling Heights, Detroit, Ann Arbor and Grand Rapids. For more information, call Michigan Auto Law at (800) 777-0028.

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Natalie Lombardo
Michigan Auto Law
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