No-Fault Facts

Cutting Costs, Protecting Benefits

Michigan’s auto insurance companies support changes to the no-fault law that will continue to provide the BEST auto insurance coverage in the country while curbing some of the factors that drive up the cost. Common sense reforms have been proposed that will:

  • Put in place fair cost controls for auto accident medical services
  • Establish a fraud bureau to reduce abuse of the system
  • Make auto insurance rates more affordable for consumers

However, there seems to be some misconceptions or misinformation about reform that we need to fact check.

Not FACT: The legislation “would put a $545,000 cap on catastrophic injuries.” – Ed Bruff, President and CEO of Covenant Healthcare (Mlive 4/26/15)

Check_MarkFACT: Senate Bill 248 would protect the unlimited no-fault benefits in the current system. The first $545,000 of bills will be paid by the driver’s insurance company. Medical bills over $545,000 will be paid directly by the new Michigan Catastrophic Claims Corporation (MCCC).

Not FACT: There will be a loss of healthcare benefits for auto accident victims.

Check_MarkFACT: Senate Bill 248 continues to provide all reasonable and necessary medical care for the lifetime of a person injured in an auto accident. Prohibiting medical providers from charging auto insurance companies 200 or 300 percent more for the same medical treatment, would not lessen the amount or types of health care that will be provided to the catastrophically injured – it would only affect the cost being paid for the care.

Not FACT: “…a bill that would cap, cut, alter and reassign the benefits that catastrophic victims rely on.” – Mitch Albom, Detroit Free Press (4/26/15)

Check_MarkFACT: Mitch should stick to sports. Senate Bill 248 would not cap, cut, alter or reassign (whatever that means) benefits for anyone injured in an auto accident in Michigan. It would only bring the costs in line with what is being charged to other patients for the same care.

Not FACT: “Anytime you put limits on care providing it’s going to affect patient care. It’s going to affect the services that we can offer clients (and) it’s going to affect our ability really to provide top-notch care,” – Greg Hall, Integrity Home Health & Skilled Trade on WWMT TV interview (4/28/15).

Check_MarkFACT: Apparently hospitals and medical providers are providing substandard care for workers’ compensation patients, Medicare patients and Medicaid patients because all of those systems have limits on care reimbursements.  Oakland County Executive L. Brooks Patterson is receiving benefits from the workers’ compensation system which operates under a fee schedule and he is not complaining about the medical treatment he is receiving.

Not FACT: “The only drivers who will save much money are drivers in Detroit, because they’re getting a special deal. The insurance companies win big, with another billion dollars of your money.

“More special interest deals. And more bailouts for Detroit. We’ll pay. And pay. And pay.” – ad on MIRS by Concerned Association of Patients and Providers. (4/26/15)

Check_MarkFACT: The legislation guarantees a $100 rate savings per car for two years no matter where you live. Drivers in Traverse City are going to save the same amount as those drivers in Detroit.

Not FACT: The reform proposal is aimed at increasing the coffers of profitable insurance companies.

Check_MarkFACT: Auto insurance in Michigan is not profitable at all. In fact, according to a study by the National Association of Insurance Commissioners (NAIC), the return on net worth for auto insurance in Michigan was – 3.9 percent in 2013, compared to the national average of 4.6 percent return on net worth.

Michigan’s loss ratios are also consistently higher than the national average. In 2013, Michigan auto insurers paid out $1.15 for every $1.00 earned. This ratio measures the company’s underlying profitability, or loss experience. Nationally, the average auto insurance loss ratio is 66 cents for every $1.00 earned.

Not FACT: Medicaid rates would balloon in Michigan by $30 million if SB 248 is implemented.

Check_MarkFACT: That $30 million figure is not relevant to discussion on SB 248 which does not cap unlimited, lifetime medical benefits. The $30 million amount was included in a study by Public Sector Consultants that was actually an analysis on a $50,000 Personal Injury Protection (PIP) benefit limit and assumed there were no other health care benefits as a backstop.

Not FACT: “.. the new mechanism is specifically exempt from the insurance laws of Michigan, and it is not clear what, if any, contractual obligations there are between the new fund and a person who suffers a serious injury.” – Magen Samyn, vice president of marketing and public relations for Bay County’s McLaren Bay Region (MLIVE 4/26/15)

Check_MarkFACT: The new corporation would be organized under the Insurance Code and the Nonprofit Corporation Act. The association would be subject to supervision of the director of the Department of Insurance and Financial Services (DIFS), according to the House Fiscal Agency Legislative Analysis dated 4-28-15.

That same analysis indicates that the “new association would cover personal (injury) protection benefits when they exceed the limit for which auto insurers are responsible, as the current MCCA does.”

Not FACT:  “…today it (MCCA) has about $20 billion, but the legislators can’t get to it. … The insurance companies can’t get to it, and it’s driving them crazy. And they’re doing anything they can to tear down that gate.” – L. Brooks Patterson (as quoted by Mitch Albom (Detroit Free Press (4/26/15)

“This bill would do that, phasing out the entity that controls the fund and opening loopholes through which the insurance companies could refund themselves.” – Mitch Albom. Detroit Free Press (4/26/15)

Check_MarkFACT: Neither of these statements is true. The current MCCA would become the Michigan Legacy Fund and it would be used to pay for benefits of everyone remaining in the fund for as long as they lived.
The coalition of organizations supporting no-fault reform includes: the Insurance Institute of Michigan, The Michigan Farm Bureau, The Michigan Association of Insurance Agents, the Michigan Chamber of Commerce, National Federation of Independent Businesses, and the Michigan Insurance Coalition.