Michigan’s Auto Insurance Reform Law Reducing Costs, Paper Finds
Michigan’s personal auto insurers are paying out less in claims and drivers are paying less in premiums since changes were made to the state’s no-fault system in 2020 and policyholders are benefiting, two non-resident scholars at the
“Our initial evaluation of the likely effects of the reform legislation indicates that it is significantly reducing the costs of auto insurance for many
PIP covers the treatment of injuries to the driver and passengers of the policyholder’s car in a no-fault auto insurance system.
Before the state’s no-fault auto insurance system reform law took effect in
The 2020 reform law’s enactment allowed for:
- Reducing auto insurer payouts of high PIP medical benefits
- Instituting medical cost controls
- Broadening the state’s authority to regulate personal auto insurance rate filings
-
Creating a Fraud Investigation Unit within the
Department of Insurance and Financial Services - Restricting auto insurer use of “non-driving” rating factors (e.g., credit-based insurance scores)
The paper reports the average
“Hence, the data lend support to the contention that Michigan’s unlimited PIP medical benefits and its lack of a medical fee schedule, uncontrolled utilization, and substantial fraud and abuse were the principal factors causing Michigan’s high PIP costs,” the paper’s co-authors conclude. The authors contend that by addressing these problems through its reform legislation,
The paper notes a case pending before Michigan’s Supreme Court has the potential to reverse some of the auto insurer cost savings and policyholder premium reductions achieved by the 2020 reform law.
RELATED LINKS:
Article: Background On:
Facts and Statistics:
Policy Brief: No-Fault Auto Insurance Reform in
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