Rethinking Auto No-Fault Reform: The Need For A More Incremental Approach

As the Michigan House of Representatives debated and then voted on a radical redesign of our 40-year auto no-fault system November 2, 2017, it was no surprise that efforts on the part of the insurance industry, Rep. Tom Leonard (R), Detroit Mayor Mike Duggan and attorney Mark Bernstein were unsuccessful. HB5013 needed bipartisan support to pass, but what it actually engendered was bipartisan opposition.

HB5013 represented a radical redesign of a nationwide, best-in-class Auto No-Fault system with a goal of lowering insurance rates for Michigan motorists. This bill shows how little Michigan citizens value the long-held benefits we enjoy from no-fault insurance.

Michigan’s auto insurance rates are among the highest in the country. However, we have the most generous benefits that help protect some of the most vulnerable among us – those catastrophically injured in a motor vehicle accident. Florida motorists pay similar rates with a $2,500 cap in benefits. In New Jersey, the story is similar, with $100,000 in benefits.

This isn’t the first time our state legislature has attempted to reform auto no-fault, and it won’t be the last. The only way we will actually achieve reform is not through a radical, big-bang, complete overhaul but rather through a series of deliberate, carefully considered, incremental policy changes over many years that build a lower-cost system.

Lasting change happens slowly and takes time. Unfortunately, with term-limits in Lansing, few legislators can see beyond their term in office.

The resounding failure of this latest attempt at no-fault reform is evidence that change needs to happen in small or incremental steps. It’s time to find areas of compromise. Duggan’s grand vision for changing no-fault was grounded in a noble goal – lowering insurance rates for Michigan drivers. But governing and lawmaking are very different things.

Lawmaking is about compromise. We simply can’t go from four decades of best-in-class, no-fault insurance to overnight change. Michigan drivers have enjoyed the far-reaching safety net of auto no-fault insurance, which provides lifetime benefits for those injured in accidents. Recent legislative proposals focused on eliminating auto no-fault and replacing it with higher premiums and lower coverage.

This isn’t the first time Michigan’s legislators have tried to do away with no-fault. However, it’s the first time the proposal has gotten to the House floor. House Bill 5013 would protect insurance agents from lawsuits, give drivers options of coverage and cost, provide motorcyclists low-level benefits, free motorists from out-of-pocket expense recovery, set health care provider rates at Medicare levels and implement extreme limits on services for injured folks.

This was the most egregious package of insurance bills ever proposed.

For healthcare providers, one of the most concerning provisions was utilization review, which gives insurance directors power over patient treatment protocols. That’s not a change I can live with, and I don’t think motorists could, either.

That said, change is needed. Residents of high-traffic, high-crime locales pay a lot more for auto insurance than safer suburbanites. What happens in big cities affects small communities. It’s not fair, but it’s reality. We are one state, urban to rural, suburban to remote.

For 40 years, we’ve enjoyed the Cadillac of coverage; no insurance package is perfect. We must ask ourselves whether auto insurance exists for the insured or for the insurer, and make change to benefit our people, rather than our pocketbooks.

Are we really willing to save money for big business at the expense of the health of our citizens? I don’t think any of us want to leave Michigan drivers with limited access to care. The truth is, we’ll foot the bill at one end or the other.

Let’s come together to develop incremental changes that satisfy people on all sides of the conversation. It’s the only way we can have a significant impact and not throw the baby out with the bath water.