New plan to overturn no-fault is an insurance industry giveaway

New plan to overturn no-fault is an insurance industry giveaway

SB1 offers no consumer protections or guaranteed rate relief

LANSING, Mich. – (May 7, 2019) – A new plan introduced in the state Senate today would gut protections for auto accident survivors and all Michigan consumers, shift the cost of care from auto insurance companies to taxpayers, and do absolutely nothing to guarantee lower premiums or stop the discriminatory pricing practices of auto insurance companies.

The bill, SB1, amounts to a giveaway to the auto insurance industry, said John Cornack, president of the Coalition Protecting Auto No-Fault.

“Michigan residents are desperate for real relief from their auto insurance premiums,” Cornack said. “Instead, a group of senators are all too eager to strip away their protections and raise their taxes, while letting auto insurance companies continue to charge exorbitant rates with little to no oversight of their discriminatory practices. SB1 is a great deal if you’re an auto insurance company CEO. It’s a bad deal if you are anyone else.”

Despite the fact that Michigan’s auto insurance industry is weakly regulated compared to other states, SB1 does nothing to increase protections for consumers:

  • It does not prohibit the insurance industry’s discriminatory practice of setting rates based on non-driving factors like gender, job title or ZIP code.
  • It does not move Michigan from a “file and use” system—where insurance companies can set rates with little oversight—to a “prior approval” system, where rate increases would have to be approved by the state.
  • It does not include a fair fraud authority that cracks down on fraud in all aspects of the no-fault system, including insurance companies that deny and delay legitimate claims.

In addition, SB1 would likely represent a hidden tax increase on all Michigan residents. By gutting no-fault benefits and protections, more victims would be forced into medical bankruptcy and onto state Medicaid. That cost would be passed onto the taxpayer – a 2017 analysis by the House Fiscal Agency found that a similar plan would increase Michigan’s Medicaid cost by $150 million.

“We can lower auto insurance premiums without depriving care for catastrophically injured residents,” Cornack said. “But that involves standing up to auto insurance companies and holding them accountable. Instead, Senate Republicans are giving them everything they want. We call on the Senate to join us in a real conversation and move forward with reforms that protect people, not insurance company profits.”

Cornack added that SB1 is out-of-line with what Michigan voters want. A recent poll found that 65 percent of likely voters reject any plan to eliminate or limit medical benefits for auto accident victims.

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