Letter: Michigan’s no-fault system broken

Re: The Detroit News’ March 29 editorial, “Revisit no-fault insurance law”: What was once a faraway rumbling has become a roar, heard from residents in Detroit to people living in the Upper Peninsula. Car insurance in Michigan is far too expensive and the Legislature must do something about it.

According to data released in January by the National Association of Insurance Commissioners, Michigan drivers pay the third-highest auto insurance premiums in the country. Drivers in our state pay almost twice as much as drivers in neighboring Ohio, Indiana and Wisconsin. Why? Because Michigan has a unique mandate that every driver purchase unlimited medical benefits with their insurance policy. And it’s a mandate we can no longer afford.

The editorial rightly pegs Michigan’s unlimited lifetime medical coverage as the chief culprit of skyrocketing auto insurance premiums. Giving people a choice of different levels of medical benefits — much like a cell phone plan or cable TV subscription — so consumers can have the flexibility to choose what works best for them and what they can afford is one of the primary ways to lower insurance costs.

The second: Reduce fraud and scams by funding a fraud bureau and requiring people to provide proof when they are injured in a car accident. These are common sense reforms that could save families hundreds of dollars a year in additional premiums.

Finally, the third: Reduce medical costs and insurance premiums by allowing auto insurers to negotiate the best rate for their customers, just like other insurance companies can. Currently, auto insurance companies often pay 200 to 300 percent more for the same procedure as health insurance companies. That’s because health insurance companies can negotiate rates, but a loophole in state law makes it nearly impossible for auto insurance companies to do the same. This can lead to medical care providers ordering and charging for tests and procedures that may provide little or no health value to the patient, according to a report issued by the Citizens Research Council of Michigan.

Michigan’s no-fault system is outdated and broken. It hasn’t undergone any significant updates or changes in over 40 years. It’s high time the Legislature reform this broken system to bring relief to consumers saddled with some of the highest auto insurance premiums in the country.

Pete Kuhnmuench, executive director

Insurance Alliance of Michigan