What’s really driving up Detroit (and Michigan’s) insurance costs?

Even supporters of the no-fault system have called for reforms to curb rising costs

What’s really driving up Detroit (and Michigan’s) insurance costs?

Motor & Fleet

By Allie Sanchez

Three thousand dollars can easily burn a hole in a motorist’s pocket. And it does in Detroit, where the average driver pays that much in annual premiums for car insurance.

But something has to give. The no-fault insurance system in the city and in Michigan as a whole is proving to be such a burden that even its supporters are calling for reforms to ease the astronomical rates in the state. Detroit suffers from the highest car insurance rates in the country due to the current system, but some say it will be tough to totally do away with it.

"Don’t throw out the baby with the bathwater and get rid of no-fault," said Oakland County Executive L. Brooks Patterson in a Detroit Free Press special report.

Mark Bernstein, president and managing partner at the Sam Bernstein law firm, supports reform.

"The tragic truth is that no-fault was a noble experiment with the best intentions to help accident victims and to reduce lawsuits, and it has gone off the rails," Bernstein told the Free Press.

According to the report, some of the other states that have successfully curbed ballooning rates in a no-fault system, did some of the following:
  • Setting a cap on no-fault benefits
  • Establishing fee schedules for the upper limit that doctors and clinics can charge for no-fault procedures and services
  • Adopting restraints on lawyer compensation in legal disputes
  • Cutting the time limit for starting treatment after an accident
  • Proactively preventing and pursuing fraudulent cases
Bernstein said that Michigan does not have to totally supplant its current system. Rather, he said, there need to be checks and balances to ensure that those that really need the insurance benefit from it.

"How do we eliminate bad actors and still protect the legitimate interests of injured people? It’s a very difficult balancing act," he said.

Related stories: 
Allstate and State Farm attempt to combat fraud with racketeering suits
Senator’s bill would reduce Detroit’s premiums, make the rest of the state’s rise

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