Michigan's landmark auto insurance reform bill is signed into law

Michigan's landmark auto insurance reform bill is signed into law | Insurance Business

Michigan

Michigan Governor Gretchen Whitmer officially signed a landmark no-fault auto insurance reform bill today (May 30). The legislation, which passed with bipartisan support, is designed to lower the state’s ‘extortionate’ insurance premiums by letting drivers forego a one-of-a-kind requirement to buy unlimited medical coverage for crash injuries.

The bill, which will take effect next week once it has been filed with the Office of the Great Seal, will guarantee rate reductions for every Michigan motorist and offer choice among personal injury protection, or PIP, levels, which often make up about 50% of car insurance premiums. According to earlier Associated Press reports, a rollback in PIP rates will start in July 2020 and last for eight years.

The legislation also prohibits the use of several non-driving factors in setting rates and scale back reimbursements for health providers that treat accident victims to 190% to 230% of what Medicare pays, according to a report by wwjnewsradio.com.

In contrast to some other no-fault auto insurance states, Michigan doesn’t have a fee schedule for care covered by auto insurers, which means they’re often paying much more for the same services than employer plans or government insurance, such as Medicare, have to pay.

This has contributed to Michigan’s very costly average auto insurance premium. According to a recent report by The Zebra, an insurance comparison website, the average auto insurance premium in Michigan is $2,693, which is 83% higher than the national average of $1,470. Detroit’s premium on average is a staggering $5,464, which is much higher than any other US city.

After signing the reform bill into law at the Mackinac Policy Conference, Governor Whitmer told WWJ that the bipartisan cooperation in Michigan is a stark contrast to what’s coming out of Washington.

She said: “When we focus on these fundamentals, I think we can find common ground. There’s so much ideology and dysfunction in Washington D.C. and I am determined not to let that divided government paralyze us in Michigan, but to make it incredibly productive.”