LANSING, Mich. (Michigan News Source) – The House Committee on Insurance and Financial Services convened this week for a presentation on the 2019 No-Fault Auto Insurance and how it affects Michiganders on a daily basis. 

According to Rep. Brenda Carter (D-Pontiac) there have been mixed views of the changes in which some have been in favor of multiple factors, while others have concerns. 

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“Some of these concerns include the level of reimbursements for medical providers, the difficulties providers have had navigating the reimbursement process with insurers, potential disruptions in transition and care for accident victims, and certain communities being impacted with higher rates [and] which factors go into making those decisions,” she said. 

Joseph Sullivan, Legislative liaison manager and Parker Fisher, insurance legislative liaison from Department of Insurance and Financial Services (DIFS) presented an overview of the 2019 reforms and the department’s implementation efforts. 

“Michigan is one of twelve states with a No-Fault automobile insurance system,” Sullivan said. 

While the system was put in place many years ago, there were some recent changes in 2019. 

“Prior to the reforms, Michigan was the only state that mandated unlimited PIP medical coverage for all drivers,” Sullivan said, “Post reform MI is the only state where drivers can choose unlimited PIP benefits at all levels and has the highest benefits available in the country.” 

After the reforms, according to Sullivan it increased consumer protections by eliminating non-driving factors.

“The reform prohibits auto insurance companies from using home ownership, credit score, educational level, occupation, and zip codes, and setting you auto insurance rates,” he said, “Sex and marital status continue to be prohibited rating factors.” 

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The DIPS representatives clarified some of the insurance and coverage terminology, and how it has changed. 

“Personal injury protection medical coverage also called PIP,” Sullivan said. “Which pays for all reasonable and necessary medical expenses for your lifetime if you are hurt in an auto accident and wage loss and replacement services up to three years after the date of the accident.” 

According to Sullivan, drivers can choose between six PIP medical coverage options depending on their budgets, as well as an option to medical PIP out due to medicare.

After giving some statistics, Sullivan shared that studies noted that Michigan has experienced some reduction in auto-insurance rates. 

“One study from a multi-state insurance rate comparison website noted that Michigan’s rates dropped 28% from 2019 to 2023, with the state average rates falling more than $600 in 2023, which was the largest average drop in the nation during this time period,” he said, “And that put Michigan down to the fourth highest rate in the nation – while remaining the only state where unlimited PIP coverage still remains an option.” 

For additional context, insurance coverage rates nationally have been on the rise according to Sullivan, in large part due to “a national increase in accident frequency and severity, as well as higher costs of replacement parts due to inflation and supply parts issues.” 

Sullivan briefly delved into the Supreme Court decision that occured in July which changed two fee schedules options.  For a more detailed report, see Michigan News Source’s reporting from this summer, here. 

Some of the committee members were skeptical about the many successes shared by the DIFS representatives, including Representative Kelly Breen (D-Novi). 

“You indicate that there was a 28% reduction in rates overall in the state,” Rep. Breen said, “Do you have any idea about how many policies that affects – I personally have seen my rates go up, everybody I know have seen their rates go up – so I’m wondering how many policies it has affected and not the overall reduction.” 

Sullivan shared that involved the 7 million drivers across the state as it was a statewide average. 

“It’s not a region specific thing, it’s a statewide average in PIP reduction, and that particular statistic was about insurance rates in general, not PIP,” he responded. 

According to Chair Carter, there will be more to the “deep dive” regarding the No-Fault Insurance and why the rates are higher in areas such as Detroit and Pontiac which will be addressed at the next meeting.