Common sense reforms coming for auto insurance

Pete Kuhnmuench is the executive director of the Insurance Alliance of Michigan.
Published 5:30 a.m. ET Sept. 24, 2017

A recent report on a misleading “study” released by the Coalition to Protect Auto No-Fault is yet another in a long line of attempts to shift the focus from the real problem plaguing Michigan drivers: Their auto insurance is too expensive, and our auto no-fault system is broken.

Drivers in our state pay the highest auto insurance premiums in the country, according to Insure.com, and residents of the city of Detroit pay the highest auto insurance premiums of any city in America. It’s tragic that many drivers in Michigan equate their car insurance to a second mortgage. In fact, more than 20 percent of drivers – or 1.5 million people – behind the wheel right now are driving without insurance because they can’t afford it.

A chief culprit behind the rising cost of auto insurance is the state’s one-of-a-kind requirement that drivers purchase unlimited, lifetime medical benefits with their car insurance policy. In fact, a Detroit Free Press investigative series revealed that these unlimited medical benefits are a cash cow for medical providers, who charge auto insurers two or three times more for the same procedures than health insurers. According to the report, MRI centers in metro Detroit were billing auto insurers $5,300 for an MRI. The same MRI costs $500 under Medicare.

Rampant fraud and abuse is also a contributor to the rising cost of auto insurance in Michigan. The Free Press, in its investigative series, outlined countless instances of people claiming no-fault benefits they were not entitled to. In one particular case, a man was cashing in on no-fault benefits, including attendant care, and was later caught participating in a Mixed Martial Arts fight in Traverse City. In some cases, the very medical centers providing care are defrauding the system. A recent article in Crain’s Detroit Business found privately-owned medical clinics in metro Detroit were receiving kickbacks from chiropractors, physical therapists and transportation companies in exchange for false MRIs. Michigan law requires medical businesses to be owned by physicians, not greedy businesspeople looking to cash on the state’s broken no-fault system.

The coalition has a lot riding on this broken, outdated system, which hasn’t been significantly updated since it was first enacted in 1973. Their members, made up of medical providers and lawyers, have been lining their pockets for decades – profiting from the status quo – while Michigan drivers watch their premiums increase, over and over again.

Misleading, cooked-up studies aren’t going to save drivers a dime on their car insurance and only serve to prolong and protect the broken status quo. In order to truly reduce costs, we must reform Michigan’s broken, outdated no-fault system by cracking down on fraud through creation of a fraud authority to review claims, stopping overcharging by medical providers by enacting a fee schedule for services and driving down costs by giving consumers a choice of different levels of medical benefits.

These common-sense reforms will go a long way towards bringing down the cost of auto insurance in Michigan and putting money back into the pocketbooks of hard-working Michiganders, not hospital executives and lawyers.

Pete Kuhnmuench is the executive director of the Insurance Alliance of Michigan.

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