The House and Senate each passed their own separate auto insurance reform bills this week, with many provisions in common. This report summarizes key features and differences of these complex proposals.
• Senate Bill 1, Senate version, no-fault auto insurance reform: Passed 24 to 14 in the Senate
To no longer mandate that auto insurance policies include unlimited personal injury protection (PIP) coverage. A customer could theoretically keep the unlimited PIP (if it remains available), or choose policies with $250,000 PIP limits. Individuals with other health insurance (including Medicare and Medicaid) could choose not to purchase any PIP coverage at all.
The Michigan Catastrophic Claims Association (MCCA) that covers the cost of unlimited PIP claims above specified amounts would be phased out by limiting its liabilities to claims covered by pre-existing policies but not new ones sold after the bill goes into effect. This would reportedly reduce MCCA surcharges on individual insurance bills by $180, based on a $220 rate that goes into effect in July 2019.
Medical service providers and hospitals could not charge more for medical care given to crash victims than the amounts prescribed by the state’s injured workers compensation insurance law. Limits would also be applied to long term care costs including weekly “attendant care” hours provided by relatives.
The bill would also make trial lawyers liable for insurance company costs incurred defending against lawsuits based on claims for excessive or medically unnecessary crash victim treatments, or if the attorney improperly solicited a case (“ambulance chasing”). It would create a State Police automobile insurance fraud task force tasked with pursuing and prosecuting fraud cases.
A Democratic amendment was adopted that would restrict insurers from setting rates on the basis of two specific “non-driving factors,” gender and the zip code where the car is garaged.
37 Sen. Wayne Schmidt R
Traverse City Y
• House Bill 4397, House version, no-fault auto insurance reform: Passed 61 to 49 in the House
The House version of an auto insurance reform bill. This is similar to the Senate-passed reform bill described above, with these differences:
The House would not eliminate unlimited personal injury protection (PIP) coverage, but would permit insurance policies with PIP limits of $50,000, $250,000 and $500,000.
Like the Senate version, individuals with other health insurance (including Medicare and Medicaid) could choose not to purchase any PIP coverage at all.
The House bill attaches specific rate reduction mandates to these choices depending on the coverage selected.
The House would allow more restrictions on insurers setting rates on the basis of “non-driving factors.”
State regulators would be required to ban factors with “no rational correlation between the factor and insurance losses.”
Under current law, Michigan insurance companies must file rate structure changes with the state but can start using them right away (“file and use”).
The House bill would require auto insurers to wait 90 days after filing before using new rates.
Other provisions including hospital price controls and limits on trial lawyers are very similar to the Senate-passed reform bill described above.
105 Rep. Triston Cole
R – Antrim County Y