Michigan drivers have saved a total of $4 billion in auto insurance premiums since reforms to the state’s debt insurance law took effect in July 2020, the Insurance Alliance of Michigan said Wednesday.
Because of those reforms, Michigan drivers pay reduced fees to the Michigan Catastrophic Claims Association, the nonprofit organization that manages a fund designed to pay for care for people with serious, long-term injuries. Those rate cuts totaled $1 billion in savings, the insurance association said.
The MCCA will also refund $400 per vehicle to drivers this year, another $3 billion in total savings.
“The results are clear: Michigan’s auto-no-fault reforms are working and saving Michigan drivers billions of dollars on their auto insurance premiums,” said Erin McDonough, executive director of the insurance alliance.
She described the news as a “huge win for Michigan drivers” and said costs could continue to fall.
Lake:Who Qualifies for $400 Michigan Auto Insurance Reimbursement?
State legislators revised Michigan’s auto insurance law in 2019. The reforms will allow drivers to buy cheaper but less robust personal injury coverage – previously they had to have unlimited personal injury protection.
More than 155,000 drivers have taken out car insurance since the reforms began in July 2020, the insurance group said. More than 66,000 of those drivers had not had car insurance for at least 3 years.
No-fault reforms have also reduced compensation paid to companies that provide long-term care to people injured in car accidents. For home care and residential care providers who help accident victims with things like washing, eating and other daily activities, insurers and the MCCA pay just 55% of what they paid in 2019.
Proponents say the massive reduction has led some providers to close or fire victims of crashes, meaning some injured patients are unable to receive services such as home care.
Lake:‘I don’t think I’m that stressed’: Mistakeless reforms are turning the lives of Michigan’s crash victims upside down
About 1,500 accident victims have been fired by their health care providers since the tariff schedule went into effect in July, according to a survey of brain injury providers conducted from Sept. 29 to Oct. 20. The study was commissioned by the Brain Injury Association of Michigan and conducted by MPHI, a public health group from Okemos.
More than 3,000 jobs were eliminated due to the rate cuts, the study found. More than half of the healthcare providers indicate that they have had to cut their services considerably due to the cutbacks.
Auto insurance companies claim the reimbursement cut has stopped “outrageous overburdening by medical providers,” including long-term care providers, the Insurance Alliance of Michigan said in Wednesday’s release.
While auto insurance premiums have fallen statewide, reforms have failed to bring Michigan in line with most other states and have not corrected differences in costs by race and geography, a team of Poverty Solutions analysts at the University of Washington has found. Michigan in Dec.
Using data from The Zebra, which collects and compares auto insurance information, UM analysts found that average auto insurance rates fell 18% between 2019 and 2020, from $3,106 to $2,525. While rates in Detroit fell, average rates for city dwellers remained high, at $5,146 in 2020.
But Michigan rates are no longer the highest. Louisiana surpassed Michigan in 2021 at an average annual rate of $3,265, according to The Zebra’s latest report.
UM analysts said the cost of auto insurance is still highly correlated with race. They proposed requiring insurers to consider driving-related factors and prohibit the use of credit scores and geographic “areas” when setting rates.
They also suggested that lawmakers reconsider the reimbursement rate cuts introduced last year and consider using MCCA funds to cover higher reimbursement rates.
“The 2019 reform bill was a first step, but lawmakers shouldn’t be satisfied. More needs to be done to eliminate discriminatory pricing practices and further reduce premiums,” said Amanda Nothaft, senior data and evaluation manager of Poverty Solutions and co- author of the policy. short. “We also need to consider the impact on people who have been catastrophically injured in car accidents and ensure that medical providers are appropriately reimbursed for long-term care.”