At a recent Gov. Rick Snyder office hour event in Iron Mountain the issue of Michigan's auto no-fault insurance was the hot topic of discussion. State Rep. Ed McBroom was also there and provided a great deal of information as to how the program works, why it is costing drivers so much money, and why it is not being fixed.
The Michigan Catastrophic Claims Association was created in 1978 by the Michigan Legislature; the MCCA's board is governed by auto insurance executives appointed by the director of the Michigan Department of Insurance and Financial Services. The MCCA collects the money paid and pays out any medical/benefits exceeding approximately $530,000.
The rates under the MCCA were only $4 per year in 1978, that rate has now reached $186 per car insurance policy. This is a 4,600 percent increase and is on every car, even fleet vehicles for businesses.
This is only the tip of the iceberg as the mandate of unlimited, lifetime medical coverage plus the lack of a fee schedule for medical procedures has pushed the cost of auto insurance anywhere from 20 percent to nearly 50 percent higher than in neighboring states. The next highest coverage state is New York where benefits are capped at $50,000.
The cost to insure is so high in Michigan that one in five people in Michigan are driving without insurance. In Detroit and in larger cities in downstate Michigan one in two are now driving without insurance. In addition to this, one in 10 claims are fraudulent, which drive up the cost of auto insurance premiums. Couple this issue with the enormous elevation of the cost of medical procedures for auto accident victims such as 10 times the costs for an MRI.
Legislators like McBroom, Sen. Tom Casperson, and the governor have been working very hard to lower the cost of insurance for Michigan drivers but the Legislature has not obtained enough members believing in the necessity of change.
The biggest reason why little has been accomplished is that the unlimited benefit program has led to many service providers and programs being established in Michigan, particularly in southeast Michigan, that work diligently against any real, money saving change.
And the insurance industry itself, while supporting serious reform, seems unable to pursue reform without appearing self-serving.
After hearing about the reasons the Legislature continues to be unable to provide relief, the attendees of the office hours asked McBroom how citizens could force real reform without the Legislature. He pointed out that they could pursue a legislative initiative which would place the question first before the Legislature and then, if it does not concur, before the voters at an election.
Several of the attendees were very interested in the possibility and have decided to form an exploratory committee to research the means and specifics of accomplishing real relief for drivers across this state. Karl Weber of North Dickinson County will be chairing the Steering Committee, and beginning the process of obtaining information from state officials and other industry experts.
The steering committee will meet soon and is interested in involving many citizens in determining a successful path to placing a true, cost saving, simple, and concise policy reform on the 2016 ballot. Several starting points for discussion would involve giving drivers options of how much coverage to purchase and placing a workman's comp-like fee schedule in place to control medical costs.
If you have questions and would like to participate you may contact Karl Weber at (906) 542-3218. Stay alert for a notice of the first organizational meeting.
Steering Committee Chairman
W8860 Fox Lake Road