Gov. Whitmer Statement on MCCA’s 55% Cost Reduction for Drivers

LANSING, Mich. — Governor Gretchen Whitmer released the following statement today in response to the Michigan Catastrophic Claims Association lowering their per vehicle assessment to $100 starting July 2, 2020 through June 30, 2021. The MCCA stated the 55 percent reduction was a direct result of the no-fault insurance reforms signed into law by Whitmer earlier this year.

“Today’s reduction by the MCCA demonstrates that our historic bipartisan legislation will provide real savings to Michigan drivers,” said Governor Whitmer. “The new law will enhance consumer protections and continue to lower costs for Michiganders by mandating rate reductions for eight years. Millions of Michigan drivers will finally see relief under a new system that maintains the highest benefits in the country.”

Insurance Reforms: Resources to Help

Insurance Reforms: The Department of Insurance and Financial Services (DIFS) has developed educational resources to help Michigan drivers navigate the state’s new auto insurance law. DIFS has launched a new website, www.michigan.gov/autoinsurance, created consumer guides, and now has a dedicated hotline, 833-ASK-DIFS (275-3437) and email address, autoinsurance@michigan.gov, where drivers can ask questions and file complaints related to auto insurance in Michigan.

In addition to creating these new educational resources, DIFS is also working to implement the legislation to ensure consumer protection and industry compliance.

In May 2019, Gov. Whitmer signed historic bipartisan auto no-fault legislation to lower costs for Michigan drivers, maintain the highest coverage options in the country, and strengthen consumer protections. These changes apply to auto insurance policies issued or renewed after July 1, 2020.

“Last year we worked closely with leaders from both political parties to preserve no-fault and create a better auto insurance system for Michigan drivers. Protecting policyholders and providing them access to affordable coverage is fundamental to the prosperity of our entire state,” said Whitmer. “Drivers are now encouraged to use these educational resources before making the important decision of choosing their auto insurance policy.”

The new site details changes in the law, new coverage options, shopping tips, and provides many other resources that help explain the new reforms and how they will affect auto policies in Michigan.

“DIFS is here to help Michigan drivers understand the new auto insurance law so they can decide on a policy that best fits their family’s needs and budget,” said DIFS Director Anita Fox. “We are focused on educating policyholders and implementing these reforms to ensure that consumers are protected, and that companies are in compliance with the law.”

Following the signing of no-fault reform, DIFS began taking important steps to implement the new law. These measures include:

• Fraud Investigation Unit: DIFS has established a new unit to investigate criminal and fraudulent activity related to the insurance and financial markets and work with Michigan Attorney General Nessel and law enforcement to prosecute these crimes.
• New Consumer Forms on Coverages: DIFS developed new forms for insurance companies, agencies and agents to provide to drivers when choosing new coverage options.
• Independent Actuaries: In anticipation of an increase in auto insurance company rate filings, DIFS’ rate review staff is working closely with independent actuaries to ensure the filings are thoroughly reviewed and actuarily sound.
• Industry Bulletins: DIFS has issued more than 10 bulletins to the insurance industry regarding compliance in the areas of rate filing, reimbursement rates, and other enforcement issues.

Key Aspects of Michigan’s New Auto Insurance Law:

Lowers Costs, Maintains Highest Benefits

• Personal Injury Protection (PIP) Choice: Drivers will be able to choose a coverage level that is right for their family. The new limits equal or exceed the highest benefits in the country and Michigan is the only state where unlimited PIP medical coverage continues to be an option. PIP medical pays for medical care if policyholders are in an auto accident.
• Premium Reduction: Each insurance company will be required to reduce statewide average PIP medical premiums for eight years. Drivers’ overall premiums will depend on their individual circumstances and the coverage they select.
• Fee Schedule: The new law establishes a fee schedule designed to control the costs that medical providers may charge auto insurers for their services. This is similar to cost control provisions used by other types of insurance, such as health insurance. This fee schedule will make PIP medical coverage premiums more affordable for policyholders, but will not affect the services to which existing and future accident victims are entitled.
• Michigan Catastrophic Claims Association (MCCA) Assessment: The MCCA has already announced that as a direct result of the new law, it is lowering its per vehicle assessment starting July 2, 2020, which will save Michigan drivers at least $120 per car.

Increases Consumer Protections:

• Elimination of Certain Non-Driving Factors: The new law prohibits auto insurance companies from using sex, marital status, home ownership, credit score, educational level, occupation, and zip codes in setting auto insurance rates.
• Prior Approval: Auto insurance rates must now be filed with and approved by DIFS prior to being offered to consumers.
• Fines and Penalties: The new law allows for increased fines on insurance companies, agencies, and agents for certain violations of the law.

MICHIGAN AUTO NO-FAULT REFORM QUICK FACTS

On May 30, 2019, Governor Whitmer signed an historic bipartisan no-fault auto insurance reform bill to provide lower rates for Michigan drivers, protect insurance coverage options, and strengthen consumer protections.

When Does the New Law Take Effect?

The law currently requires you to carry unlimited medical coverage to pay for your expenses if you are injured in an auto accident. The new law allows you to choose a level of medical coverage when your policy renews after July 1, 2020. If you are already receiving payments from your auto policy due to injuries from an auto accident, you will continue to receive the current unlimited benefit regardless of the choice you make for the future. This is also true if you are injured in an accident between now and July 1, 2020.

Will My Auto Insurance Bill Be Lower When the Law Goes Into Effect?

Because the new law will allow drivers to choose a level of medical coverage, insurance companies are required to reduce the premium for this coverage (known as PIP coverage) so that there will be an average reduction per vehicle based on the level of coverage chosen.  Your premium and savings will depend on the PIP option you select and other coverages you choose.

How Will I Know What Choices I Have and What to Choose?

The new law requires that agents and insurers give you a form that describes the benefits and risks of the coverage options. You may also want to talk with an insurance agent to discuss your personal auto insurance needs.  In addition, DIFS’ website will be updated on an ongoing basis to provide the latest information to Michigan drivers as the effective dates of the new law approach. Please check www.michigan.gov/AutoInsurance for updates and educational materials.