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As legislators return to Lansing, IAM urges the Legislature to stay the course on no-fault reform

The Insurance Alliance of Michigan (IAM) today urged newly elected and returning lawmakers to stay the course on Michigan’s new auto no-fault law, which went into effect last year and was passed with strong bipartisan support in 2019. While much of the law took effect on July 2, 2020, a critical component of reform — a medical fee schedule — will be phased in beginning July 2, 2021.

“We urge lawmakers in both parties to let these reforms work and push back on special interests — who have profited the most from Michigan’s old auto no-fault law — that want to turn the clock back on these historic reforms,” said IAM Executive Director Erin McDonough. “Undoing these reforms would create more economic uncertainty for Michiganders at a time when they can least afford it.”

Michigan’s new auto no-fault law is working and even those who choose to keep unlimited, lifetime medical benefits are saving money on their auto insurance premiums. In fact, for the second year in a row, the Michigan Catastrophic Claims Association lowered its per-vehicle fee for drivers because of the expected savings from Michigan’s new auto no-fault law — specifically the medical fee schedule.

Beginning next summer, the per-vehicle for drivers choosing unlimited, lifetime medical benefits will be $86 — down from $220 in 2019. Drivers who choose other levels of coverage will continue to pay $0. The decrease, the second in two years, marks a 60% drop since reforms took effect.

For decades, brain injury clinics have been routinely charging three- and four-times more for medical procedures if someone was injured in a car accident.

According to a blistering investigative report from the Detroit Free Press, an MRI at a medical clinic in Metro Detroit cost $500 under Medicare, but the same MRI at the same facility and with the same type of machine will cost an auto insurer $5,300.

This dramatic overcharging will be reined in by a new fee schedule for medical services, which takes effect in July of 2021.

“We’re hearing from drivers across the state who are saving hundreds and even thousands of dollars on their auto insurance premiums under the new law,” McDonough said. “It’s critical for the Legislature to allow these reforms, which were passed with bipartisan support, to take effect so drivers can see how these changes will benefit them now and in the future.”

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