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Savings for drivers, more competition, more able to afford insurance: No-Fault reform is working

Bipartisan reforms to Michigan’s broken auto no-fault system continue to reap huge benefits for Michigan drivers in terms of more savings, more choices and more competition.

“Michigan’s new auto no-fault law has been an across-the-board win for drivers and small businesses throughout the state who are saving hundreds and even thousands of dollars a year on their auto insurance premiums,” said Erin McDonough, executive director of the Insurance Alliance of Michigan.

Passed by the Legislature with strong bipartisan support — and signed into law by Gov. Gretchen Whitmer — in 2019, the new law has lowered premiums for drivers across the state.

The final piece of the no-fault reform puzzle, a medical fee schedule, will take effect on July 2. The fee schedule will rein in overcharging by medical providers, which is one of the biggest factors behind Michigan’s highest-in-the-nation auto insurance premiums.

The lower rates drivers are currently paying are based on anticipated savings from the medical fee schedule. The Michigan Catastrophic Claims Association (MCCA), which reduced its yearly per-vehicle fee by 60% over the last two years, also based its reduction on the upcoming fee schedule.

In addition, new industry data and public filings show the reforms have brought a slew of new companies into the Michigan market which will increase competition. As of May 11, more than 25 new companies have signaled their intentions to begin offering auto insurance in Michigan.

“Later this year, dozens of new companies are expected to begin offering car insurance in Michigan which will increase competition and further drive down costs,” McDonough said. “This is another clear sign that reform is working.”

According to data compiled by IAM member companies, which represent nearly 90% of the auto insurance market in Michigan, nearly 50,000 new drivers are purchasing auto insurance for the first time or for the first time in several years because they can finally afford it. This substantially reduces the risk of getting into an accident with an uninsured driver. Michigan has consistently ranked among the Top 5 for uninsured drivers, with more than 20% of drivers opting to not buy insurance.

“We urge lawmakers in both parties to let these reforms work and push back on special interests who want to turn the clock back on these historic reforms,” McDonough said. “Changing the medical fee schedule would erase savings drivers are seeing now and cause rates to increase at a time when Michiganders can least afford it.”

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