The Holland Sentinel was one of a number of Michigan newspapers to run my op-ed on proposed reforms to the state’s no-fault auto insurance system. Michigan uniquely requires unlimited personal injury protection benefits for all policies, a major factor in the state’s ranking by Insure.com as the costliest market for auto insurance this year, with the average annual rates of $2,541, compared to a national average of $1,561.
But higher than average medical costs and widespread fraud also have proven to be a problem:
As lawmakers look to improve Michigan’s auto insurance environment, it is important that they examine the full gamut of solutions to bring down costs. Although all the proposals before the legislature — more choice for consumers and fee schedules among them — deserve consideration, efforts to fight fraud should come first.
One option is to create something similar to the state’s Auto Theft Prevention Authority, which has been successful in catching $59 million of fraudulent auto theft claims since 1996, to fight other forms of auto insurance fraud as well. A similar fraud authority established in Pennsylvania has prevented almost $115 million in losses.
Reform of Michigan’s auto insurance system is bound to be controversial, and with good reason. No one wants to see consumers exposed to risks they cannot afford to bear. But with an estimated 17 percent of the state’s drivers currently uninsured, the existing system clearly does not offer the kind of protection Michiganders deserve.
