In a rare Friday session, the House and Senate are set to pass reforms to Michigan’s current auto no-fault insurance system. The deal came together after a week of negotiations between Governor Gretchen Whitmer, Senate Majority Leader Mike Shirkey (R-Clarklake) and House Speaker Lee Chatfield (R-Levering). The leaders have long agreed the system needed reforms but have disagreed on the path to change, until yesterday.

A main part of the legislation includes a mandatory minimum rate rollback on Personal Injury Protection (PIP) coverage beginning on July 1, 2020 and ending in 2028. Additionally, the Department of Insurance and Financial Services (DIFS) will have prior approval of an insurers’ rates.

The mandated average reduction by insurance companies is outlined below:

• 100% rollback for drivers who opt-out of PIP because they receive either Medicare Parts A or B or have health coverage that would cover injuries related to an auto accident
• 45% reduction for drivers who select $50,000 coverage (Medicaid eligible consumers)
• 35% reduction for drivers selecting $250,000 coverage
• 20% reduction for drivers who select $500,000 coverage
• 10% reduction for drivers selecting unlimited coverage

The agreement will ban the use of non-driving factors in determining a driver’s insurance rate. The factors include gender, marital status, zip code, credit score, educational level, plus more. This has been an important aspect that the governor wanted included throughout the negotiations.

The bill also includes a phase-in fee schedule for healthcare providers, with some exceptions and differences.

• July 1, 2021 – 200% of Medicare
• 2022 – 195% of Medicare
• 2023 – 190% of Medicare

The plan also codifies the authority of the anti-fraud unit located in the DIFS and increases civil fines for violations of the Insurance Code. The legislation, once passed by the House and Senate, will be sent to Governor Whitmer for her final approval. It is expected that she will sign the legislation next week during the annual Detroit Chamber Policy Conference on Mackinac Island.

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