LANSING – The insurance industry is again leading a charge to reduce personal injury protection requirements under Michigan’s no-fault laws. But unlike prior efforts that have died at the hands of both legislators and voters, the industry thinks this time it has the backing needed to move the issue into law.

Like the prior efforts, however, opposition was quick in coming.

The Drivers for Savings Coalition is pushing support for SB 1278 , to be introduced this week, which would allow motorists to choose personal injury protection as low as $50,000. The group is backed by the Insurance Institute of Michigan, but boasts the backing of the two legislative committee chairs, who will review the issue, as well as a variety of community and business groups.

The target is the uninsured motorist population in the state and particularly in Detroit, where officials estimate as many as 55 percent of the drivers do not have insurance based on national statistics, said Peter Kuhnmuench, IIM executive director. He said the proposal could mean 15 percent premium cuts for those carrying full coverage and 50 percent for those carrying the statutory minimum.

Those rate cuts and the possibility of more people carrying insurance are attracting support to the proposal, he said. “I think we’ve got a critical mass here,” Kuhnmuench said. “Before it was purely a Lansing-based coalition.”

“When Macomb County and Detroit can get together on an issue we can move mountains,” said Sen. Alan Sanborn (R-Richmond), chair of the Senate Economic Development and Regulatory Reform Committee that is expected to get the bill.

Rep. Virgil Smith III (D-Detroit), chair of the House Insurance Committee, admitted that the proposal would allow for lesser benefits than the current law, but he said it was better than the no coverage many residents of his district have. “You’ve given up collision and you don’t have much medical but you do have insurance,” he said.

And there will be opposition to the measure, as there was to prior attempts to reduce no-fault benefits, he said. “I wouldn’t say there’s a breakthrough,” he said. “It’s still an uphill battle.”

The Coalition for Protecting Auto No-Fault, made up of organizations such as the Brain Injury Association of Michigan, the Michigan Health and Hospital Association, the Michigan Association for Justice and the AARP, argued the proposal would take too much away from crash victims.

“Lowering the cost of auto insurance for Detroit residents is an honorable mission,” said Michael Dabbs, president of the Brain Injury Association and CPAN spokesperson. But he said the proposal would end up shifting more costs onto families, health insurers and the state.

“The only group to benefit from PIP choice ultimately will be the auto insurance industry, which will not be burdened with paying claims for uninsured drivers,” Dabbs said.

Kuhnmuench said most auto crash claims fall under the $50,000 minimum the bill would provide. Motorists also would have to request the lesser coverage. The default coverage would be unlimited benefits.

Sanborn said the competition in the market would ensure that insurance companies would not increase rates for full coverage rather than cutting rates for the lesser coverage.

The proposal would also allow residents to push some of the costs of a crash onto other systems, Kuhnmuench said. In addition to being able to sue of the costs of treatment exceed a motorist’s coverage, he or she could also be more able to ensure that healthcare coverage pays some of the bills, he said. Under federal law, some insurers are able to avoid coordinated coverage because the unlimited no-fault coverage is mandated.

Smith said that coordination of benefits has been something for which he has fought for some time. “Why is it mandatory that you buy medical coverage (under auto insurance)?” he said. “That’s what you have health insurance for.”

He said those who do not have separate health insurance would have to consider what level of auto coverage they should carry and should consider opting for the highest benefit they can afford.

Kuhnmuench said seniors would also be able to seek coverage under Medicare and Medicare supplement policies that now are not required to cover the claims from a crash because of the unlimited state coverage.

He said some motorists here would have the same fallback they have in other states: Medicaid. “You would have to rely on that if you burn through your private resources.?

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Sanborn said he expects to begin hearings this week with relatively quick passage through the Senate. The goal, he said, is to have the legislation on the governor’s desk by June.

“Certainly the governor agrees with the proponents of the legislation on the need for comprehensive auto insurance reform,” said Granholm press secretary Liz Boyd. “Certainly Michigan continues to have serous affordability issues.”

She noted that, executive office officials understand the proposal, it would not guarantee rate cuts.

But Boyd said the governor would have to review the proposed legislation before taking a stance on it. She also argued that the governor’s appointment of an insurance advocate in the Office of Financial and Insurance Regulation was intended to find solutions to the problem.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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