R Street welcomes Gov. Snyder’s call for no-fault reform
In his address, Snyder pointed out that Michigan has the nation’s highest average claim costs among states with no-fault insurance, with costs spiking 81 percent between 2004 and 2012. Detroit, Novi and Muskegon all rank among the ten most expensive cities in the United States to insure an automobile, Snyder noted.
R Street Senior Fellow R.J. Lehmann, author of the forthcoming research paper “Reforming Michigan’s Auto Insurance Market,” noted that the state’s problems can be traced, in large part, to a unique requirement that all policies provide for uncapped medical benefits. While 11 other states require insurers to offer coverage on a no-fault basis, none has this system of uncapped medical benefits.
“Michigan’s automobile insurance system is clearly in crisis, with residents paying far more for insurance than those in neighboring states or in similar states across the country,” Lehmann said. “We encourage the Legislature to take on Gov. Snyder’s challange to enact fundamental reform, including restructuring the Michigan Catastrophic Claims Association, providing consumers with greater choice and exploring ways that both market forces and effective, responsible regulatory oversight can serve to bring an end to the state’s unsustainable cost spiral.”
Lehmann’s paper, which is set to be published by R Street on Jan. 22, will offer a set of recommendations for lawmakers interested in reforming Michigan’s no-fault system.