Insure.com cites auto no-fault reforms as a catalyst for savings to Michigan drivers

LANSING – Michigan continues to be dethroned as the state for the highest auto insurance rates – thanks to the 2019 bipartisan auto no-fault reforms – according to the latest rankings out of Insure.com.

In its annual report on car insurance rates by state, Insure.com now has Michigan ranked #4 in the nation, behind Florida, Louisiana, and Delaware. Last year, Michigan was ranked #2. The decline in the cost of Michigan’s auto insurance as compared to other states is attributed to the 2019 bi-partisan auto no-fault reform.   

“Michigan uses a unique no-fault system that has resulted in sky-high rates for years. Recent changes to their system are responsible for their drop to fourth place this year,” according to the rankings.

“Michigan once had a broken, outdated, and expensive auto no-fault system. Bipartisan auto no-fault reforms have cracked down on fraud, reined in overcharging by medical providers, and have provided consumers a choice – all while continuing medically necessary care and offering the highest personal injury protection coverage in the nation,” said Erin McDonough, executive director of the Insurance Alliance of Michigan. “This past spring, more than 7 million Michigan drivers received $400 per-vehicle refunds. This was the biggest refund in state history, estimated at more than $3 billion. Allowing the reforms the opportunity to continue to work is providing the benefits we are seeing in this new report.”

Fee reductions by the Michigan Catastrophic Claims Association in 2020 and 2021 totaled more than $1 billion per year. The combined $5 billion-plus in estimated savings doesn’t take into account savings drivers may see by choosing different levels of Personal Injury Protection (PIP). Under the bipartisan auto no-fault reforms, insurance companies were required to reduce statewide average PIP medical premiums for eight years, which has contributed to the savings, according to the Michigan Department of Insurance and Financial Services.

The Michigan Catastrophic Claims Association (MCCA) maintains a sufficient balance to cover catastrophically injured care and all medically necessary care is still covered.

Additional benefits to the 2019 bipartisan auto no-fault reforms include:

• More than 202,000 Michigan drivers without prior coverage have purchased auto insurance since reforms took effect on July 2, 2020, according to IAM member company data. Of those, 83,238 were Michigan drivers who didn’t have car insurance for three years or more.
• To date, 42 new companies are planning to enter the Michigan market or have already done so, increasing competition and further lowering the cost of auto insurance.

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IAM is a government affairs and public information association that represents auto, home and business insurance companies and related organizations operating in Michigan. Learn more about IAM and its members on Facebook, Twitter or at www.insurancealliancemichigan.org.