Detroit Mayor Mike Duggan announced a plan Tuesday morning to reduce drivers’ car insurance bills in Michigan.

Michigan residents pay the nation’s costliest insurance premiums. The new bipartisan legislation to reform no-fault insurance laws would end Michigan’s requirement that all drivers pay for unlimited lifetime health insurance through their auto insurers.

The plan is expected to drive down health care costs, root out fraud and reduce the number of lawsuits statewide.

“It’s clear that no-fault is collapsing and not doing what it was designed to do, and that’s costing Michigan drivers dearly,” Duggan said. “People are paying too much, forcing them to cut back on other necessities so they can afford to drive. It leaves too many people driving uninsured or unable to drive at all because their insurance costs more than their car payment.”

Michigan residents pay nearly twice the national average in auto insurance premiums.

The bipartisan legislation is sponsored by state Rep. Lana Theis (R- Brighton) and backed by Michigan House Speaker Tom Leonard (R-DeWitt).

“Michigan drivers are paying the highest rates in the county because we are the only state that requires everyone to buy bonus medical plans many don’t want and other don’t need.” Leonard said.

Under the no-fault reform legislation:

  • Insurers would be required by law to roll back rates for people who select the $250,000 coverage level to guarantee that the savings are passed to drivers and not kept in insurers’ pockets. Future rate increases would be regulated by the State of Michigan for 5 years.
  • Auto insurers would be subject to a fee schedule for health services, just like health insurers. Under the current law, car insurers pays three or four times more for services such as X-rays and MRIs than health insurance companies do, so the exact same MRI that costs health insurers $770 costs auto insurers $3,200 or more.
  • Senior drivers who have lifetime health care coverage would be able to opt out of PIP since they’re already insured through employee retirement plans, Medicare and the like.
  • Lawyers would be prevented from filing liens against health care providers until an insurer has denied a coverage claim, preventing thousands of lawsuits from being filed. Lawsuits over auto crashes are skyrocketing across the state — accounting for 42% of all civil suits filed. Since 2010, the number of car-crash lawsuits has increased more than 50% in Oakland, Macomb and Kent counties. And in too many cases, lawyers are filing immediate suits for drivers against their own insurance companies for medical bills — before coverage decisions are even made — so the lawyers can pocket up to a third of those bills as attorney fees.
  • Anti-fraud measures would crack down on those who abuse the system with unnecessary or excessive medical services. That would include banning lawyers or their families from abusing this system to profit from financial interests, direct or indirect, in medical care facilities, a conflict of interest that often creates a financial incentive for lawyers to drive up unneeded medical services.
  • Any excess funding in the Michigan Catastrophic Claims Association that actuaries say isn’t necessary to cover medical care would be returned to drivers who paid into it.

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