Update to Michigan No Fault Reform

Early Thursday morning, the House passed HB 4397 with some additions to the original proposal.  It now awaits some reconciliation with the Senate and then a signature of Governor Whitmer before it becomes law.

The updated bill now includes some additional options for PIP (Personal Injury Protection) which is the medical portion of your auto insurance. They have also added some guaranteed rate reductions that coincide with each level; however, it is important to note that these percentage reductions apply only to the PIP coverage on your auto policy.  Currently, PIP typically accounts for roughly half of most consumers’ auto insurance premium.

The new options are as follows:

  1. Unlimited PIP benefits – 10% PIP rate reduction
  2. $500K PIP benefits – 30% PIP rate reduction
  3. $250k PIP Benefits – 60% PIP rate reduction
  4. $50k, including $200k for Acute/Trauma care PIP Benefits – 80% PIP rate reduction
  5. $0 PIP Benefits– 100% PIP rate reduction

If the bill passes, insurers will have 6 months to establish new rates in accordance with the above PIP rate reductions. Once in place, these reductions would be guaranteed for 5 years.  At this point, however, there is no way for us, or any agent for that matter, to tell you exactly how much your policy might reduce once this is in effect.

The MCCA, as it currently stands, would be dissolved and replaced by a new association, CCA (Catastrophic Claims Association) that would have stricter requirements for financial disclosure to the state. Any new or adjusted fees going forward per vehicle would be in the form of CCA fees instead of the current MCCA fees.

Additional savings can be realized by selecting some of the lower PIP benefit options in the form of either a reduced CCA (The newly formed Catastrophic Claims Association) or even a $0 CCA fee with some of the lowest benefit options. The current MCCA fee was set to increase to $220 per vehicle in July.

A new addition to the bill includes banning the use of what they are calling “non-driving” factors which would include the use of credit scoring. A full list of what will be considered non-driving factors is yet to be determined and will be determined by the Director.  It is believed that zip code rating might be a part of that list.

While Whitmer originally stated Tuesday that she would veto this bill, it was because it did not include any guaranteed rate reduction and it did not address the use of non-driving factors such as zip codes and credit scoring in the determination of auto insurance rates.  This updated bill does include those items, however, a spokesperson for the Governor has said that she still may veto this as it doesn’t go far enough.

As we learn more, we will be sure to let you know.

Darin Mohrman

Darin Mohrman

Sales and Operations Manager, Personal Insurance at Al Bourdeau Insurance Agency
“Education is what you get from reading the fine print; experience is what you get from not reading it.“

I’m a former aspiring “ski-bum” turned insurance professional.I was licensed in 2002 and in 2013 I obtained my Certified Insurance Counselor (C.I.C.) designation. I'm married to an amazing woman, have a wonderful son and a cat.I enjoy travelling, music, craft beer, woodworking, collecting and restoring antique tools and all things computer and tech related.
Darin Mohrman

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