DALE PRIESTER: Michigan’s ‘no-fault’ mess is result of greed

TO THE EDITOR:

It is time to lay aside the canard that Michigan has the highest automobile insurance rates in the United States.

We don’t. We are third, Louisiana first (25 percent higher) and Oklahoma next, both with higher rates and fewer benefits. That said, Michigan’s rates are painfully high, a drag on the economy and a severe problem to many families and individuals.

How we arrived here can be summed up in a single word, “greed.”

“No-fault” was the idea of two law professors in the 1960s, Keeton (Harvard) and O’Connell (Illinois). They suggested that “no-fault” would quicken payments to injured and more would go to those persons by simply removing lawsuits and intervening attorneys. (Based on the number of legal ads on television, this seems to have failed.)

“Consumer Reports”, September 1984, says, “There are few good no-fault laws. As we’ve noted, Michigan has the best.” Basically unlimited, quickly paid lifetime benefits.

Keeton may have been influenced by Massachusetts having the highest national rates then, as Massachusetts insurance law stated (allegedly) that only bodily injury liability was required, leaving even the most minor fender-bender subject to the inevitable whiplash claim.

Michigan’s no-fault law states that any self-propelled vehicle, registered for the road and having more than two wheels, be insured. Medical bills, loss of wages, in-home care, appropriate transportation and other items from dollar one and as long as medically necessary are covered as long as necessary.

When, a few years later, it was discovered that these lifetime benefits produced unsustainable burdens on small insurance companies, mostly Michigan based, the Michigan Catastrophic Claims Association (MCCA), a nonprofit, was set up to cover bills over $250,000 — indexed up to over $500,000 now — with a small semi-annual fee.

We (in insurance) were told they would never need more than $6 per year. That has morphed to the current figure of over $200 a year, but not without some bumps.

Does anyone remember the time they had too much money and sent out a check for about $100 on every car? Generally, it’d been up and up.

Reform? Not likely. Remember “greed” above. Medical bills bloomed like dandelions in spring as quick payment with little restraint led to much higher bills and often additional treatment and tests where peripherally related. (Note, I once questioned a second late bill for a policyholder, and was told by the provider that the fee — 50 percent higher — was that they were unaware this was an accident when billed).

Our legislature seems to want to do nothing about this but to cut the “unlimited” out and throw around numbers with no solid background. The providers has so far stopped this.

We did get a number one. Michigan’s legislature, during the last administration, was rated the second most corrupt in the nation (Wyoming is worst; Louisiana surprising ninth). Our state government got a number one as being the last in accountability in the nation.

Dale Priester

Manistee

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