Guest Blog: Keep Michigan’s Auto No-fault Insurance Law Intact

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The following is a letter sent to Michigan legislators Tuesday by L. Brooks Patterson, executive of Oakland County, outlining his support for Michigan’s auto no-fault insurance law.

One of the most intriguing and entertaining stories of Greek mythology is the Greek siege of Troy that allegedly lasted 10 years. In frustration, as well as a brilliant act of subterfuge, the Greeks offered Troy a gift of a wooden horse for their heroic stand and then pretended to withdraw their fleet. As the story goes, the defenders of Troy took the wooden horse into their city not knowing that the belly of the horse had been hollowed out and a handpicked band of Greek warriors was concealed inside. Of course, we all know what happened after the Trojans celebrated their victory all night. As they were sleeping it off the next morning, the Greeks opened the horse from within, slipped out of the belly of the horse, opened the front gates of Troy that had been so strong for 10 years, and the Greeks raced in and literally burned Troy to the ground.

Out of this story made famous by Homer’s Iliad and Odyssey, history has coined a phrase — a warning if you will — “Beware of Greeks bearing gifts.”

Well, we have another Trojan horse in our midst, and one must proclaim: “Beware of insurance companies bearing gifts.” Insurance companies are the driving force behind Senate Bill 248, which would gut the very popular auto noâ€fault insurance we enjoy here in Michigan. Why are the insurance companies hell bent on giving us a “gift” of Senate Bill 248? There is absolutely nothing wrong with the auto noâ€fault insurance we have today. In fact, there is plenty to brag about.

So, what is the genesis of Senate Bill 248? With all due respect, it’s corporate greed. Over the years that auto noâ€fault has been in existence in Michigan, motorists have paid a very modest premium on their auto insurance policy to pay the costs for those who are catastrophically injured. If you stop to think about it, the fund is a benefit to the insurance companies as well because the fund pays the multiâ€million dollar cost of catastrophic care, not the insurance companies.  

Anyway, let me explain the concept of corporate greed.  

1. The catastrophic claims fund is now hovering at about $20 billion. The fund is safely beyond the reach of the insurance companies and beyond the reach of the Legislature as well. It blinks out there as a challenge to the insurance companies: “Come and get me if you can.” That’s what this is all about, folks, insurance companies who didn’t pay a dime into that fund, but now want to claim it as their own. Today’s auto noâ€fault is unique to Michigan. It provides the best auto insurance in the nation, but it’s not significantly priced higher than insurance in other states. Michigan placed 16th out of 50 states in the cost of our auto insurance, but only 5 percent more than the national average. (Source: 2010 National Association of Insurance Commissioners.)

2. The benefit for that premium on our insurance policy for catastrophic care means that a person injured in an accident in Michigan where the other driver has no insurance can collect a lifetime of benefits for medical costs. Today medical costs, as you know, are not cheap, especially in the case of catastrophic care. It can be millions of dollars in the first year alone. But again, keep in mind that the insurance company does not pay that amount, the catastrophic claim fund pays it, and the fund belongs to you and me.  

3. If House Bill 248 were to pass in the House and thereby create “MC3,” what happens to the present $20 billion fund that has been built up over the years? Good question. The $20 billion would be instantly pounced upon by the insurance industry and divvied up among them. Now you can understand why the insurance industry is clandestinely and enthusiastically supporting HB 248. Note: We recommend the Legislature should make the MCCA “FOI-able” (subject to the Freedom of Information Act) and pass bills to either reduce the annual assessment to $50 or reduce the PIP liability cap for insurance companies to $250,000 and study the growth and management of the fund for five years.

4. So to you Legislators who understand the potential damage of HB 248, we thank you for your courage and your stalwart commitment to fight off these perennial attacks. You are indeed our first line of defense.  

P.S. We would be remiss if we did not single out the Detroit Legislative block of voters in the State House. You have been magnificent in your defense of auto noâ€fault and now you are witnessing your own Trojan horse in your city. This time it’s called Dâ€Insurance. You understand how this insurance proposal destroys the lifetime benefits for people who are catastrophically injured in an auto accident. Dâ€Insurance replaces it with $25,000 of benefits once you are medically stable (a determination to be made by the insurance companies). Incredible, the Mayor of Detroit (Mike Duggan) would scrap lifetime protection for a paltry $25,000. Under today’s costs, that’s about two weeks in the life of a catastrophically injured victim. So, congratulations Detroit block, for your grasp of the fine points and your ardent defense of your constituents in the face of City Hall pressures.

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