House Republican's Auto No-Fault Reform Thoughts

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The House Republican Caucus released its Action Plan for this year. No surprise, it mentions Auto No Fault Reform (excerpt regarding Auto No-Fault below (page 18)).

1. Reforming Auto No-Fault: Michigan has the second-highest car insurance premiums in the country and is one of less than a dozen that operate under a no-fault system of insurance liability. Reforms to Michigan auto no-fault must be made to control costs for motorists.

1.30.15. MIRS: Leonard Looking For Bipartisan, Comprehensive No-Fault Reform
The new chair of the House Insurance Committee says he wants to advance comprehensive auto no-fault reform that can pass out of the chamber with at least 70 yes votes.

Rep. Tom LEONARD (R-DeWitt), who is also the new speaker pro tem, says he's been meeting with groups on both sides of the state's current no-fault insurance law. The goal, Leonard said, is to eventually arrive at significant reforms that can pass with bipartisan support.

"I always think the best policy is policy that can get 70 plus votes as opposed to 56," Leonard said.

But he added, "At the end of the day, if we have to do a reform and 56 votes is all that's there, I'm willing to do that. But I'd like to put something together that can get 70-plus votes."

Michigan has a one-of-kind no-fault insurance law that requires all vehicle owners to purchase no-fault insurance that pays for unlimited medical expenses if an accident occurs -- regardless of whose fault the accident was.

The nonprofit Michigan Catastrophic Claims Association (MCCA) is in charge of reimbursing insurance companies for the medical claims of those catastrophically injured in car accidents.

But the assessment the MCCA has had to charge companies to cover the claims has steadily grown over the years. And that growing assessment has been passed on to policyholders, driving auto insurance rates up in the state.

In recent years, lawmakers on both sides of the aisle have proposed a variety of changes to the system, but major reform has eluded them.

Last session, former Speaker Jase BOLGER (R-Marshall) and former House Insurance Committee Chair Pete LUND (R-Shelby Twp.) had their own reform proposals that never made it out of the House.

Lund's proposal, which would have capped medical coverage for the catastrophically injured at $1 million, made it out of committee in May 2013. But it never got the support it needed from the full House to advance to the Senate.

Both current House Speaker Kevin COTTER (R-Mt. Pleasant) and Leonard served on the committee that supported Lund's proposal in 2013.

Asked if he thinks it's possible to find a bipartisan and comprehensive solution on no-fault, Leonard said he's "cautiously optimistic."

Last session, Leonard was able to get wide-ranging reforms to the judicial system's preliminary exam process through the Legislature.

"They told us preliminary exam reform couldn't be done either," Leonard said. "And we got that done with 110 votes in the House."

Leonard didn't reveal any of the specific reforms he's considering but said "preliminary discussions" are going on with people on both sides of the subject.

His hope, he said, is to build on those discussions.

Lund, who worked on no-fault reform for years in the House, said he believes it's possible that a comprehensive reform proposal could get bipartisan support.

"It's complicated but possible," Lund said. "If the Governor is committed to it and everyone is starting to understand that the rates are too high, then I think it can be done."

As for other priorities for the new House Insurance Committee, Leonard plans to work on another issue that Lund began advancing last term: a series of oversight standards pushed nationally by the National Association of Insurance Commissioners.

On top of that, Leonard said he wants to make sure the Insurance Code is up-to-date with current technology, most notably ride-sharing services like Uber and Lyft.

"Right now the Insurance Code is not clear as to when a passenger is covered, whether the driver is covered, when the commercial use starts," Leonard said. "So we've got to a lot of work getting the Insurance Code brought up to make sure we have proper insurance law in place."

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