All the auto insurance providers in Michigan are keen on making changes to the no-fault system in the state that has been in existence for over two decades now. This need, they attribute, to the increasing cost of medical facilities in the state.
Insurance Institute Of Michigan’s executive director, Peter Kuhnmuench, said that the no-fault auto insurance law in the state has worked without any concerns till date, the burgeoning costs of medical facilities in the state is calling for a change to this law to curb this before things roll out of control. This law was brought into implementation in the 1973 and has been a model for most of the other states who wanted to bring in similar laws in their state.
The average claim cost has increased by 170 percent over the last few years. Kuhnmuench also went on to say that at the start of the last decade in 2000, the average cost per claim filed was $13,617 as compared to $36,245 now. Today, he says, there are lesser restrictions and no particular protocols for treatment. There is also no fee structure in place which is all compounding to the exorbitant medical costs in the current situation.
It is not just Michigan that has the no-fault law in place for its residents. There are a few other states as well that have similar laws, but none of these states offer unlimited treatment care or rehabilitation costs as a part of the PIP (personal insurance plan) coverage. Medical costs to the tune of $500,000 are covered by the auto insurance providers while the rest of the medical and treatment cost is funded by Michigan Catastrophic Claims Association.
Kuhnmuench also said that there are few insurers in the state who are striving hard to prevent these changes from coming into implementation. They don’t realize that it is not being feasible anymore considering the costs involved in retaining this law. At present, at least one in five residents in Michigan drive without having a valid insurance policy and, he says, this number could go up if the right measures are not taken to keep the growing medical costs in check and bring about a change to the no-fault system.
The representative for Shelby Township, Pete Lund, has proposed HP 4936 that offers the four medical coverage options. The insurance policy holders can choose medical coverage ranging from $50,000 to $500,000. Kuhnmuench says that the person with even a $250,000 coverage can have close to 99 percent of all medical costs covered and it will also reduce the cost of the premiums significantly.