Insurer “Hardship Clause” in No-Fault Reforms Another Loophole for Insurance Industry

LANSING – Governor Snyder’s proposed reforms to Michigan’s auto no-fault system includes a “hardship” loophole for insurers to get out of reducing rates in the first year, according to Gongwer News Service. However, the Michigan Catastrophic Claims Association (MCCA) fee – which is the portion that would be reduced – is a pass through charge that in no way impacts an insurance companies’ revenue.

“Why would the insurance industry include a hardship clause when the proposed cost reduction has absolutely no impact on insurers’ bottom line,” said John Truscott, spokesperson for the Coalition Protecting Auto No-Fault (CPAN). “This is yet another loophole that should cause people to question whose interests these ‘reforms’ are looking out for.”

The MCCA fee is a separate charge included on Michigan drivers’ insurance statement that is simply passed through to support the Catastrophic Claims Fund. The $125 reduction in this rate that the Governor’s plan proposes for the first year is only a one-time reduction for Michigan drivers, and based on the hardship clause – it’s not even guaranteed.

“The only ‘hardships’ the insurance industry is creating with these reforms are for catastrophically injured accident survivors that will not be covered under the benefits cap and the massive burden it’s shifting onto taxpayers through increased Medicaid costs,” added Truscott.

###

The Coalition Protecting Auto No-Fault: The Coalition Protecting Auto No-Fault is a broad-based coalition of consumer advocate groups, lawyers, doctors, hospitals and other health care providers working together to keep Michigan’s model no-fault insurance law intact. Learn more about CPAN by visiting www.ProtectNoFault.org.