The Property Casualty Insurers Association of America (PCI), a national insurance trade group representing p/c insurance companies, told the Michigan House Judiciary Committee this week that there could be far-reaching negative consequences in passing legislation that would drastically alter the state’s no-fault automobile insurance system.
In 1995, the Michigan Legislature attempted to clarify that the no-fault verbal threshold’s definition of a serious impairment of bodily function should be understood to require “an objectively manifested impairment of an important bodily function that affects the injured person’s general ability to lead his or her normal life.”
The intent of the verbal threshold is to limit the amount of litigation by permitting only the most serious injuries to surpass the threshold of going to court while accident victims not meeting the standard are compensated by his or her own insurance carrier.
PCI contends that with House Bill 4301, there is a legislative effort to redefine the standard and dramatically lower the threshold by creating an extensive list of what cannot be required in reaching a finding of serious impairment of bodily function.
In testimony before the committee, PCI’s Vice President, Regional Manager and Counsel Ann Weber told lawmakers that Michigan’s no-fault system is working effectively. Its average liability premium is in the middle third of the nation due to lower-than-average claim frequencies and loss costs. Although its liability premium is somewhat higher than other states in the Midwest, it must be noted that medical benefits here are the most generous in the nation. As an example, Michigan is the only state that offers unlimited medical benefits.
“HB 4301 significantly lowers the bar of when an accident victim could bring suit,” said Weber. “This bill could upset the delicate balance in the no-fault system that allows claims to be paid quickly while limiting the necessity to go to court in many accidents. We are concerned that the bill could open the system up to increased litigation and higher costs that will have a negative impact on consumers.”
Source: Property Casualty Insurers Association of America
Topics Michigan
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