Michigan No-Fault Insurance Reform: Economic Perspectives

The Michigan no-fault auto insurance system is known for having few allowable reasons for lawsuits and potentially unlimited lifetime coverage. In recent years the system has seen increasing litigation and costs of insurance to drivers. The State of Michigan reformed its no-fault automotive insurance laws in 2019 with initial changes effective in July 2020. These reforms included reducing assessments to cover catastrophic claims, introducing new catastrophic claims coverage options (personal injury protection; PIP), reducing medical reimbursements to medical caregivers, increasing minimum personal liability limits, and changing underwriting factors. We briefly summarize these changes and examine the potential economic impact of Michigan’s no-fault insurance reform act. We also report and analyze the results of two new surveys. A consumer survey measures consumer knowledge of, attitudes about, and reactions to Michigan’s no-fault reform, and notably finds a significant difference in coverage choices across income levels. An industry survey measures how the responding health care providers say changes to the no-fault law may affect their businesses, indicating a possible decline in the number of providers resulting from the scheduled reductions in reimbursement rates.