NU Online News Service, Oct. 07, 9:12 a.m.EST

Insurance trade associations are attempting to get through toMichigan lawmakers in order to prevent a "death spiral" of thestate's no-fault automobile system.

"Michigan can bring its system some reasonable reforms that willoffer the consumer greater flexibility and choice in their coveragewhile still offering them the protection they need," writes ErinCollins, Mid-Atlantic state affairs manager for the NationalAssociation of Mutual Insurance Cos., to the state House InsuranceCommittee in support of HB 4936.

The measure, introduced by Rep. Pete Lund, R-Shelby Township,looks to give drivers four options for medical coverage—$5 million,$1 million, $500,000 and $250,000.

Michigan's law currently provides unlimited medical care underpersonal injury protection (PIP) coverage.

HB 4936 also establishes a fee schedule in hopes of bridlingcosts. A fee schedule exists for the state's workers' compensationsystem.

The insurance industry in Michigan says it is looking tostabilize the state's no-fault automobile system before costs getout of control.

The average cost per claim has increased nearly 170 percent overthe last decade to $36,245 from $13,617 in 2000, says the InsuranceInstitute of Michigan.

"The current system with its uncontrolled medical costs andmandated benefit that doesn't allow consumer choice will simply putMichigan behind for business growth and continue to drive costs upfor both consumers and insurers," Collins continues.

David Snyder, vice president and associate general counsel ofthe American Insurance Association, urges the House committee toconsider reforms to "reverse the current slide into a 'deathspiral' of rising costs, rising premiums, rising affordabilityproblems and rising anger from the public." He says HB 4936constrains costs while keeping the benefits of the no-faultsystem.

Snyder says several states have repealed no-fault laws, Floridais considering it and New Jersey struggled for decades to reformits system. Michigan will face similar calls to repeal the entiresystem if it does nothing to fix it now, he adds.

"My experience is that every case of repeal or near appeal inwhich I have been involved, was preceded by extensive efforts toachieve moderate reforms that failed," he says. "Without thosereforms, costs continued to rise as did public anger and repealbecause the preferred option."