NU Online News Service, Sept. 23, 3:19 p.m.EST

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

Peter A. Kuhnmuench, executive director of the InsuranceInstitute of Michigan, says the state's auto insurancesystem—established in 1973—has actually worked, but now the“numbers are starting to look scary.”

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

“There are very few cost restraints,” he says. “No treatmentprotocols. No fee schedule.”

A dozen states have no-fault auto insurance laws but onlyMichigan's law provides unlimited medical care under personalinjury protection (PIP) coverage.

Auto insurance policies cover up to $500,000 with the rest ofmedical costs reimbursed by state-sponsored Michigan CatastrophicClaims Association, which is funded by assessments to insureddrivers. The MCCA is basically a reinsurance mechanism, sinceinsurers cannot find reinsurance for the risk of writing autoinsurance in Michigan.

Kuhnmuench says insurers and some lawmakers are looking to “savethe system,” which right now is becoming increasingly unaffordableto a residents. About 20 percent of Michigan motorists areuninsured and that number could rise without auto insurance reform,he adds.

Rep. Pete Lund, R-Shelby Township, has introduced HB 4936, whichlooks to give drivers four options for medical coverage—$5 million,$1 million, $500,000 and $250,000.

“Even at the $250,000 limit, about 99 percent of claims arecovered,” Kuhnmuench says. But drivers could save up to 40 percenton insurance coverage if the bill passes, he adds.

The tiers give drivers options, he says. The limit of $5 millionis basically unlimited medical-care coverage. Only about 125 claimsin history have reached this plateau, Kuhnmuench says.

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

Reimbursements under the no-fault system are much higher thanworkers' compensation or Medicare reimbursements.

For instance, providers in Detroit are reimbursed $162 for aspine x-ray that costs $41.60 and $54.75 under reimbursements fromMedicare and workers' compensation, respectively.

Legislation is being supported by lawmakers, who seem to thinkreform would “level the playing field for charges,” Kuhnmuenchsays. The bill will be debated soon and could move within the nextcouple of weeks, he adds.