Triple-I Weblog | Report: No-Fault Reforms Improved Michigan’s Private Auto Insurance coverage Affordability

Michigan private auto insurance coverage affordability improved markedly after enacting substantial auto insurance coverage reform in 2019, in keeping with a brand new report by the Insurance coverage Analysis Council (IRC) – just like the Triple-I, a division of The Institutes

The examine, Private Auto Insurance coverage Affordability in Michigan, discovered that private auto insurance coverage expenditures accounted for 1.9 p.c of the median family earnings in Michigan in 2022 (the final 12 months the information is obtainable), a decline of half-a-percent from the pre-reform peak. Michigan’s expenditure share stays larger than the proportion within the total U.S. and forty-four different states.

Different key findings from the report embody:

• Earlier than the reforms, Michigan drivers had been required to buy limitless private harm safety (PIP) protection; as compared, the second highest mandated quantity of PIP protection was $50,000 in New York. The limitless medical advantages and different options, reminiscent of attendant care advantages and no medical price schedule, led to Michigan’s extraordinarily excessive common auto harm declare severity, which has been the first value driver within the state.
• In 2022, Michigan households spent $1,319 to insure every car, almost 20 p.c above the nationwide common. Nonetheless, within the years since reform, expenditures have fallen in Michigan whereas rising in virtually each different state. From 2019 to 2022, the common expenditure for auto insurance coverage in Michigan fell 12 p.c in contrast with a rise of 5 p.c within the U.S. total.
• Uninsured and underinsured motorists are each a symptom and reason behind affordability points. In 2019, Michigan had the very best price of uninsured drivers within the nation, with a couple of in 4 motorists missing the required legal responsibility protection. The uninsured motorist price in Michigan dropped by 5 p.c between 2020 and 2022.

“Efforts to enhance auto insurance coverage affordability in Michigan should start with the underlying value drivers: harm declare severity and litigation,” mentioned Dale Porfilio, FCAS, MAAA, president of the IRC. “The common quantity paid per auto declare for auto harm insurance coverage is dramatically larger in Michigan, greater than double the U.S. common and one and a half occasions the second highest state.”

Porfilio, who can also be Chief Insurance coverage Officer of the Insurance coverage Data Institute (Triple-I), famous that the 2022 affordability information doesn’t totally replicate many current countrywide challenges to affordability, reminiscent of financial inflation, larger alternative prices, authorized system abuse, and deteriorating driving habits. “Nonetheless, the motion of a number of key indicators illustrate the optimistic impact of the Michigan policymakers’ efforts to enhance affordability of their state.”