Midwest Legislative Priorities Include No-Fault Auto, Distracted Driving, Contractor Fraud, Tort Reform

With some of the highest auto insurance rates in the nation, Michigan’s no-fault insurance laws — much maligned by the insurance industry and business interests — are sure to be a target for legislative reforms. Insurance trade associations, including the Property Casualty Insurance Association of America (PCI), along with the Michigan Chamber of Commerce and other business groups, have said no-fault auto insurance reform will be a focus in the state’s legislative session that begins on Jan. 9.

Part of the problem with no-fault is the unlimited personal injury protection required under the law. Previous attempts to allow insurers to offer consumers other options, such as PIP limits of $250,000 and $500,000, have been shot down in the legislature.

Dan Gilbert, founder of the Detroit-based mortgage lender, Quicken Loans Inc., reportedly has threatened legal action against no-fault and may push to get no-fault reform on the 2020 ballot if state lawmakers don’t tackle the issue next year. Gilbert, and other business interests in the state, say the no-fault system is a deterrent to economic development.

According to the National Insurance Crime Bureau, a bill introduced in the Michigan Senate late in 2018 would create an auto-fraud authority and catastrophic claims board to oversee high-risk losses — including fraud. Another Michigan bill that supporters say would help lower both auto insurance and workers’ compensation costs, would strengthen the state’s oversight of pharmacy benefit managers, giving that responsibility to the insurance department. NICB noted that it will be tough to get either measure passed in the waning days of the 2018 session, but the bureau expects to see them resurrected in 2019 if passage fails in 2018.

Jeffrey Brewer, vice president for Public Affairs for PCI outlined some of the other issues PCI would be working on in the Midwest.

He said the group backs stronger distracted driving laws in Midwest states.

“Specifically, we would like to see a ban on hand-held devices in Minnesota and the current hand-held ban for young drivers in Indiana extended to all drivers,” he said.

PCI would oppose any proposed body shop legislation in Minnesota that would restrict the ability of insurers to offer direct repair program options to consumers. The insurers association will also keep a watch on towing issues in Indiana and will pursue the passage of towing protections there.

Roofing and contractor fraud and abuse are issues in Iowa, Kansas and Ohio that PCI will be watching. “We will be supportive of legislative efforts in Iowa and Kansas to address assignment of benefits abuses associated with roofing repairs. Nebraska passed assignment of benefits reform in 2018 that created key disclosures for consumers and provided protections so that they don’t unknowingly sign away their rights. PCI would like these provisions adopted in Iowa and Kansas. We would also like to see Ohio pass stronger consumer protections to prevent contractor fraud and abuse,” Brewer wrote.

A significant priority for PCI and other groups in Missouri is tort reform. St. Louis, in particular, has for years been tagged as a “judicial hellhole” by the American Tort Reform Foundation (ATRF) due to its popularity as a forum for litigation and its reputation for handing down big awards in civil cases. According to the ATRF, issues such as venue laws, punitive damages in lawsuits and statute of limitations, are expected to be debated by Missouri lawmakers in the coming session.

Brewer said PCI expects workers’ compensation reform will likely “resurface in Illinois, and PCI will be focused on ensuring that proposals address the true underlying costs for Illinois businesses.”

In Wisconsin and Michigan, outgoing Republican governors Scott Walker of Wisconsin and Rick Snyder of Michigan each signed lame duck legislation passed by Republican controlled legislators that limit the powers of Democrats in both states. Voters elected to replace Walker and Snyder with Democrats — Tony Evers and Gretchen Whitmer in Michigan. Insurance commissioners in Wisconsin and Michigan are appointed, so it’s possible both states may have new top insurance regulators.

Kansas also has a new governor, Democrat Laura Kelly, and a newly elected insurance commissioner, Vicki Schmidt, a Republican and a former state senator.

This article was first published by Insurance Journal.

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