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Friday, April 1, 2011

Key reforms can cut car insurance costs

Key reforms can cut car insurance costs : Michigan's automobile no-fault law needs to be updated to improve efficiency, promote affordability and ensure long-term survival of the system. In this time of tight household budgets, too many Michigan residents are driving without insurance, and state law doesn't contain key tools essential to control costs and promote affordability.

Some in the insurance industry oppose reforming our current system and instead want to get rid of or cripple it by offering Michigan drivers the "choice" to opt out of the system. Rather than scrapping the system, which would reduce benefits and increase litigation costs, reform initiatives should be aggressively pursued.

The Legislature should take action on several sensible proposals to address the cost-drivers that have sent rates beyond the reach of many residents. Failure to address these cost-drivers will put our current system in danger of eventual collapse.

• Establish a Michigan Insurance Fraud Bureau:
Michigan is the only state that hasn't undertaken an aggressive, coordinated, statewide effort to combat insurance fraud. Every dollar spent on fraud prevention and prosecution will result in several dollars of savings that can be used to reduce insurance rates.

Simple steps like requiring every Michigan insurer to develop anti-fraud plans, report scammers to a fraud bureau, and fully cooperate with prosecutors are widely accepted fraud-fighting techniques.

• Standardize fees:
Currently, the fees that Michigan insurers pay doctors, hospitals and at-home caregivers for the catastrophically injured vary widely. Reimbursements to auto repair facilities are similarly all over the map.

Unlike in Medicaid, Medicare and workers compensation, our auto insurance system doesn't control costs by requiring uniform payment of fees. This means that fees are negotiated on a case-by-case basis, with auto insurers invariably paying more, which results in higher auto insurance rates for drivers. A uniform fee schedule has worked well in the workers compensation arena and would help eliminate delays in claims processing and reduce fraudulent overbilling of auto insurance claims.

• Reduce claim filing time :
Today, a medical provider can wait up to a year before sending a bill to a Michigan auto insurer, making it very difficult for insurers to identify and prevent fraudulent billing because of the long delay between when the service occurred and when the request for payment is made.

Prompt filing requirements promote more effective claim review and ensure more efficient provider payments. Requiring providers to submit bills within 90 days of providing a service would greatly assist fraud-fighting efforts while not unduly burdening the provider community.

• Create a low-cost policy :
Some areas of Michigan have rates that are so high that they have become unaffordable for many low- and moderate-income drivers. Michigan should provide these drivers with access to a low-cost, bare-bones policy that provides a basic level of coverage at an affordable price.

If constructed in an actuarially sound manner and properly priced, this kind of a product would offer an alternative to those who currently put themselves and their families at risk by driving uninsured.

These proposals would reduce insurance fraud, streamline claims processing and effectively control costs, making our system more efficient and ultimately lowering rates for Michigan drivers.SOURCE www.freep.com... For the latest updates PRESS CTR + D or visit Stock Market news Today

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