Report Challenges Michigan Auto No-Fault Law Impact on Insurance Rates and Coverage

Michigan’s No Fault Reform Five Years Later: What the Industry Should Really Take Away

Michigan’s 2019 auto no fault reform continues to ignite debate across the insurance community. The state’s Department of Insurance and Financial Services (DIFS) recently highlighted a consultant’s report that seemed to paint the reform as a success story for affordability and coverage. But a closer read of the same report tells a different, more nuanced tale. For insurers, agents, and claims professionals, the findings offer a timely reminder that headline talking points rarely capture the full market reality.

“The data is more complicated than the public narrative suggests.”
Milliman Analyst

Rates Rise Despite Promised Relief

When the no fault overhaul passed in 2019, lawmakers touted it as the long awaited remedy for Michigan’s historically high premiums. Yet the Milliman analysis, when reviewed in detail, shows that average auto insurance rates have climbed nearly two hundred dollars between 2019 and 2024. While certain components of the premium structure did decline especially personal injury protection costs those savings were eclipsed by upward pressure in other rating areas.

Put simply, 2024 has been the costliest year for Michigan auto insurance since the reform took effect.

A significant contributor to the mixed outcome is the report’s analytical framework. Milliman modeled hypothetical premium trajectories assuming the law had never passed. That approach acknowledges the extraordinary market disruptions triggered by the pandemic, supply chain volatility, and claim cost inflation. Still, it complicates efforts to draw clean causal lines between the reform and the real world results consumers are experiencing.

“We cannot view these trends in isolation. The pandemic alone reshaped the auto market in ways no reform could fully anticipate.”
Insurance Economist

Uninsured Rates Tell a Mixed Story

DIFS publicly emphasized improvements in Michigan’s uninsured driver rate, yet the underlying data offers a more layered picture. The report shows that the number of uninsured drivers actually rose following the reform. What changed was the relative gap between Michigan’s uninsured driver rate and the national average. The state still sits above the national level, but the gap has narrowed.

For insurers, this signals a coverage environment that is improving in comparison with national movement, but not necessarily improving in absolute terms.

Human Impact A Growing Point of Contention

One of the most controversial outcomes of the 2019 reform continues to be its effect on long term care for catastrophically injured drivers. The law imposed steep reimbursement cuts for home care providers serving patients with lifelong injuries. As a result, thousands of individuals now exhaust their medical benefits each year, creating care access barriers that were once virtually unheard of under Michigan’s former unlimited PIP structure.

Although the reform succeeded in lowering some PIP related costs, its ripple effects on the care ecosystem are increasingly sparking legislative and legal pushback.

What Insurance Professionals Should Watch

Only one section below uses bullet points, as requested.

Key industry considerations moving forward:

• Shifting premium mix as PIP decreases but other components climb

• Continuing uncertainty in claim severity trends and supply chain costs

• High public scrutiny around long term care outcomes

• Potential for legislative adjustments as consumer pressure builds

A Market Still in Transition

Five years into Michigan’s no fault overhaul, the industry is left with a complex story rather than a tidy verdict. Some costs went down, others went up, and customer sentiment remains divided. The reform changed the structure of the market, but it didn’t eliminate volatility. For insurers, the path ahead will hinge on how emerging claim trends stabilize and how policymakers respond to mounting public pressure over affordability and care access.

One thing is clear. Michigan’s experience remains one of the nation’s most closely watched case studies in auto insurance reform, and its next chapter is still being written.