Michigan Residents Warned About Auto Insurance Reform Legislation

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LANSING, MI – Michigan Attorney General Dana Nessel weighed in today on auto no-fault legislation that sped through the House and Senate earlier this week, warning residents that the bills will deliver limited temporary rate reductions and undermine efforts to pursue auto insurance fraud.Auto Insurance

“If passed, this legislation will destroy existing efforts by my department and the Department of Insurance and Financial Services to investigate and prosecute no-fault fraud,” said Nessel.  “The excessive amount of fraud in our state – estimated to be more than $820 million ($108 for every insured vehicle) annually – is one of the single biggest contributors to Michigan’s extraordinarily high auto insurance rates.”

Nessel established an Auto Insurance Fraud Unit as part of the Department of Attorney General within weeks of taking office.  The unit coordinates with DIFS to utilize the Anti-Fraud Unit (AFU) to receive complaints, and then to investigate and prosecute those complaints where criminal activity has been confirmed. The unit has received 3,200 complaints in less than a year.

“We currently have more than 25 active cases under investigation and we have already charged one case with an estimated $100,000 in fraudulent activity,” said Nessel.  “We are driven to aggressively investigate and prosecute acts of auto insurance fraud in tandem with the Department of Insurance and Financial Services and the Michigan State Police.”

Nessel says the bills passed by the House and Senate will eliminate the coordinated AFU and all current and new cases would be transferred to the Michigan State Police, which doesn’t have a single prosecutor nor does it have prosecutorial authority – which means the new AFU couldn’t prosecute even a single instance of auto insurance fraud. Nessel also pointed out that the State Police has competing priorities to protect public safety and county prosecutors do not handle auto insurance fraud cases.

“Without any funding appropriations – in addition to the Senate’s 10 percent reduction in our general fund appropriation – auto insurance fraud will go unprosecuted, leaving this area of criminal activity a free-for-all for any and all bad actors who chose to take advantage of the system,” added Nessel. “Our ‘highest in the nation’ rate of insurance fraud will increase, which will inflate the premiums even more.”

“As a former prosecutor, Governor Whitmer surely appreciates how devastating the elimination of the ability to prosecute all instances of auto insurance fraud will be on the state of Michigan,” said Nessel. “As Michigan’s chief law enforcement official, I am stunned and outraged that the Legislature would deliver this all-encompassing gift to criminals who abuse our state’s auto insurance system, passing those costs along to consumers. I support Governor Whitmer’s expected veto of these imprudent bills. Criminals should not be granted carte blanche to break the law, and these bills hand them that opportunity.”

 

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