New Michigan DIFS Order Raises More Questions for Auto Insurers

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On September 20, 2019, the Director of the Department of Insurance and Financial Services of Michigan (“the Department”) issued order number 19-048-M, which has a direct impact on the ability of automobile insurers to implement the recent Michigan No-Fault Reform Act.  Per the Act, most provisions were effective June 11, 2019, with a limited number not taking effect until July 2020.  As would typically be the case, on June 11, 2019, insurers began implementing the new provisions of the No-Fault Act.

However, the Department’s order has now put an end to that practice.  Relying upon various statutes that permit it to review forms and rates, the Department has responded to the practice by stating “[i]nsurers that implement the amended provisions that affect the scope of coverage required to be provided under automobile insurance policies without first revising their forms or rates are in violation of Sections 2106, 2108, and 2236 of the Code, MCL 500.2106, 500.2108 and 500.2236.”

The troubling aspect of the Department’s order is the fact that it does not identify the provisions that “affect the scope of coverage.”  For example, do the changes to the order of priority “affect the scope of coverage” because now a new insurer or the Assigned Claims Plan is responsible for Personal Injury Protection where another insurer would have been but for the reforms made?  How does this affect the one-year-back rule which provides for tolling in the case where a denial is made after an investigation?  How does it impact changes made to what qualifications are necessary for a physician that performs an independent medical examination?

The Department’s order does more to confuse the recent changes than clarify the obligations of insurers.  This development is an unwelcome complication where there is already ample confusion as to what insurers, providers and attorneys should be doing to protect their customers, patients and clients – and is one that  could easily be remedied by identifying the provisions the Department intended to impact.  Short of that, insurers are left in an unenviable position of making a section by section assumption of what applies, which will only create further delays in coverage, an impact the Department likely did not intend.

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