Michigan insurance regulator briefs committee on consumer help, auto no-fault changes and fraud unit

Joseph Sullivan, legislative liaison manager for the Michigan Department of Insurance and Financial Services, told the Michigan House Insurance Committee that the department’s work covers licensing, financial oversight, market conduct and consumer assistance for insurance and state‑chartered financial institutions.

Sullivan said DIFS is “fee funded and do not require tax dollars to operate,” and described the agency’s multiple consumer resources, licensing responsibilities and enforcement activities.

The presentation matters because DIFS oversees the products that touch nearly every Michigan resident — from auto and homeowners insurance to life and health coverage — and enforces recent changes to Michigan’s auto no‑fault system that affect policy costs and consumer protections.

Sullivan told the committee the department’s Office of Consumer Services operates a live call center, answered about 50,000 calls in 2024 and opened more than 9,000 formal complaints last year. “As a result of those complaints we received just for last year, we recovered over $22,000,000 for your constituents,” he said. Those recoveries include premium refunds, reversal of denied claims and other payments to consumers.

He described DIFS’s financial oversight and licensing work for insurers, producers (agents), state‑chartered banks and credit unions, and specialty licensees such as third‑party administrators and pharmacy benefit managers. Sullivan said DIFS also performs on‑site financial exams, licensing investigations and market conduct reviews when the department detects patterns of problematic behavior.

On auto insurance, Sullivan summarized changes stemming from the 2019 bipartisan no‑fault reform. He said the law requires insurers to reduce statewide average personal injury protection (PIP) medical premiums during an eight‑year post‑implementation period and introduced a provider fee schedule and utilization‑review processes for treatment related to auto accidents. He noted, “Michigan is still the only state that offers unlimited lifetime PIP benefits as an option.”

Sullivan explained the Michigan Catastrophic Claims Association (MCCA) remains a statutory reinsurance mechanism that reimburses member insurers for catastrophic PIP medical costs above a statutory threshold and that drivers who choose less than unlimited PIP no longer pay a per‑vehicle MCCA assessment.

The department’s fraud investigation unit, codified in statute in 2019, investigates suspected criminal and fraudulent activity in the insurance and financial markets and coordinates with local, state and federal law enforcement. Sullivan said the unit also conducts outreach to law enforcement and other regulators.

Sullivan described the Patient’s Right to Independent Review Act (PRIRA), which allows consumers to appeal certain insurer adverse determinations to an external medical review process the department administers. He told the committee appeals under that process have roughly doubled since 2020 and that expedited external review is available in emergency cases. “It’s a really good consumer protection,” he said.

Committee members asked how DIFS handles court rulings and guidance. In response to a question about ongoing litigation over billing rules, Sullivan said, “Whenever the court issues a decision, that’s what we’re gonna implement,” and that DIFS issues bulletins and FAQs to clarify any regulatory changes that follow court decisions.

Members also asked about barriers to new carriers entering Michigan. Sullivan said financial solvency reviews and NAIC accreditation standards drive much of the licensure process and that Michigan’s review timelines and financial requirements are largely comparable with peer states. He flagged litigation risk and broader national market trends as factors insurers consider when entering a market.

On cost drivers, Sullivan cited general inflation, rising repair costs for vehicles with newer technology, and fraud as contributors to higher premiums. He said there is no single “magic” solution and urged continued collaboration between the committee and stakeholders to explore targeted policies and model laws that could lower costs.

The committee did not take substantive legislative action during the presentation; members signaled interest in following up on cost drivers, fraud prevention and outreach about PRIRA for constituents. DIFS provided committee contact points (including the director of consumer services, listed on DIFS materials as Renee) and said additional guidance, bulletins and web resources are available on the department’s website.

Votes at the meeting were procedural: the committee approved the Feb. 19 minutes with no objection and took a motion to excuse absent members (moved by Minority Vice Chair Carter) during adjournment; details of the latter motion’s recorded vote were not specified in the transcript.