31st Mar 2017
Legislators statewide complain about the cost of auto insurance fees. But the Michigan Catastrophic Claims Association recently announced those costs are about to get even higher. The situation emphasizes the need for transparency and regulation over the auto insurance industry.
The Michigan Catastrophic Claims Association (MCCA) has announced that, for the second year in a row, it will be raising its assessments on Michigan No-Fault auto insurance policies. Starting July 1, 2017, every insured vehicle will incur in $170.00 auto insurance fees.
What Is the Michigan Catastrophic Claims Association?
The MCCA is a nonprofit entity established by the Michigan No-Fault Act to pay insurance companies back for catastrophic medical costs of their most seriously injured customers. After an auto accident, the insurance company pays the first $555,000. If a person’s injuries require more treatment, the insurance provider can seek reimbursement for those costs from the MCCA. To pay for these costs, the MCCA issues an assessment to insurance providers for each vehicle they insure. This assessment shows up on motorists’ bills as an auto insurance fee.
Auto Insurance Fees Up Two Years in a Row
The MCCA has been around since the late 70s. Over the years, the assessment motorists have paid have gone up and down dramatically. As recently as 2000, drivers paid a mere $5.60 per vehicle. The auto insurance fee hit an all-time high in 2013 and 2014 at $186 before dropping to $150. But the last two years have seen the fees creep back up. The current rate, set in July 2016, is $160 per vehicle.
The Mystery Behind MCCA Assessments
If you are wondering why those numbers are on the rise, you’re not the only one. The MCCA says “an independent actuarial consultant”evaluated the organization’s medical costs, economic conditions, investment returns, and claims statistics. The consultant reportedly indicated that the organization was functioning at a loss, thus requiring the auto insurance fees increase.
But the Michigan Court of Appeals has ruled that the MCCA, despite being a public entity, does not have to respond to FOIA requests. That means motorists or the organizations that advocate for them, cannot get access to the information that goes into those reports.
The Need for Transparency and Regulation
The MCCA assessment increase has brought extra attention to the cost of auto insurance in Michigan. Several legislators are already using the costs as a motivating factor in pushing no-fault reform bills. But the proposed bills do nothing to increase transparency in MCCA auto insurance fees, or regulate the auto insurance industry as a whole. Because of this, auto insurers, and the MCCA, are able to write their own ticket, outside of the watchful eye of consumer advocacy organizations. For any no-fault reform to work, it will need to pull aside the curtain and show the facts behind the numbers.