Remember that time that the Michigan Legislature and the Governor teamed up to accomplish a long overdue bit of auto insurance reform earlier this year? Well, it’s paying off handsomely next summer in the form of a 55-percent reduction for the Michigan Catastrophic Claims Association fee.
The Michigan Catastrophic Claims Association announced today they are lowering the assessment charged per vehicle to $100 for the period beginning July 2, 2020 through June 30, 2021. That is a 55-percent reduction from this year’s $220 assessment. Insurance companies will charge that assessment only to people who choose to maintain unlimited lifetime personal injury protection (“PIP”) benefits. Those who choose lower limits under Michigan’s revised no-fault insurance law avoid the assessment altogether, as long as the MCCA is not in a deficit position.
Governor Gretchen Whitmer released the following statement today in response to the Michigan Catastrophic Claims Association fee established, which was a direct result of the no-fault insurance reforms signed into law by her earlier this year:
“Today’s reduction by the MCCA demonstrates that our historic bipartisan legislation will provide real savings to Michigan drivers. The new law will enhance consumer protections and continue to lower costs for Michiganders by mandating rate reductions for eight years. Millions of Michigan drivers will finally see relief under a new system that maintains the highest benefits in the country.”
The 55-percent reduction results directly from savings created by cost controls for medical treatment and other changes made to Michigan’s no-fault insurance law back on June 11, 2019. These changes are estimated to erase the MCCA’s deficit of approximately $2.0 billion and reduce the annual MCCA assessment by approximately $1.0 billion.
Beginning on July 1, 1973, Michigan’s no-fault insurance law had required all policyholders in Michigan to buy unlimited PIP coverage. That mandatory coverage covered unlimited lifetime medical benefits for people injured in motor vehicle accidents. Under the new law, as of July 2, 2020, applicants for no-fault insurance coverage can select from several different coverage limits, including the same unlimited coverage offered since 1973.
The legislature created the MCCA effective July 1, 1978 to reimburse insurance companies for amounts paid for PIP benefits over an amount deemed catastrophic under the no-fault insurance law. The cost of those benefits has been reflected in the premiums all Michigan policyholders pay.
State Representative Pauline Wendzel issued her own statement following the news, saying, “For decades, Lansing politicians have tried and failed to reform our broken auto-insurance system. The news of the MCCA slashing rates by 55-percent is a huge win for the drivers of Southwest Michigan and is just the beginning.” Wendzel adds, “Michigan drivers who chose to keep their unlimited lifetime medical coverage will go from paying $220 per year to only $100 per year. Those who choose lower limits for medical coverage may avoid the fee altogether.”
In conclusion, Wendzel says, “The number one issue I heard about from people in our community was the need to reform our broken auto-insurance system. I’m proud to have delivered on a promise I made to Southwest Michigan residents.”
Additional information on the MCCA, including claim payment statistics, audit reports, financial statements, the annual consumer report to the Michigan legislature, and answers to frequently asked questions is available at the MCCA’s website which his linked below:
http://www.michigancatastrophic.com
There’s also additional information from the Michigan Department of Insurance and Financial Services’ website at:
