Michigan drivers to see a 21 percent increase in mandatory MCCA fee

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No-Fault insurance lawyer Steven Gursten says increase in Michigan Catastrophic Claims Association assessment calls for 5 reasons why profitable auto insurance companies are hiking their prices

Steven Gursten, Michigan Lawyer of the Year and Michigan Leader in the Law

What we need to know about is more transparency in auto insurance, how the cost is determined and how it's passed down to Michigan drivers.

The Michigan Catastrophic Claims Association (MCCA), which reimburses No-Fault insurance companies for auto accident medical claims that exceed $500,000, recently announced a 21 percent increase ($30) in its annual per vehicle assessment.

The assessment, which is charged to the No-Fault insurers and is used to reimburse them for claims exceeding $500,000, is passed on to and paid for by auto insurance consumers as part of their No-Fault auto insurance policies, said Steven M. Gursten, an insurance lawyer and head of Michigan Auto Law.

"It's expected by insurance lawyers and lawmakers alike that this increase in the MCCA assessment will cause auto insurance rates in Michigan to rise," Gursten said. "This is unnecessary, as Michigan auto insurance prices are among the highest in the entire nation."

Michigan ranked third in the country for the highest priced auto insurance, according to Insure.com’s 2012 car insurance rate survey: “Car Insurance Rates By State: The most and least expensive places to buy auto insurance in 2012.

Gursten says if Michigan drivers are going to be asked to pay yet more money for their auto insurance, they need to know why: "What we need to know about is more transparency in auto insurance, how the cost is determined and how it's passed down to Michigan drivers."

Gursten is president of the Motor Vehicle Trial Lawyers Association and a member of the Michigan Association for Justice Auto Accident No-Fault Committee. He is available for comment.

Below are five points that Gursten believes will help increase transparency regarding the cost of Michigan No-Fault insurance.

1. The Michigan insurance commissioner should conduct an updated study of the "excessiveness" of Michigan auto insurance prices.

Michigan’s three leading Michigan auto insurers — State Farm, Allstate, and AAA — were all deemed "highly profitable …,” according to a May 2007 report by former insurance commissioner Jay Angoff: “An Analysis of the Profitability and Performance of the Michigan Auto Insurance Market.” Michigan is a unique state where our insurance commissioner does not have the power to regulate “excessive profits,” unlike most others.

2. Michigan auto insurance companies should be required to disclose trends on their No-Fault claims.

In the ongoing debate over so-called Michigan No-Fault “reform,” the state’s auto insurance industry contends that the average No-Fault claim for benefits has increased. But insurance companies fail to discuss how much profits they make, or how much more the profits are in Michigan than in other states where pricing can be regulated by state insurance commissioners. The insurance industry is leaving out a lot of the necessary contextual information that Michigan drivers require to make the right decisions.

3. Michigan auto insurance companies should be required to disclose loss ratios on their No-Fault coverage lines each year.

An auto insurance company’s “loss ratio” reflects how much of each premium dollar is paid out in claims. It's calculated by dividing the insurer’s “incurred losses” by its “earned premiums.” If an insurer’s loss ratio is 60 percent or less, meaning that for every $1 collected in insurance premium only $.60 is paid out in claims, then its insurance prices are deemed “unreasonable," according to MCL 500.1615(5)).

4. Remove Freedom of Information Act (FOIA) exemptions that may apply to the MCCA.

In a lawsuit filed in January 2012 called Coalition Protecting Auto No-Fault (CPAN) v. The Michigan Catastrophic Claims Association (MCCA) (Case No. 12-86-CZ, Ingham County Circuit Court), CPAN seeks a declaratory judgment that the MCCA’s claimed exemption (MCL 500.134(4) and (6)(c)) to FOIA (MCL 15.231) is unconstitutional. Further, legislation pending in the Michigan Senate and House of Representatives proposes to close the MCCA’s FOIA exemption “loophole” in MCL 500.134. (Senate Bill 74, which was introduced on January 26, 2011; House Bill 4785, which was introduced on June 16, 2011)

5. Amend the Open Meetings Act to apply to the MCCA.

Under Michigan’s Open Meetings Act, the meetings of “public bodies” are required to be open to the general public so that anyone can attend. Moreover, any deliberations and/or decisions of the public body must be made during the public, “open meeting.” (MCL 15.261, et al.) Legislation pending in the Michigan Senate and House of Representatives proposes to amend Michigan’s Open Meetings Act to specifically include the MCCA as a covered “public body.” (Senate Bill 75, which was introduced on January 26, 2011; House Bill 4786, which was introduced on June 16, 2011)

" In light of the recent developments concerning Michigan auto insurance prices and the ongoing debate over Michigan No-Fault reform, there has never been a greater need for transparency into the pricing decisions of Michigan auto insurance companies," Gursten said. "These are the entities authorized by the state to sell a product that the law requires the our 8 million-plus drivers to purchase."

About Steven M. Gursten: Steven M. Gursten is a Michigan No-Fault insurance lawyer handling serious auto accident lawsuits and truck accident cases. He is president of the Motor Vehicle Trial Lawyers Association and lectures to attorneys across the country about various legal topics, such as traumatic brain injury and No-Fault reform.

About Michigan Auto Law: Michigan Auto Law has 18 lawyers exclusively handling auto accident and No-Fault insurance litigation throughout the state. Michigan Auto Law has received the top-reported jury verdict for a car or truck accident victim in 2009, 2009, 2010 and 2011, according to published reports by Michigan Lawyers Weekly. The firm has offices in Farmington Hills, Sterling Heights, Detroit, Ann Arbor and Grand Rapids. For more information, call Michigan Auto Law at (800) 777-0028.

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