Court Order Shines Light on Michigan No-Fault Insurance System
Historic ruling subjects Michigan Catastrophic Claims Association to FOIA; vehicle fee calculations must be revealed.
LANSING, Mich. – The Ingham County Circuit Court issued an order last week that will bring long-awaited transparency to the Michigan auto no-fault insurance system. The landmark ruling, issued by Judge Clinton Canady III, subjects the Michigan Catastrophic Claims Association (MCCA) to the Freedom of Information Act and requires the fund to publicly disclose how it calculates the assessment charged to every Michigan vehicle when drivers purchase or renew their auto insurance.
The court’s ruling is the result of separate lawsuits brought by the Coalition Protecting Auto No-Fault (CPAN) and the Brain Injury Association of Michigan (BIAM). The two organizations both sought information that would help lawmakers analyze the necessity of insurance industry-proposed changes to Michigan’s no-fault system.
“Lawmakers, the press and the public will finally have the opportunity to get the full truth regarding the MCCA and the premium increases it routinely levies,” said CPAN President John Cornack.
The MCCA is a reinsurance fund created by the state legislature in 1978. Each Michigan driver is required to pay $175 annually per vehicle to fund the MCCA, which helps reimburse insurers for costs above $500,000 for the care and treatment of seriously injured auto accident survivors. The MCCA assessment has increased each year since 2000. About 13,000 accident survivors are provided care through MCCA reimbursements.
“A well-functioning MCCA is critical to the existence of our state’s auto insurance system and for the care of seriously injured accident victims,” said Michael Dabbs, president of the Brain Injury Association of Michigan. “But until now insurance companies have kept the MCCA hidden from the public. There has been no way to verify whether drivers were being charged appropriate rates to sustain the MCCA or whether Michigan insurance companies were properly managing the more than $13 billion held in MCCA funds.”
The MCCA is controlled by a five-member board, made up entirely of insurance companies, whose meetings are closed to the public. The Michigan Insurance Commissioner also sits on the board but is not allowed a vote.
As a result of the court ruling, CPAN plans to consult with insurance regulation experts to investigate MCCA financial records to determine whether the insurance companies have been properly managing its funds and to determine the appropriateness of MCCA annual assessments.
“If you insure a car in Michigan you are paying into the MCCA,” said Cornack. “It’s plain and simple; this is the public’s money and the public has a right to know all the facts about how their money is managed and whether what they pay in premiums is adequate to handle future claims. This court ruling finally allows for this information to be publicly verified and that is what CPAN plans to do.”