Michigan Catastrophic Claims Fund has billions in reserves

Although the insurance industry is pushing hard for No Fault insurance caps and even for the Michigan Catastrophic Claims Association (MCCA) to be dissolved, it is not providing the information that lawmakers and the public need to make an informed decision before changing our system — a system that has served Michigan residents remarkably well for the last 40 years.

The MCCA’s mission is to pay the No Fault claims of catastrophically injured auto accident victims once those claims exceed $500,000 in cost. Those funds come from annual per vehicle assessments imposed on Michigan drivers from their auto insurance companies. This year, the cost was $175.

The insurance industry likes to propagate that the MCCA fund is unsustainable, and that it won’t be able to support auto accident victims indefinitely (auto accident victims with lifelong injuries, like brain injury and spinal cord injuries, usually rely on the MCCA).

But two of the most recent Annual Reports to the Insurance Commissioner show that the Michigan Catastrophic Claims Association (MCCA) is paying its bills, and has plenty of money in the bank:

Michigan Catastrophic Claims Association Annual Report to the Commissioner, 2012

Michigan Catastrophic Claims Association Annual Report to the Commissioner, 2011

In 2012, the MCCA’s income from assessments exceeded its payouts on catastrophic injury claims by $69 million.

It also had an average annual reserve (which is used to pay present and future catastrophic claims) of $14,243,649,000.

Numbers like this beg some serious questions:

• Why do Michigan’s insurance lobbyists continue to try scare Michigan drivers by claiming our No Fault insurance system is on shaky ground and the MCCA doesn’t have the money to pay its obligations?
• Why does the Michigan Catastrophic Claims Association cause auto insurance prices to increase by charging higher assessment rates, such as a staggering 21% increase last year (coincidentally timed at the same time as the push for No Fault reform)?
• Why is the MCCA allowed to operate in greater secrecy than the CIA?

The MCCA, the Insurance Commissioner and the insurance industry’s lobbyists at the Insurance Institute of Michigan and the Michigan Insurance Coalition must stop fighting and denying the obvious need for greater transparency at the MCCA.