Fund hikes Michigan auto insurance fee by double digits, Whitmer orders audit - Insurance News | InsuranceNewsNet

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March 28, 2019 Newswires
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Fund hikes Michigan auto insurance fee by double digits, Whitmer orders audit

Detroit Free Press (MI)

March 28-- Mar. 28--LANSING -- Gov. Gretchen Whitmer requested an audit of the Michigan Catastrophic Claims Association Fund on Wednesday, after it announced its latest annual increase -- one of 14.6 percent -- in a fee tacked onto what are already the nation's highest auto insurance premiums.

The MCCA, which is controlled by insurance companies, announced a fee increase of $28, effective July 1, to cover unlimited benefits for injured drivers under Michigan's no-fault auto insurance system.

The fee, which covers medical claims that exceed $580,000, is set annually and added to drivers' insurance premiums. The latest increase brings the total fee to $220 per vehicle.

The fee has been controversial because state courts have ruled that although the MCCA was created by an act of the Legislature, it is not subject to the Michigan Freedom of Information Act. Critics complain it is not transparent in how it calculates the fee. Though the catastrophic fund contains more than $20 billion, the MCCA says it needs higher fees to cover a $3.9-billion deficit related to existing and pending claims.

"From Detroit to the Upper Peninsula, drivers are feeling the pinch of paying the highest auto insurance rates in the nation and it's time to do something about it," Whitmer said. "Michiganders deserve to know why they are being forced to shell out hundreds of dollars in additional fees for car insurance, which is why I'm ordering an audit to provide drivers with the transparency they deserve."

Whitmer ordered an accelerated review by the Michigan Department of Insurance and Financial Services.

The MCCA increased the fee by 13 percent in 2018 and 6.3 percent in 2017.

"Today we told the MCCA that we were concerned and strongly urged them to provide more information so the public can understand the basis for this fee increase," said Anita Fox, director of the state insurance and financial services department.

"To provide greater transparency, we welcome Governor Whitmer's direction to conduct a financial examination into the association's operations."

The department last audited the MCCA in 2015.

Legislative Republicans have identified reducing Michigan's auto insurance costs as a top priority this year and have been holding hearings as they work on legislation.

"I remain dedicated to passing meaningful auto insurance reform to make driving a car affordable for all families in our state," Sen. Tom Barrett R-Charlotte, said in a news release.

Discussions include giving motorists options that don't include unlimited medical coverage --a change strongly opposed by some stakeholders.

The MCCA is a private nonprofit unincorporated association that was created by the state Legislature in 1978.

In a news release Wednesday, the fund said it paid out $1.2 billion in costs related to catastrophic injuries in 2018, including $683 million for attendant care, $121 million for prescription drugs and $107 million for hospitalization.

John Cornack, president of the Coalition Protecting Auto No-Fault, said much more detail is needed about exactly how the fund sets the annual fee.

"Every year it asks for more money, yet it refuses to show us the rate-making data it uses to determine its financial health and set its annual assessment," Cornack said in a news release.

"This is yet another example of the auto insurance industry not being held accountable due to a lack of strong consumer protections in Michigan."

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4. Read more on Michigan politics and sign up for our elections newsletter.

___

(c)2019 the Detroit Free Press

Visit the Detroit Free Press at www.freep.com

Distributed by Tribune Content Agency, LLC.

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