We are often asked by clients just what they are paying for with regard to the mysterious “MCCA Assessment Recoupment” line item on declarations pages of insurance policies for riders and drivers across the state. There is a common misconception that this fund, administered by the Michigan Catastrophic Claims Association (MCCA), is set up for the benefit of those individuals who have paid into it and later become severely injured in an accident. This is not exactly true. More accurately, the fund is set up for the benefit of insurance companies who do business in Michigan. Since Michigan’s No-Fault law provides accident-related medical benefits on an unlimited, lifetime basis, the Michigan Legislature became concerned with the idea of putting too much strain on a single insurance company which may be on the hook for millions of dollars of lifetime medical care for an individual. Accordingly, relative to a qualifying accident, the applicable No Fault insurer is responsible for paying on the entire claim, but will be reimbursed by the MCCA for medical costs paid beyond $500,000.00. Currently, the association reimburses medical bills for approximately 12,800 individuals severely injured in accidents throughout Michigan.
The MCCA is funded through assessment to all automobile insurance companies operating in Michigan. For the period ending June 30, 2012, this assessment amount is $145.00 per covered vehicle. Not surprisingly, insurers pass these fees on to policy holders, which is why we see MCCA charges connected with our insurance policies.
This fund has not existed and operated without controversy. In January of 2012, the Michigan Catastrophic Claims Association was sued in Ingham County by a group called the Coalition Protecting Auto No-Fault (CPAN). The CPAN had previously attempted to procure information relative to the cost of claims and the age of claimants through a Freedom of Information Act request, but was denied on the basis that a 1988 state law exempts the MCCA from the Act. CPAN alleges that this exemption is improper and unconstitutional and that the public has a right to know how this money is spent and whether the premiums paid are adequate. The desire for this information has been spurred in part by a recent state insurance commission audit showing the MCCA to be $1.6 billion in the red, but not providing information revealing how this figure was calculated. Check back here for further updates as this interesting case develops.
|
