A few weeks ago, a bill in the state house was introduced that would dramatically open up how auto insurance rates are set by the Michigan Catastrophic Claims Association (MCCA).
Currently, the MCCA charges all motorists $150 per vehicle to provide unlimited medical care for victims injured in motor vehicle accidents after the auto insurer pays the first $545.000. How this charge has been formulated by the MCCA – an organization run by insurance companies – has been hidden from public view for years.
The MCCA charge has increased dramatically over the past decade. In fact, until earlier this year, there was an over 80% increase in the MCCA rate in just 6 years.
2008 – $104.58
2009 – $124.89
2010 – $143.09
2011 – $145.00
2012 – $175.00
2013 – $186.00
2014 – $186.00
The formula and factors the MCCA utilizes in arriving at the per-vehicle MCCA charge remains a deeply held secret. Despite lawsuits filed by various organizations, the MCCA and its member car insurance carriers refuse to divulge its books so the public can accurately know what is going on behind closed doors.
Despite receiving various Freedom of Information Act (FOIA) requests, the MCCA has still refused to turn its books over to the public and the Michigan Supreme Court will have to decide whether the public is entitled to this information or not.
House Bill 4752 seeks to put an end to this secrecy. The bill would require the MCCA to disclose more financial information, including actuarial formulas as well as the assumptions and computations used by its actuaries. The financial modeling used must also be disclosed. These disclosures are required to occur within 15 days after MCCA sets its new premium each year.
The legislation is co-sponsored by various legislators on both sides of the political aisle and by representatives from all corners of the state.
It is unclear if HB 4752 will pass the House and state Senate. It is also unclear if Governor Snyder will sign the bill. However, what is clear is the need for public disclosure of how a mandatory rate charged by auto insurance carriers upon all policyholders is set.
For over 4 years, insurance carriers have clamored for a drastic change to the present Michigan no-fault system that limits their risk while guaranteeing little to no rate relief for policyholders. At the same time, these individual carriers refuse to disclose how much money they have reaped due to the MCCA charge.
This type of financial obfuscation must end. I am hopeful this much needed piece of legislation will pass both houses and arrive on the governor’s desk for signature in the very near future.
