Why Did Michigan Car Insurance Rates Decrease? - Call Lee Free

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Why Did Michigan Car Insurance Rates Decrease?

After years and years of increases, the special assessment on auto insurance polices will drop $36 per vehicle in the next fiscal year. Beginning on July 1, 2015, each policyholder will pay $150 per vehicle. This announcement by the Michigan Catastrophic Claims Association (MCCA) is a surprising one, although it comes on the heels of an ongoing lawsuit against the association regarding state transparency rules.

In 2012, the Coalition Protecting Auto No-Fault (CPAN), filed a lawsuit under the Michigan Freedom of Information Act to force the MCCA to open its books so independent investigators could better understand the financial make up of the MCCA and Michigan citizens could better understand where their insurance premium money is going.

The MCCA has fought viciously to keep its books closed and the case is currently pending before the Michigan Supreme Court.

All Michigan policyholders are required to pay the special assessment. It’s part of the Michigan no-fault system that allows for medical coverage (and other benefits) by auto insurance companies for injuries resulting from a car or truck accident.

Catastrophic claims assessments are used to reimburse car insurance companies for claims that costing more than $545,000 beginning July 1, 2015. These claims are referred to as catastrophic claims and typically involve spinal cord injuries, traumatic brain injury and other horrible injuries.

But why the decrease? And why now? Michigan policyholders have seen nothing but increases in MCCA assessments for years. For example, in 2009 the rate was $129.89. By 2013, the rate had skyrocketed to $187.00. When asked why the increase was so dramatic, or even needed in the first place, the MCCA has given its usual response – citing increase medical costs and more claims entering the system each year.

But given the MCCA’s complete lack of transparency, it’s impossible to know for sure. The public still has no clue how rates are set and whether the MCCA runs a deep deficit – which it claims – or actually sits on billions of surplus dollars, a claim made by many observers throughout the state.

The MCCA stated the rate decreased this year due to the fund’s positive stuck market investments. I personally find this reasoning to be curious at best. The stock market has been on a bull run for 6 years now. The fund’s stock investments have been returning solid gains for years. Why the sudden give back to Michigan policyholders now? Could the MCCA be feeling the heat?

Whatever the reasons, the decrease in the assessment is welcome news. What would be great news is the Michigan Supreme Court mandating the MCCA open its books so everyone can adequately examine and understand what is hiding behind those coffers.