Michigan Catastrophic Claims Association (MCCA)
What is the Michigan Catastrophic Claims Association (MCCA)?
Michigan is the only state that offers unlimited personal injury protection benefits. These benefits are offered through no-fault auto insurance policies. The Michigan Catastrophic Claims Association (MCCA) reimburses no-fault auto insurers for benefits that exceed $460,000, as of July 1, 2009. MCCA was created by the legislature a means of spreading costs across all Michigan motorists for providing these unique unlimited benefits.
Although created by statute, the MCCA is a private, nonprofit association. All of its dealings are with insurance companies, not the general public. The MCCA has a Board of Directors that consists of 5 representatives from insurance companies, appointed by the Commissioner of the Office of Financial and Insurance Regulation (OIFR) according to statute. The insurance companies appointed to serve on this board are among the top writers, by volume of business, of auto insurance in Michigan. The Commissioner of OFIR serves as an ex-officio member of the board without a vote.
How is the MCCA assessment determined?
Each year, the MCCA analyzes the amount needed to cover the lifetime claims of all people catastrophically injured in a car accident. This analysis includes review of the investment return that the fund receives, medical cost inflation, and any changes to coverages. The analysis yields an amount needed to pay those lifetime claims and a per vehicle assessment is set based on that amount.
Since 1979, 23,100 catastrophic claims have been reported to the MCCA. Based on current estimates, 11,408 claims remain active, resulting in future lifetime payments in excess of $70 billion. This figure assumes inflating costs for products, services, and accommodations necessary for the care, recovery and rehabilitation of injured persons throughout their lives. The MCCA further estimates that an additional 1,050 Michigan insureds will be catastrophically injured in auto accidents next year. It is the cost of providing these medical benefits that influences the MCCA assessment.
How is the MCCA funded?
An MCCA assessment is charged to every Michigan auto insurance premium. The assessment funds a pool of money for medical costs exceeding $460,000, as of July 1, 2009, resulting from an auto accident.
Do I pay this assessment?
Although the MCCA assessment technically is made to the insurance company, companies typically pass the assessment on to policyholders. Some insurance companies include the MCCA assessment in the Personal Injury Protection (PIP) portion of your insurance premium. Other companies sometimes list this as a “statutory assessment” of “MCCA assessment” on the declarations page of your policy.
Even though the amount assessed each insurer by the MCCA is the same, each company may include administrative and other miscellaneous costs in the amount it assesses policyholders for this coverage. Therefore, the amount assessed by the MCCA may affect each policyholder’s premium differently. If you have questions about the amount being assessed, you may wish to contact your insurance agent or insurance company.
What is the assessment for 2009?
The MCCA announced that the 2009 assessment will be $124.89. The pure premium (the actual cost for each vehicle in the state of Michigan to fund the MCCA pool) is $100.78 and the deficit adjustment is $23.89, with a $.22 administrative expense, setting the assessment at $124.89.
What will happen to the assessment in the future?
The MCCA Board meets every spring to set the assessment for the year beginning July 1st. The assessment is set using the same criteria – by analyzing the amount needed to cover the lifetime claims of all people catastrophically injured in a car accident. Investment return, medical cost inflation, and any changes to coverages will again be considered.
Do I pay the full assessment if I own a historic vehicle?
Public Act 662 of 2002 reduced the MCCA assessment for historic vehicles to 20 percent for the full assessment charged for vehicles effective July 1, 2003. The assessment for historic vehicles beginning July 1, 2009 will be $24.98.
*This article was updated April 2, 2009 by the State of Michigan Office of Financial and Insurance Regulation.