Michigan's governor, Gretchen Whitmer, has directed the Department of Insurance and Financial Services (“DIFS”) to conduct an audit into the Michigan Catastrophic Claims Association (“MCCA”) after the board voted to impose an additional fee increase of $28 on drivers, to be added to a driver's insurance premium, bringing the total fee to $220 per vehicle.
“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,” Governor Whitmer said in a statement. “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.”
The MCCA has increased the fee motorists pay to cover catastrophic medical claims annually for the last three years – 6.3 percent in 2017, 13 percent in 2018, and 14.5 percent in 2019 – resulting in drivers paying more than twice as much as they did in 2008.
On Wednesday, March 13, 2019, officials from the MCCA testified before the Michigan Senate's Insurance and Banking Committee that fee increases were the result of “waste and fraud” in the medical system. Governor Whitmer pointed out, however, that the newest MCCA fee increase came on the heels of a volatile market that caused the MCCA's investments to miss their projected returns.
The DIFS has the legal authority to visit the MCCA and examine any and all documents to conduct a thorough review of the association's operations, which was last conducted in 2015. Under Governor Whitmer's direction, the DIFS will conduct an accelerated financial examination into the MCCA.
“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, who serves as director of the DIFS. “To provide greater transparency, we welcome Governor Whitmer's direction to conduct a financial examination into the association's operations.”
The MCCA is a private non-profit unincorporated association that was created by the state legislature in 1978 to provide unlimited lifetime coverage for medical expenses over $555,000 resulting from auto accidents.
The MCCA is not subject to the Freedom of Information Act and Open Meetings Act.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].