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Michigan Catastrophic Claims Association Reimburses No-Fault Auto Insurers
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 $400,000, as of July 1, 2006. MCCA was created by the legislature as 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 Services (OFIS) 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 OFIS 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, 19,000 catastrophic claims have been reported to the MCCA. Based on current estimates, more than 10,633 claims remain active, resulting in future lifetime payments in excess of $55 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 1,400 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.
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