Mich. Catastrophic Fund Assessment to Decrease
An assessment paid by auto insurance carriers to cover catastrophic injuries resulting from auto crashes will decrease on July 1.
The Michigan Catastrophic Claims Association (MCCA) assessment, which covers costs for unlimited lifetime medical costs for those injured in auto accidents, will decrease $14.18, from the current $137.33 to $123.15 per vehicle on July 1, 2007.
The MCCA said that Michigan’s no-fault auto insurance system is unique in that it provides unlimited medical benefits for motorists injured in auto accidents. Michigan is the only state in the country with such generous medical benefits. The MCCA was created in 1978 to reimburse auto insurance companies for injury claims that currently exceed $400,000. The MCCA then assesses all auto insurance companies to cover the costs of those catastrophic claims. The assessment is reflected in the premiums paid by Michigan policyholders.
“While it is good news for policyholders that the assessment has declined, the cost to pay for a lifetime of medical care for individuals injured in auto crashes is still expensive,” said Peter Kuhnmuench, executive director, Insurance Institute of Michigan.
In 2006, the MCCA paid out $668 million, primarily for closed-head injuries, paraplegia, quadriplegia and burns. Since 1978, when the fund began, more than 20,700 claims have been reported, which will cost an estimated $59 billion.
The Board of Directors of the MCCA is comprised of five member insurance companies that write over 50 percent of the state’s auto insurance. Those member companies are appointed by the Commissioner of the Michigan Office of Insurance and Financial Services. The Commissioner serves as an ex-officio member.
IIM is a government affairs and public information association representing 40 property/casualty insurance companies and another 50 related organizations operating in Michigan. IIM member companies provide insurance to 73 percent of the automobile and 66 percent of the homeowners markets in Michigan.
Source: IIM