Michigan Auto Insurance: Understanding Mcca Recoup

The Michigan Catastrophic Claims Association (MCCA) is a non-profit organisation that was established in 1978 to help insurance companies in Michigan cover the costs of providing unlimited lifetime medical benefits for people who suffer catastrophic injuries in car accidents. All insurance companies selling car insurance in Michigan must be a member of the MCCA. On July 1, 2023, the MCCA assessment charged per vehicle will be $122 for unlimited Personal Injury Protection (PIP) coverage and $48 for all other PIP coverage options. This increase in fees is due to higher-than-anticipated claims costs and lower investment returns. This additional charge will affect your policy at the first renewal after July 1, 2023, and will result in higher auto insurance premiums for Michigan drivers.

The MCCA assessment change

The MCCA is a non-profit, unincorporated association established by the Michigan Legislature in 1978. Its purpose is to serve as a reinsurance fund, assisting insurance companies in covering the costs of providing unlimited lifetime medical benefits for individuals who suffer catastrophic injuries in car accidents. All insurance companies selling car insurance in Michigan are mandated to be members of the MCCA.

Prior to the change, the MCCA assessment fee for unlimited Personal Injury Protection (PIP) coverage was $86 per vehicle in 2022, while there was no charge for other PIP coverage options. However, from July 1, 2023 onwards, the MCCA assessment fee for unlimited PIP coverage increased to $122, and a fee of $48 was introduced for all other PIP coverage options.

The primary reasons for this adjustment in MCCA assessment fees can be attributed to three key factors:

• A court ruling in the summer of 2022: A court decision overturned certain no-fault medical cost controls for crash victims, resulting in a projected loss of $3.7 billion.
• Stock market declines: Recent declines in the stock market led to a financial loss of approximately $2.8 billion.
• Refund checks: The distribution of $400 per-vehicle refund checks in the previous spring, due to an earlier surplus, resulted in a financial loss of about $3.1 billion.

As a result of these factors, the MCCA introduced a deficit recoupment fee of $48, intended to mitigate the mentioned losses. This change directly impacted Michigan drivers, leading to higher auto insurance premiums.

It is important for Michigan drivers to stay informed about such changes and understand their implications. Reviewing insurance policies, staying updated on legal developments, and consulting with insurance agents or companies can help individuals navigate these adjustments and make informed decisions regarding their auto insurance coverage.

The recoupment fee

The Michigan Catastrophic Claims Association (MCCA) is a non-profit organisation that was established in 1978 to assist insurance companies in Michigan in covering the costs of providing unlimited lifetime medical benefits for people who suffer catastrophic injuries in car accidents. All insurance companies offering car insurance in Michigan are required to be MCCA members.

On July 1, 2023, the MCCA assessment charged per vehicle will be $122 for unlimited Personal Injury Protection (PIP) coverage and $48 for all other PIP coverage options. This marks an increase from the previous year's assessment, which was $86 per vehicle for unlimited PIP coverage with no charge for other PIP coverage options.

The increase in the MCCA assessment is attributed to several factors, including a court decision overturning some no-fault medical cost controls for crash victims, recent declines in the stock market, and the cost of $400 per-vehicle refund checks issued due to a previous surplus. As a result of these factors, the MCCA has introduced a deficit recoupment fee of $48 to help cover the losses. This recoupment fee is a one-time charge that will be included in the MCCA assessment fee for the 2023-2024 period.

The impact of the recoupment fee on Michigan drivers will be in the form of higher auto insurance premiums. It is important for consumers to be aware of this change and understand the reasons behind it. Staying informed will enable drivers to make well-informed decisions regarding their auto insurance coverage and explore options to mitigate the increase in costs.

The impact on consumers

The Michigan Catastrophic Claims Association (MCCA) is a non-profit organisation that was established in 1978 to help insurance companies in Michigan cover the costs of providing unlimited lifetime medical benefits for individuals who suffer catastrophic injuries in car accidents. All insurance companies selling car insurance in Michigan are required to be members of the MCCA.

On July 1, 2023, Michigan drivers experienced a change in the MCCA assessment charged per vehicle, resulting in increased fees. This change primarily resulted from higher-than-expected claims costs and lower investment returns. The MCCA assessment for unlimited Personal Injury Protection (PIP) coverage rose from $86 per vehicle in 2022 to $122 in 2023. For other PIP coverage options, the fee increased from $0 in 2022 to $48 in 2023.

The impact of these changes on consumers is significant. Michigan drivers will face higher auto insurance premiums due to the increased MCCA assessment and the introduction of the recoupment fee. This change will be reflected in the first renewal after July 1, 2023. Consumers are advised to review their auto insurance policies and consider their options for adjusting their PIP coverage. While unlimited PIP coverage is still recommended, it may become cost-prohibitive for some individuals.

It is important for consumers to stay informed about legal developments that could impact their insurance rates. For instance, the Michigan Supreme Court is currently reviewing an application related to the Andary decision, which contributed to the MCCA's financial deficit. Any changes resulting from this appeal may further affect the MCCA assessment and the recoupment fee. Consumers should also be aware of their rights regarding refunds and proper procedures for issuing refunds.

Additionally, consumers can take proactive steps to mitigate the impact of higher insurance costs. Anita Fox, Director of the Michigan Department of Insurance and Financial Services, suggests shopping around for the best rates and asking about potential discounts. Comparing rates between insurance companies and exploring options for reducing costs can help consumers find the most suitable coverage for their needs.

The MCCA refund process

Eligibility:

The refund is applicable to all vehicles insured as of 11:59 p.m. on October 31, 2021, that meet the minimum insurance requirements for operating on Michigan roads. This includes motorcycles and RVs but excludes trailers, which are not subject to the MCCA assessment.

Refund Amount and Calculation:

The MCCA announced a refund of $400 per eligible car or motorcycle. For historic vehicles with limited allowable use, the refund amount is $80 per vehicle. For fleet vehicles, the refund amount depends on how the vehicles are identified in the policy. Individually identified vehicles receive a full refund of $400 per vehicle, while policies written on a per-plate basis receive the $400 refund calculated per plate. For commercial fleet policies written on a gross-receipts basis or where individual vehicles cannot be identified, the refund is calculated as 135% of the applicable in-force commercial auto PIP written premium.

Issuing the Refunds:

The MCCA transfers the surplus funds to the insurance companies operating in Michigan, who are then responsible for issuing the refunds to eligible policyholders. The refunds are provided in the form of a check or ACH deposit. The deadline for insurance companies to issue the refunds is typically set at 60 days after the transfer of funds from the MCCA.

Communication and Support:

Policyholders with questions or concerns about the refund process can contact the Michigan Department of Insurance and Financial Services (DIFS) for assistance. Additionally, if a policyholder has not received their refund by the deadline or has issues with their insurance company, they can reach out to DIFS for guidance and support.

Timing and Frequency:

The MCCA's financial position

The Michigan Catastrophic Claims Association (MCCA) is a non-profit organisation that was established in 1978 to assist insurance companies in Michigan in covering the costs of providing unlimited lifetime medical benefits for individuals who sustain catastrophic injuries in car accidents. Every insurer selling car insurance in Michigan is required to be a member of the MCCA.

The MCCA assessment fee per vehicle increased on July 1, 2023, to $122 for unlimited Personal Injury Protection (PIP) coverage and $48 for all other PIP coverage options. This represents a significant increase from 2022, when the charge was $86 per vehicle for unlimited PIP coverage, and no charge for other PIP coverage options. The increase in fees is intended to cover the higher-than-anticipated claims costs and offset the lower investment returns experienced by the MCCA.

The financial position of the MCCA is crucial to ensuring that individuals who suffer catastrophic injuries in car accidents receive the necessary medical benefits. The recent increase in fees is expected to impact Michigan drivers in the form of higher auto insurance premiums. It is important for consumers to stay informed about these changes and understand how they may affect their auto insurance coverage.

Frequently asked questions