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Sen. Glenn Anderson says reforming the MCCA would ‘protect drivers’ and ‘lower rates’

State Sen. Glenn Anderson makes the case for requiring greater transparency from the Michigan Catastrophic Claims Association

Sen. Glenn S. Anderson

I’m pleased and honored to welcome Michigan State Sen. Glenn S. Anderson (D-6th District) and his guest post today.  Senator Anderson’s post is included in its entirety below.

Sen. Anderson has been an  advocate for  greater transparency from the Michigan Catastrophic Claims Association (MCCA). He’s currently is the primary sponsor for Senate Bills 102 and 103, which, if passed, will require the MCCA to comply with disclosure and openness requirements of the Michigan Freedom of Information Act (FOIA) and the Michigan Open Meetings Act.

Sen. Anderson’s concern for auto insurance consumers is also apparent in his efforts to require auto insurers “to deal fairly and in good faith” with insureds claiming benefits or be held “liable for compensatory, consequential, and exemplary damages …” (Senate Bill 71 (2011)).

This will also be the subject of the House Insurance Committee’s Meeting tomorrow (Thursday, March 21, 2013), where the agenda is listed as “An Overview of the Michigan Catastrophic Claims Association.”

For more information, click here to read a comprehensive analysis of Michigan No Fault reform and the latest developments.

Here’s Sen. Anderson:

Reforming Michigan Catastrophic Claims Association Would Protect Drivers, Lower Rates

“The Michigan Catastrophic Claims Association (MCCA) was created with best of intentions. The MCCA is a private organization that was established by the Michigan Legislature in the late 1970s when our current no fault insurance law was enacted. It provides for the care of Michigan drivers who are catastrophically injured in an auto accident by reimbursing no fault auto insurers for all benefits that exceed $500,000. This process spreads costs among all motorists since every Michigan driver is required by law to carry valid insurance.

“While the service of the MCCA is just as important today as when it was enacted, many questions have been raised about its practices. Since 2000, the MCCA has raised its annual rates from $5.60 to $175 per insured vehicle—an increase of 3,025 percent! That’s an appalling rate hike that dwarfs the rate of inflation or any other clear justification for an increase. Another rate increase of $30 just went into effect this past July to pay for the MCCA claimed to be increasing expenses.

“These recent rate hikes are not only substantial, but they might be unnecessary. Unfortunately, this is impossible to determine with certainty. The MCCA does not currently have to disclose the data it uses to arrive at these increases. And while all Michigan drivers are beholden to the MCCA and any rate it sets, the MCCA is not accountable to anyone. The financial information the MCCA uses to make rate decisions are not public and not subject to the Freedom of Information Act, and their board meetings are not subject to the Open Meetings Act. Additionally, all the voting members of the board represent corporate insurance companies that are likely more concerned with protecting their profits than standing up for consumers.

“This is not right, and flies in the face of what the MCCA was designed to do. That is why I am fighting to implement true auto insurance reform in Michigan by adding some much needed checks and balance to the Michigan Catastrophic Claims Association.

“This legislative session, I have again introduced bills to add accountability and transparency to the MCCA rate determination process. My bills, Senate Bills 102 and 103, would:

  • Add one member representing the public to the MCCA Board.
  • Make the Commissioner of the Office of Financial and Insurance Regulation (OFIR) a voting member of the MCCA Board.
  • Make the MCCA Board subject to the Open Meetings Act and the Freedom of Information Act, which will require decisions regarding rate increases be made at public meetings and that financial documents must be made available upon request.
  • Require that an independent Certified Public Accountant appointed by the Commissioner conduct an annual audit of the MCCA and report to OFIR and the House and Senate Insurance Committees.
  • Permit the Insurance Commissioner to disapprove any MCCA rate increase that the Commissioner believes is excessive.

“I first introduced legislation to reform the Michigan Catastrophic Claims Association in 2002 when the MCCA started to make significant rate increases that called into question its motives. I have reintroduced similar bills every legislative session since, but the deep-pocketed insurance lobbyists have been able to keep any action on it at bay. My legislation to reform the MCCA is needed now more than ever, and the increased media and public scrutiny of how the MCCA operates may be the spark we need to usher in real change.

“The MCCA is currently waging a legal battle over access to information on the catastrophic claim fund and other transparency issues, including the MCCA’s appeal of a circuit court ruling that says it is subject to the Freedom of Information Act and must disclose general rate calculation information. I hope the lawsuit filed by the Coalition Protecting Auto No-Fault (CPAN) and the Brain Injury Association of Michigan (BIAMI) is successful in requiring the MCCA to divulge more information on how it sets its rates.

“The legal proceedings currently underway against the MCCA are important, but regardless of which way the ruling goes, it will still only scratch the surface of what really needs to be done to rein in the MCCA and return its focus to the people it was created to serve. I do hope the spotlight continues to shine on this organization and reveal just how much decision-making and rate-setting is currently done in the shadows. I have been working on this issue for a long time and have developed a comprehensive proposal to improve the MCCA without diminishing the important role it plays in our state’s insurance structure. I appreciate the support of the legal community in pushing for these reforms, and will continue to work to identify and inform allies like you that are dedicated to protecting Michigan drivers, their rights and their financial resources.”

Sen. Anderson sent Michigan Auto Law this blog post after we invited him to share his views about the Senate bills, the need for transparency at the MCCA, the role of the MCCA in the larger debate over No Fault reform, or any related topic that he feels the public needs to know about.

This stands as an open invitation to all lawmakers, policy makers and thought leaders who wish to share their views about Michigan No Fault, including whether and/or how Michigan’s No Fault auto insurance system should be reformed.

For more information about Sen. Anderson, please check out his website.

For more information on No Fault reform, click here to read a comprehensive analysis of Michigan No Fault reform and the latest developments.

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