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Should the public have a seat on the MCCA board?

To finally stop the foxes from guarding the hen house, Rep.  Yanez proposes MCCA Board of Directors include voting member from general public with HB 4386

Fox guarding hen house

The MCCA is broken. Rep. Henry Yanez (D-Sterling Heights) proposes we fix it. That starts with subjecting the MCCA to FOIA and the Open Meetings Act, as I wrote yesterday. It must also include allowing  the “general public” to have a seat on the Michigan Catastrophic Claims Association (MCCA)’s Board of Directors.

Rep. Yanez introduced House Bill 4386 on May 24, 2015.  The bill would  expand the MCCA’s Board of Directors by creating a new voting position for a director “representing the general public.”

Currently, the MCCA Board of Directors consists of five voting members (five insurance companies) and the director of the Department of Insurance and Financial Service (DIFS), who does not have a vote.   To many consumer protection advocates and No Fault attorneys such as myself, this is a glaring conflict of interest. If indeed the “foxes are guarding the MCCA hen house,” as I’ve often said when writing about the MCCA Board of Directors, then these much needed protections should be enacted now.

Specifically, Rep. Yanez’s HB 4386 provides the following about the new “public” MCCA Board position:

  • The new MCCA Board position would be for “1 member representing the general public …”
  • The new “public member” of the MCCA Board would have voting power equal to each of the other Board of Director members.
  • The public’s representative on the MCCA Board would be appointed by the Director of the Department of Insurance and Financial Services (DIFS).
  • The DIFS Director “shall appoint the first public member to the board within 3 months after the effective date of the amendatory act that added this sentence.”

Interestingly, Rep. Yanez’s HB 4386 effectively expands the MCCA’s Board to seven – rather than six – voting members because it transforms the DIFS Director’s non-voting, “ex officio member” status to that of “a voting member of the board.”

The insurance companies who sit on the MCCA Board of Directors – a huge conflict of interest

The MCCA is currently run by a five-member Board of Directors, which, among other things, sets, increases and/or decreases the MCCA’s annual per-vehicle assessments. (See MCL 500.3104(9), (11), (13) and (14))

The MCCA pays for the No Fault medical benefits of catastrophically injured Michigan auto accident victims with claims exceeding $530,000. It raises funds to carry out its function by charging per-vehicle assessments to the auto insurance companies doing business in Michigan.

Ultimately, auto insurance consumers pay the costs of the assessment as auto insurers are are required by the No Fault Law to pass along the assessment costs in the form of higher auto insurance prices.

The five voting members of the MCCA’s current Board of Directors – which are appointed by Director of the Department of Insurance and Financial Services (DIFS) – are the following insurance companies:

  • Auto Club Insurance Association
  • Auto-Owners Insurance Company
  • Citizens Insurance Company of America
  • Farmers Insurance Group
  • State Farm Mutual Automobile Insurance Company

As noted above, the DIFS Director is an “ex officio member” of the MCCA’s Board of Directors – who, unlike the Board of Directors members she appoints, does not have a vote.

Yanez has also proposed a bill that would subject the MCCA to the Freedom of Information Act as well as the Open Meetings Act.

Kudos to Rep. Yanez, for pushing for greater transparency and much needed balance between protecting the public interest and the insurance industry.

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Blog Author Steven M. Gursten
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