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Senate Bills push for transparency into rate-calculation process at Michigan Catastrophic Claims Association (MCCA)

March 6, 2013 by Steven M. Gursten

Legislation proposes to close ‘secrecy’ loopholes for MCCA in FOIA & Michigan Open Meetings Act

The Michigan Catastrophic Claims Association (MCCA) will be forced to provide unprecedented transparency into its process for calculating and increasing per-vehicle assessment rates, under a pair of bills recently introduced in the Michigan Senate.

Introduced on January 29, 2013, by Senators Glenn Anderson (D-6th District), Steven Bieda (D-9th District), Vincent Gregory (D-14th District) and Coleman Young II (D-1st District), Senate Bill 102 and Senate Bill 103 would require:

  • That MCCA business be conducted at public meetings in compliance with Michigan’s “Open Meetings Act.”
  • And that MCCA documents be subject to the requirements of Michigan’s Freedom of Information Act.

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

The secrecy that has cloaked the MCCA’s rate-calculation process has made the organization a lightning-rod for controversy recently as the public, lawmakers and policymakers have scrambled for reasons to explain why Michigan drivers are having to pay so much for auto insurance.

Attention has been focused on the MCCA, because when it increases the per-vehicle assessment rates, auto insurers pass the increased costs to Michigan drivers in the form of increased auto insurance rates.

The MCCA’s mission is to pay the No Fault claims of catastrophically injured auto accident victims once those claims exceed $500,000 in cost. The MCCA raises funds to make those payments by imposing per-vehicle “assessments” on every auto insurer doing business in Michigan.

Previous efforts to end MCCA secrecy

Historically, the MCCA has been extremely guarded about the details and process by which it sets – and raises – its per-vehicle assessment rates.

But as auto insurance rates have continued to increase in recent years, the information blackout maintained by the MCCA has come under fire:

  • In 2011, Senators Anderson, Bieda, Gregory and Young (along with Sen. Bert Johnson, D-2nd District) introduced Senate Bills 74 and 75, which were nearly identical to SB 102 and 103, but died due to inaction at the end of the 2011-2012 legislative session.
  • Similarly, Rep. Phil Cavanagh, D-Redford Township, introduced House Bills 4785 and 4786 in 2011 in attempt to bring the MCCA within the requirements of FOIA and the Open Meetings Act. In 2012, Rep. Cavanagh even introduced House Resolution 228 calling for an Emergency Financial Manager to be appointed to review the MCCA’s finances. As with his Senate colleagues’ efforts, Cavanagh’s proposals died due to inaction at the end of the 2011-2012 session.

Court orders MCCA transparency through FOIA compliance

Notably, the greatest advances toward establishing transparency into the MCCA’s rate-calculation process occurred in court. As a result of a lawsuit filed by the Coalition Protecting Auto No-Fault (CPAN) and the Brain Injury Association of Michigan, Ingham County Circuit Court Judge Clinton Canady III ruled that the MCCA was obligated to comply with the Michigan Freedom of Information Act:

“Michigan citizens have a right to know how the insurance premium they pay is calculated to ensure that no-fault insurance is provided on a fair and equitable basis.”

*    *    *

“Because the MCCA rate charged to insurers is passed on to the insured individuals as part of the premium they pay, it is reasonable to conclude that citizens essentially fund the MCCA reserves by paying that premium; thus, individual citizens have a financial interest in the rate calculation process and how it is conducted.” (CPAN & BIAofMI v. MCCA, Ingham County Circuit Court, #12-68-CZ)

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Pending Legislation – Senate Bills 102

The highlights from the senators’ currently pending legislation include the following amendments to the MCCA statute in the Michigan No Fault Law (MCL 500.3104):

“The business that the [Michigan Catastrophic Claims Association] Board may perform shall be conducted at a public meeting of the board held in compliance with the Open Meetings Act …”

*    *    *

“A writing prepared, owned, used, in the possession of, or  retained by the board in the performance of an official function is subject to the Freedom of Information Act …”

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

Related Information:

MCCA appeals court ruling that says it must disclose financial workings to the public

MCCA should not operate in greater secrecy than the CIA

The MCCA billion dollar deficit

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