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Time for an emergency financial manager to take over the Michigan Catastrophic Claims Association?

October 25, 2013 by Steven M. Gursten

Rep. Phil Cavanagh cites MCCA’s questionable “financial integrity” and $2 billion deficit in House resolution

Rep. Phil Cavanagh

The Michigan Catastrophic Claims Association (MCCA) needs  an Emergency Financial Manager.

Citing the MCCA’s questionable “financial integrity,” its apparent “unsustainability” and the fact that cities with budget deficits that are hundreds of millions of dollars less than the MCCA’s had EMF’s appointed, Rep. Phil Cavanagh (D-Redford Township) has introduced a House Resolution to explore the possibility of appointing an EMF to take over management of the beleaguered MCCA.

In House Resolution 196, introduced on September 3, 2013, Cavanagh, who is a long-time advocate for reforming the MCCA, resolved to do the following:

“[I]mplore the Michigan Department of Treasury to conduct a financial review of the Michigan Catastrophic Claims Association (MCCA) to consider the appointment of an emergency financial manager.”

Cavanagh supported his resolution by noting the following facts:

  • In 2011, the Michigan Association of Insurance Agents testified before the House Insurance Committee that it “believes … there is significant concern for the financial integrity of the MCCA.”
  • In testimony before the House Insurance Committee in March and April 2013, Michigan Insurance Commissioner R. Kevin Clinton, who is the Director of the Michigan Department of Insurance and Financial Services (DIFS), stated the MCCA has a “deficit of $2 billion” and that “the MCCA is unsustainable.”
  • Compared with the MCCA whose “deficit is $2 billion,” “an Emergency Financial Manager was ordered by the governor” for the following municipalities whose deficits were hundreds of millions of dollars less: Flint (“$7 million deficit”); Ecorse (“$9 million deficit”); Allen Park (“deficit of $6.8 million”); Benton Harbor (“deficit of $10 million”); and Detroit (“deficit was $300 million”).

Cavanagh’s previous efforts to reform the MCCA include the following:

  • Sponsoring legislation requiring the MCCA to comply with the Michigan Open Meetings Act and the Michigan Freedom of Information Act. (See: House Bill 4551 (2013); House Bill 6080 (2012); House Bill 6081 (2012); House Bill 4785 (2011); and House Bill 4786 (2011))
  • Introducing House Resolution 228 on April 17, 2012, to “implore the Michigan Department of Treasury to conduct a financial review of the Michigan Catastrophic Claims Association (MCCA) to consider the appointment of an emergency financial manager.” The resolution was motivated by the MCCA’s questionable “financial integrity” and claims that Michigan’s “current [No Fault] law is broken and unsustainable” and that “insurance companies cannot maintain the level of benefits for drivers and those suffering long-term catastrophic injuries in auto accidents.”

Related information:

Rep. Phil Cavanagh calls for scrutiny of the Michigan Catastrophic Claims Association

Fire the MCCA Board Of Directors for financial mismanagement

What’s the truth about the Michigan Catastrophic Claims Association’s claimed billion-dollar deficit?

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