Michigan Catastrophic Claims Association lowers assessment by $36 to $150 after reducing deficit by $1.5 billion between 2013-14 fiscal years
On March 11, 2015, I wrote in a blog post it was “time to reduce the MCCA fee and save consumers money in 2015.”
I’m proud to say I was right.
The Michigan Catastrophic Claims Association (MCCA) announced yesterday that it is reducing its annual per-vehicle assessment rate by $36 to $150 for the 2015-16 fiscal year.
The assessment is currently $186 through June 30, 2015.
Here’s a link to the MCCA press release.
Not only is this the first MCCA assessment reduction since 2008-09, but the assessment will be at its lowest level since 2011-12 when it was $145.
The No. 1 reason I said the MCCA should lower its assessment for 2015-16 is the $1.5 billion reduction in the MCCA’s deficit. Here’s what the MCCA said about its deficit reduction in its “Annual Report to the Director of Department of Insurance and Financial Services (DIFS) Fiscal Year Ended June 30, 2014” (Page 3):
“The MCCA deficit decreased by $1.5 billion from the June 30, 2013 deficit of $1.9 billion to the June 30, 2014 deficit of $410 million.”
The MCCA’s Annual Report went on to explain “the primary reasons” for the MCCA’s dramatic deficit “decrease were:”
- “Better than expected performance in the stock market.”
- “The deficit recoupment of $29.19 per car that was included in the assessment rate of $186 per car.”
Clearly, the MCCA’s deficit reduction between the 2013-14 fiscal years is what’s driving its assessment reduction for 2015-16.
I say “clearly” because the “primary reasons” that the MCCA gave in its Annual Report for its $1.5 billion deficit reduction are the same reasons the MCCA has given to the media for lowering its annual assessment.
The Detroit News reported on March 25, 2015:
“MCCA Executive Director Gloria Freeland said motorists are getting a reduction because the fund’s stock market investments have been more profitable than expected and because more than $29 of the current assessment has helped reduce a predicted deficit.”
Let’s keep our fingers crossed for more of this good, auto insurance-consumer-friendly news in the future.
It looks like there’s at least $118 million reasons to be optimistic.
In the MCCA’s March 25, 2015, press release (and in The Detroit News reporting), the MCCA stated it has “a $292 million estimated deficit.”
That means the MCCA’s deficit has been reduced – in addition to the $1.5 billion between 2013 and 2014 – another $118 million since June 30, 2014, when it was $410 million (according to the MCCA’s Annual Report).
What is the MCCA?
The MCCA is a private, nonprofit association made up of a five-person board (comprised from the insurance industry) who manage the fund that compensates auto insurance companies when a No Fault claim exceeds $530,000. The MCCA assessment is garnered from Michigan drivers as a portion of your auto insurance.