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Should lawmakers require the Michigan Catastrophic Claims Association to spill the beans in 2017?

January 23, 2017 by Steven M. Gursten

In House Bill 4049, Rep. Patrick Green proposes that the MCCA be required to annually disclose ‘all data used in computing’ its No Fault assessments this year


Hats off to freshman lawmaker, Rep. Patrick Green (D-Warren), for setting off to accomplish in 2017 what previous Legislatures have been unable to do and what courts have refused to do with the Michigan Catastrophic Claims Association (MCCA):

Forcing the MCCA to disclose the data and methods used in determining, setting and raising its annual, per vehicle assessments – the costs of which get passed along by auto insurers to consumers in the form of higher car insurance prices.

In his House Bill 4049, which was introduced on January 18, 2017, Rep. Green proposes MCCA transparency measures that have so far eluded Michigan lawmakers and have failed to find receptive audiences among Michigan’s appellate judges and justices.

For instance, in 2015, then-Rep. Derek Miller (D-Warren) and 53 of his Democrat and Republican colleagues introduced House Bill 4752, which proposed MCCA transparency measures identical to those in HB 4049. Sadly, despite the overwhelming bi-partisan support at the bill’s introduction, HB 4752 “died” due to inaction at the end of the 2015-16 legislative session.

Similarly, the battle for MCCA transparency that was waged in the Michigan courts ended in frustration. It started on a high note in 2013 with a trial judge’s ruling that the MCCA was obligated to disclose information about its “rate calculation process and how it is conducted.” Yet, the struggle bottomed out when both the Michigan Supreme Court and the Michigan Court of Appeals undid the trial judge’s order, refusing to require much-needed, long-overdue transparency at the MCCA.

Now, for transparency advocates like me, we’re right back with the Legislature, just as I suggested last year:

“I want to talk about what can be done to protect auto insurance consumers and car accident injury victims, and, most importantly, to protect the public and the public’s right to know how their No Fault fees are being assessed and how their dollars are being spent. Specifically, now that the courts have refused to act, I want to talk about what the Michigan Legislature can do to require the MCCA transparency that is both necessary and long-overdue.”

Thank goodness for Rep. Green’s HB 4049. Let’s hope that, this time, lawmakers heed the call for MCCA transparency.

Disclosing ‘all data’ used in the MCCA’s assessment-calculation process

Rep. Green’s House Bill 4049 proposes:

“Annually, within 15 days after the [MCCA announces its annual assessment], the [MCCA] shall disclose to the public on its website all data used in computing the premium [i.e., the assessment] and expected losses and expenses …”

In particular, under HB 4049, the MCCA would be required to disclose the following:

  • “The actuarial computation used in making determinations of unpaid losses and loss adjustment expenses.”
  • “All documents used in establishing the following: (i) the calculation of the present value of disbursements expected to be made in the ultimate settlement of the claims reported; (ii) the actuarial tables used to reflect the probabilities of each claimant surviving to incur the costs projected; (iii) the calculation of incurred but not reported losses; (iv) the actuarial assumptions and calculations used in producing the short-term discount rate and the long-term discount rate; (v) the forecasts producing the economic assumptions for claim cost inflation and investment returns used; (vi) the current economic data and historical long-term consumer price index data for any cost component categories used in producing inflation assumptions; (vii) the loss development analysis undertaken in connection with the provision for unpaid losses and loss adjustment expenses; (viii) the trend analysis for both frequency and severity undertaken in connection with the provision for unpaid losses and loss adjustment expenses.”
  • “The annual actuarial evaluation used in establishing the premium [i.e., MCCA assessment].”
  • “The annual assessment reports of [Michigan auto insurance companies] used in establishing the premium [i.e., MCCA assessment].”
  • “The annuity model used by the [MCCA’s] opining actuary in his or her actuarial opinion projecting future payment streams at the claimant level and the mortality adjustment applied.”
  • “Any explanatory memorandum explaining the various components of the premium and the judgments made to produce the premium [i.e., MCCA assessment].”

What is the Michigan Catastrophic Claims Association (MCCA)?

The purpose of the MCCA is to pay for the No Fault medical benefits of catastrophically injured auto accident victims that exceed $530,000.

The MCCA accomplishes its mission by charging annual “assessments” or “premiums” (just like the auto insurance premiums auto insurers charge) that are ultimately paid for by Michigan auto insurance consumers.

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