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New Insurance Fee

Date: Mar 29, 2005
Contributor: Clayton Ebarb

Michigan board hikes car insurance surcharge 11%

The fee to help insurers pay people seriously hurt in accidents will likely be passed on to consumers.

Michigan motorists soon will pay $141.70 per vehicle into a fund that helps support seriously injured accident victims.

The additional $14.46 per vehicle -- an 11 percent increase -- will be tacked on to annual insurance bills starting in July. The current annual assessment is $127.24 per vehicle.

The Michigan Catastrophic Claims Association set the new assessment at its meeting on Wednesday. The five-member board sets rates each year for the one-of-a-kind fund.

The charge is assessed to insurance companies and typically is passed on to motorists. The increase is needed to cover increasing costs, the MCCA said.

Michigan is a no-fault insurance state and the only one that offers unlimited lifetime medical benefits for people seriously injured in car accidents. The MCCA was created by state law in 1978.

"This reflects the increase in medical costs," MCCA general manager Gloria Freeland said. "It's important to remember this expense is over somebody's lifetime, which can be 50, 70 years out."

The money collected through the surcharge set by the MCCA helps reimburse insurance companies that have paid more than $350,000 to an accident victim on a new claim. That threshold increases each year.

The MCCA estimates that 1,500 people could be catastrophically injured in auto accidents next year in Michigan, making them eligible for coverage. The MCCA has handled more than 18,000 claims since 1979.

The fee increase comes as Democratic lawmakers and Gov. Jennifer Granholm are making another push to open the MCCA to public scrutiny. A similar effort last year failed.

The Democratic governor wants the association to be covered by the Open Meetings Act and the Freedom of Information Act, even though it's set up by law as a private board.

Democrats in the House and Senate have introduced bills that would open up the rate-setting process and add at least one member of the general public to the MCCA board.

The board has five voting members, all insurance industry representatives chosen by the state insurance commissioner.

Office of Financial and Insurance Services Commissioner Linda Watters, a nonvoting member of the MCCA board, said she supports the bills.

Opponents of the legislation have said the public already has access to material used by the MCCA board to set rates. They said the public has input because Watters is represented on the board.





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