Lawsuit Seeks to Open Books of Michigan No-Fault Insurance Fund

Citing the need for transparency and public access to information, the Brain Injury Association of Michigan (BIAMI) filed a lawsuit Wednesday against the Michigan Catastrophic Claims Association (MCCA) seeking records of the state fund’s finances and the standards it uses to calculate fees.

BIAMI officials said they were trying to obtain the “essential information” so that they could begin assessing the financial stability of the MCCA, which insurers and policyholders warn is teetering on collapse.

The MCCA is a state entity administering funds that reimburse insurers for injury-claim expenses that exceed the $500,000 threshold. In Michigan, insurers are required to cover lifetime medical expenses for injuries related to auto crashes, regardless of who caused the accident.

Lawsuit Follows Other Group Seeking Claims Information

The BIAMI is part of the Coalition Protecting Auto No-Fault (CPAN), comprised of dozens of medical and consumer groups, which filed a separate lawsuit against MCCA earlier this year seeking information on injury claims handled for insurers.

The CPAN cited the Freedom of Information Act under that lawsuit to back its right to access.

The BIAMI lawsuit cites “common law” as grounds to give policyholders access to MCAA information because those policyholders have a “demonstrable interest” in the entity’s health, according to a BIAMI statement.

“Informational blackout is not exactly a way to win the public trust,” he said.

CPAN officials also encouraged transparency from the MCCA.

“All Michigan drivers are required to have auto no-fault insurance and largely fund the system through their insurance premiums,” CPAN officials stated. “They have the right to know how their money is being used and how their rates are being determined.”

The association filed the lawsuit along with several state residents, according to media reports.

Insurers Warn of Financial Insolvency

Industry advocates offered testimony at a committee hearing at the state House last October, saying that skyrocketing claim costs under the state’s no-fault system are unsustainable.

In testimony before committee members, American Insurance Association (AIA) president David Snyder said lack of reform would trigger a “death spiral” and inevitably lead to full repeal of no-fault laws in the state.

Motorists who have to get Michigan auto insurance see extremely high premiums, according to Snyder, who said in his testimony that the state was the 11th most expensive for auto coverage in the U.S. and attributed much of the high costs to costly no-fault claims.

MCAA Fee Set to Rise in July

Beginning July 1, the MCAA fee insurers pay for each car they insurer will increase by $30, from $145 to $175.

Insurers generally pass on that cost to policyholders in the form of higher premiums.

The state’s drivers and insurers have seen MCCA fee increases year after year, paying in $104 in 2008, $125 in 2009 and $143 in 2010

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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