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Michigan motorists face 27 percent insurance hike

LANSING (AP) – Michigan motorists will have to pay $127 yearly for every vehicle they own – a 27 percent increase – to bolster a state fund for seriously injured accident victims.

The change, which takes effect July 1, was instituted by the Michigan Catastrophic Claims Association. It is aimed at generating $200 million to help erase a potential $2.2 billion MCCA deficit the agency says was created by high medical costs and a surge in injury claims.

The hike is the highest ever authorized by the MCCA, which pools money to cover costly long-term medical care under the state's no-fault auto insurance program.

But the increase has Michigan drivers -- already weighed down by hefty insurance premiums – grumbling.

"It's interminable. It's like a well that doesn't end," Barbara Nickel, a 46-year-old school social worker from West Bloomfield, told The Detroit News for a Friday story. Nickel's family pays insurance on two cars.

Michigan is the only state that offers unlimited lifetime medical benefits for people catastrophically injured in car accidents. It's the second consecutive year that increases have been implemented.

The money goes toward reimbursing insurance companies that have to pay more than $350,000 to an accident victim on a new claim.

Some legislators say the agency should be monitored more closely.

"That's absolutely unacceptable," Rep. Michael Sak, D-Grand Rapids, told the Detroit Free Press, referring to the increase. Sak has sponsored bills to require an annual audit of the MCCA and to open its meetings and records to the public.

The hike was approved during a closed meeting of the MCCA's board on Wednesday, and the board's decisions are not subject to review by any state body. The board includes five insurance company representatives and the state insurance commissioner, who does not vote.

The MCCA has long inspired controversy. In 1998, a $2 billion surplus in the fund caused a political uproar, and legislators forced it to refund auto owners $180 for each vehicle they owned. Since then, an increase in claims has not only drained the surplus, but also allowed a deficit to develop, said MCCA controller Jim Lunsted.

The MCCA has handled about 16,900 injury claims over the years, with 9,400 still active.

Insurance industry representatives say opening the agency to public scrutiny could violate privacy rights of people who file claims. They also argue that the increases are driven by soaring medical costs.

"This is not a problem of audits or administrative costs," said Doug Cruce, executive director of the Michigan Insurance Institute. "The problem is the high cost of settling medical claims under our unlimited benefits."