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
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
Some legislators say the agency should be monitored more
"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 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."