Bills could force Michigan Catastrophic Claims Association to have auto insurance transparency

auto insurance - Freedom of Information Act - law

SB 793 and SB 794 will open the MCCA up to public scrutiny if they both pass.

New bills in Michigan, SB 793 and SB 794 have the potential to boost transparency for auto insurance claims in the Michigan Catastrophic Claims Association (MCCA).

The industry-managed organization manages lifetime medical treatment claims

The MCCA is the organization in the state responsible for managing lifetime auto insurance claims payments for medical treatments of over $635,000 resulting from injuries from a catastrophic vehicle collision.

Auto insurance claim - payment

Policyholders seeking lifetime coverage for severe injuries obtained as a result of vehicle collisions pay an additional fee on their premiums, which goes to the MCCA. The amount of that additional fee is determined by the insurers operating the MCCA.

The auto insurance claims organization would be subject to the Freedom of Information Act

Should the bills pass, the MCCA would be subjected to the state’s Freedom of Information Act. This would require the agency’s board to include members of the public as well as from insurers.  Moreover, it would also require that the MCCA disclose its methodology and finances.

Furthermore, the bills would also remove the MCCA’s capacity to conduct fee assessments for drivers who have not opted in for unlimited PIP.  At the moment, the MCCA is legally permitted to charge drivers who don’t have unlimited PIP coverage, even if they aren’t eligible to receive it.

Prices are getting higher

According to lead bill package sponsor Senator Mary Cavanagh, as auto insurance premiums and inflation continue to rise, drivers are facing the brunt of the burden on a regular basis. Current laws are leaving state residents “in the dark about the MCCA’s methodology and processes” when it comes to the way the required fee is determined for each driver.  Cavanagh believes that those motorists are entitled to understand how the fees they are charged are calculated, and they should be able to pay only for the coverage they select.

Public scrutiny

According to Consumer Federation of America Director of Insurance Doug Heller, by including members of the public on the MCCA board, it could help to ensure that political or inappropriate uses for the fund are prevented.

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