Insurance Institute of Michigan
January 17, 2019

Key Issues : MCCA

Facts about the Michigan Catastrophic Claims Association

The Michigan Catastrophic Claims Association (MCCA), an unincorporated non-profit association, was created by the state Legislature in 1978. The MCCA reimburses auto no-fault insurance companies for each Personal Injury Protection (PIP) claim paid in excess of $440,000. That means that the insured’s insurance company pays the first $440,000 of medical expenses and the MCCA reimburses costs over that amount. The threshold is increased annually.

Michigan’s unique auto insurance no-fault law provides unlimited coverage for medical expenses which result from auto accidents. So, consumers who are injured in an auto accident will receive reasonable and necessary medical benefits for their entire lifetime. The cost to run such a system is expensive. Without the MCCA, the stability of one insurance company could be threatened by a series of catastrophic claims.

The 1978 law requires all insurance companies that write automobile insurance in the state of Michigan to be members of the MCCA. The law specifies that the MCCA must distribute excess losses among all auto insurance companies doing business in the state of Michigan. The MCCA is subject to regulatory supervision by the Michigan Office of Financial and Insurance Services.

How does the MCCA determine its annual assessment?

The law requires the Association to assess an amount, determined by ongoing actuarial review, that is sufficient to cover the lifetime claims of all persons catastrophically injured in that year. The MCCA also adjusts its annual assessments to compensate for excesses or deficiencies in earlier assessments.

Companies pay an assessment to cover MCCA’s liabilities and that cost is passed on to policyholders. The assessment is determined annually by a five-member board appointed by the Commissioner of the Office of Financial and Insurance Services.

What is the current assessment for the MCCA?

The 2008-9 assessment is $104.58 per car. The new assessment includes $96.06 for pure premium, $8.32 for partial recoupment of the MCCA deficit and .20 cents for administrative costs.

On July 1, 2009, the assessment will increase to $125.89 per car.  The increase is due to higher claim costs and less investment returns.

How many claims have been reported to the MCCA?

Since 1979, there have been over 21,900 catastrophic claims reported to the MCCA which will cost an estimated $66 billion.

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