Reps. Yanez, Hammoud Want MCCA Transparency

Legislators sponsor bills to shed light on insurance association
Wednesday, March 8, 2017

          LANSING – State Reps. Henry Yanez (D-Sterling Heights) and Abdullah Hammoud (D-Dearborn) are introducing legislation calling for accountability and transparency within the Michigan Catastrophic Claims Association (MCCA). This legislation would require the insurance commissioner to appoint a member of the public to sit on the MCCA board, and would also empower the commissioner to disapprove of any total MCCA charge in auto no-fault premiums that the commissioner deems excessive. The legislation also subjects the MCCA to the Open Meetings Act and Freedom of Information Act, in addition to calling for an annual independent audit.

          “The MCCA has operated in secrecy since it began, and vehicle owners have paid the MCCA fee in their auto insurance policies without ever being told how that fee is calculated each year,” said Yanez. “That fee, which covers catastrophic injury care, has ranged from less than $100 a year to as much as $186 a year per vehicle. Everyone pays this fee and it makes up a large portion of an auto owner’s insurance premium.  The first step in reforming auto no-fault is to require full disclosure and transparency from the MCCA and to subject it to an independent financial audit to make the insurance companies justify these high costs.”

          Members of the MCCA are comprised of representatives from the state’s largest insurance companies. It is funded by the public’s money, yet rates are set in secret behind closed doors. The MCCA reimburses insurance companies for money spent on medical claims above $545,000 for individuals suffering catastrophic injuries in auto accidents. Between 1978 and 2015, 4,300 people in the state of Michigan have received care that has exceeded $1 million after suffering catastrophic injuries.

          “My district has extremely high automobile insurance rates, and constituents frequently ask why they are paying so much,” said Hammoud. “Transparency on rates is a necessity for residents in my district and residents across the state. There are too many unknowns when it comes to how much money the MCCA currently has and how it makes its decisions. Requiring the MCCA to abide by the Open Meetings Act and FOIA will grant vehicle owners access to information that will increase transparency and accountability.”