The board tasked with setting and managing personal injury protection fees paid by Michigan drivers is supporting Gov. Gretchen Whitmer’s recent request to issue refunds.
In a Wednesday evening statement, the Michigan Catastrophic Claims Association — a statutorily-established nonprofit that all auto insurers pay into for personal injury protection under the state’s auto no-fault system — announced its board unanimously voted to support issuing refund checks to Michigan drivers.
The MCCA did not offer any specific amounts or a timeline for the refunds, but the statement noted details would be announced in the coming weeks. The board’s goal “is to issue the largest possible refunds to consumers while maintaining sufficient funds to ensure high-quality care to those who have been catastrophically injured,” the statement reads.
The announcement comes on the heels of Whitmer’s recent request that the MCCA use a $5 billion surplus to pay back drivers who have paid into the fund. A spokesperson for Whitmer later said the governor was calling for the MCCA to return “the maximum amount possible” while also maintaining the viability of the fund, but if $5 billion in refunds were issued to drivers, it would equate to roughly $676 per vehicle.
In a statement following the announcement, Whitmer said it was “great news” that the MCCA is taking swift action and starting the process to drive down costs of auto insurance.
“Michiganders have paid into the catastrophic care fund for decades, and these funds from the $5 billion surplus belong in the pockets of Michigan policyholders,” she said.
Department of Insurance and Financial Services Director Anita Fox concurred, adding she hopes the board will promptly determine the per-vehicle refund amount and a timetable for getting refunds to drivers.
The fees collected by the MCCA are built into premiums Michigan motorists pay. Under Michigan’s old auto insurance law, each driver had to purchase unlimited personal injury protection medical coverage and pay the MCCA assessment, which reimburses insurers for catastrophic medical claims.
Since 2020, Michigan drivers can still choose unlimited PIP coverage, but now also have the option to choose a lower level of coverage. Only drivers who choose unlimited PIP medical coverage pay the MCCA assessment, as long as the fund does not have a deficit.
The most recent MCCA fee was $86 per vehicle, down from $220 in 2019 before sweeping changes to the state’s auto no-fault policies were signed into law.
The prospect of pending refunds for Michigan drivers “is the entire reason we fixed the state’s broken auto insurance system in 2019,” House Speaker Jason Wentworth, R-Farwell, said in a statement, adding he appreciated the governor’s support.
“We wrote this law to include an automatic refund next year, and I’m glad our reforms have produced large enough savings for the MCCA to act immediately and return that money to the people even sooner,” he continued.
Insurance Alliance of Michigan Executive Director Erin McDonough in a statement stressed the importance of the MCCA landing on a refund amount that protects the longevity of the fund while getting money back to Michigan drivers.
“The fact the MCCA board is even considering this shows reforms passed with bipartisan support by the Legislature and signed into law by Gov. Gretchen Whitmer are working and delivering real savings to drivers across the state,” she said.
The governor’s effort comes as auto accident survivors and health care providers petition for changes to how much they’re reimbursed when treating auto-related injuries under the 2019 law. A portion of the policy went into effect earlier this year.
Related: Crash victims, health providers cry foul over impending change to auto injury medical fees
CPAN, a coalition of groups representing crash victims, their medical providers and other auto insurance policyholders, spoke out against Whitmer’s request earlier this week. President Devin Hutchings called it “a slap in the face to the survivors and families who have been begging for relief” from a change in the law that led to a 45% cut to reimbursement from insurance companies for health care services provided to auto accident survivors not covered by Medicare.
“The Governor’s announcement seems designed to distract our attention away from the real issue -- the fact that survivors of catastrophic auto accidents are suffering under the new law, and that auto insurance companies are continuing to gouge consumers,” Hutchings said.
The law was approved in 2019 in an effort to lower Michigan’s auto insurance rates, which frequently were ranked the highest in the nation. Although average car insurance rates have declined substantially since the first phase of Michigan’s auto insurance law went into effect, analysts say it’s still one of the most expensive places in the country to insure a car.
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