Mich. Ups Catastrophic Claims Charge

March 22, 2004

Michigan, the only state that offers unlimited lifetime medical benefits for people catastrophically injured in car crashes, said it will raise by $27 the premium included in consumers' auto insurance bills, according to the Lansing (Mich.) State Journal.

The Michigan Catastrophic Claims Association (MCCA) announced it was raising the charge from $100 to $127, the highest ever according to the newspaper.

The rising number of claims, medical inflation and poor stock-market returns made the move necessary, according to a spokesman for the Michigan Office of Financial and Insurance Services.

Editor's note: Previously, this story described the premium as a "surcharge," which drew the following clarification from reader Kurt Gallinger, an insurance lawyer with the firm of Dykema-Gossett in Lansing, Mich.:

"The MCCA is nothing more than a specialty reinsurer providing reinsurance for the unlimited lifetime medical benefits required under Michigan's generous auto no-fault system. The MCCA assesses individual insurers their proportionate share for the cost of this reinsurance. The MCCA cannot and does not surcharge indiviudal policies. In fact, the MCCA has no relationship with individual policy holders. It provides reinsurance service to Michigan automobile insurers by pooling the costs of catastrophic losses."

Thanks to Mr. Gallinger for the correction; Insurance Journal regrets the error.