Michigan drivers with auto insurance will pay $192 annually per vehicle to cover unlimited medical benefits for severely injured motorists beginning in July.
The fee was announced by the Michigan Catastrophic Claims Association (MCCA), which reimburses insurers for personal injury benefits exceeding $555,000 per claim. It is a $22, or 13 percent, increase above the current $170 assessment and will cover policies issued or renewed from July 1, 2018, through June 2019.
The fee fluctuates each year but $192 is an all-time high, surpassing the $186 fee imposed from mid-2013 through mid-2015. Of the $192, $161 will cover new claims and expenses, and $31 will address a $2.3 billion deficit related to existing claims.
The MCCA said the increase is due to higher-than-expected claim costs, partially offset by better-than-expected investment returns. It reported 16,510 open claims and $1.2 billion in spending in the last fiscal year, or $100 million a month. Nearly 56 percent of loss payments were for residential or attendant care.
Michigan is the only state to require unlimited lifetime coverage for medical expenses resulting from car crashes — typically for brain, spinal cord, neck and back injuries. It allows health providers to bill car insurers much more for care than health insurers pay.
Legislative attempts to reduce auto premiums have stalled despite Michigan having among the highest average rates in the country. In November, the House defeated a bill that sought a cut, for five years, in personal injury protection fees for motorists choosing $250,000 or $500,000 rather than unlimited PIP coverage — which is now mandatory.
The Coalition Protecting Auto No-Fault, a group of healthcare providers and plaintiffs’ attorneys that opposes making unlimited coverage optional, renewed its call to subject the MCCA to the state open-records law. Spokesman Josh Hovey questioned how the rate hike is justified when cars are safer, there are fewer accidents and the association’s assets “should have made a fortune given the performance in the financial markets this past year.”
The insurance industry says the larger issue is Michigan’s unique system and a lack of controls on medical costs. The claims association said an independent actuarial consulting firm helps to determine the per-car fee each year.
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