The Michigan Catastrophic Claims Association’s (MCCA) announcement that the per-vehicle fee will increase by $28 for Michigan drivers will add insult to injury in a state saddled with the highest auto insurance premiums in the country, according to the Insurance Alliance of Michigan (IAM). The increase puts the per-vehicle fee at $220. The vehicle assessment fees go into a fund that covers the cost of medical care for people injured in car accidents when the cost of medical care exceeds $580,000.
“The per-vehicle fee increase underscores the urgent need to reform Michigan’s broken, outdated auto no-fault system, which continues to overburden drivers,” said Tricia Kinley, executive director of the Insurance Alliance of Michigan. “The fact that medical providers can dramatically overcharge for medical procedures when someone is injured in a car accident has caused the cost of medical care to increase exponentially in Michigan, while the MCCA struggles to keep up.”
Much of the recent testimony in the Senate Insurance and Banking Committee, which has held hearings on auto no-fault reform for the last two months, has centered on Michigan’s unlimited, lifetime medical benefit and a lack of cost controls to rein in overcharging by medical providers. In one example, a medical provider charged more than $5,000 for an MRI when that exact same procedure, at the same location and on the same machine, costs $500 under Medicare.
“It’s time the Michigan Legislature sees the state’s auto no-fault system for what it is: A failed policy experiment that has forced drivers from Metro Detroit to the Western Upper Peninsula to choose between paying their auto insurance premium or buying groceries. For some, it’s like a second mortgage,” Kinley said. “Drivers across the state are demanding reform and we urge the Legislature to listen to their pleas for help and to pass real reforms to lower the cost of auto insurance.”
The Michigan Catastrophic Claims Association oversees a fund that reimburses auto insurance companies when the cost of medical care exceeds $580,000. Michigan is the only state in the nation that requires such a fund because it’s the only state that requires drivers to purchase unlimited, lifetime medical benefits with their auto insurance policy.
A recent study conducted by the University of Michigan found that auto insurance is unaffordable for drivers in 97 percent of the state’s zip codes.
“Michigan’s auto insurance companies dislike charging consumers this per-vehicle fee as much as drivers dislike paying it, which is why we’re calling on the Legislature to continue to explore ways to lower the cost of auto insurance for drivers across the state,” Kinley said.
The per-vehicle fee increase, which is assessed to every car insurance company doing business in Michigan and charged to consumers, will take effect on July 1, 2019.