LANSING – As the Coalition Protecting Auto No-Fault and the Brain Injury Association of Michigan filed an appeal with the Supreme Court on Wednesday asking that the Michigan Catastrophic Claims Association be found subject to the Freedom of Information Act, the groups also released a report, based on currently public information, showing the MCCA is likely overcharging for its reinsurance program.
The report, by former Missouri Insurance Commissioner Jay Angoff and commissioned by the two groups, showed that the MCCA’s charges have historically been about 15 percent more than needed to cover its losses. Since 2004, it has overcharged by 27 percent, the report said.
The groups have argued, unsuccessfully in the Court of Appeals, that the MCCA is a public body and so has to disclose the information it uses to calculate its annual assessment.
“The MCCA is critical to the function to Michigan’s auto insurance system, which is recognized as the best in the country,” CPAN President John Cornack said in a statement. “Thousands of our state’s most seriously injured people rely on it every year to help cover the cost of their injuries. We should have the right to examine whether it is charging appropriate rates to cover those costs.”
The insurance companies that make up most of the MCCA board have argued the data used to develop the surcharge is proprietary and should not be made public.
Angoff said in his report that it appears insurance companies are charging some of their own losses to the MCCA in addition to any actual claims costs. The MCCA currently reimburses insurers for any claims above the first $530,000 per person per incident.
The report showed Michigan residents pay $61 a year for bodily injury coverage, compared to $151 nationally. That figure did not include the $186 per vehicle per year to the MCCA.
But Angoff said Michigan insurers also generate more profit from their bodily injury coverage than do insurers in other states.
He was not, however, able to determine the overall profitability of no-fault insurance.
Michigan drivers also file fewer claims, Angoff said. New Jersey, he said saw twice as many claims as Michigan in 2009, and New York and Florida saw three times as many.
While Michigan drivers file fewer claims on themselves, they file more on their vehicles, Angoff said. While the claims are generally smaller, he said Michigan drivers file more claims than those in any other state and that side of the business is less profitable in Michigan than in any other state.
Angoff said the state should develop standardized reporting systems for estimated future no-fault claims to allow better comparisons between insurers, as well as that the MCCA make public its calculations to show that the surcharge is appropriate. He said the director of the Department of Insurance and Financial Services should have the authority to disapprove excessive MCCA surcharges.
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