LANSING -- In a move that will bring much needed accountability and transparency to the automobile insurance industry, House Democrats today passed legislation that will protect consumers while making the Michigan Catastrophic Claims Association (MCCA) more open to public scrutiny.
"This plan is about increasing accountability, transparency and scrutiny in the insurance industry," said House Speaker Pro Tempore Michael G. Sak (D-Grand Rapids). "We know remarkably little about how the MCCA works and how it sets its rates. It's time to shine a light on this process."
The House Democrats' plan requires the MCCA, an independent insurance fund that pays for the care of severely injured motorists, to comply with the Open Meetings Act, add public members to the board and open its records to annual audits.
The MCCA reimburses no-fault auto insurers for benefits that exceed $400,000. The association was created by the Legislature as a means of spreading costs across all Michigan motorists for providing these unique unlimited benefits -- however, the MCCA is a private, nonprofit association, and all of its dealings are with insurance companies, not the general public.
"In Michigan, it's required by law that all drivers carry no-fault insurance. In return, we ought to offer drivers some basic consumer protections," said State Representative Richard LeBlanc (D-Westland). "Right now the consumer does not have a voice on the MCCA board, and they deserve to be heard."
Currently, the MCCA assessment is $123 per vehicle. Those charges are in turn passed on to consumers, despite the fact that they aren't allowed representation on the MCCA board. The board has raised its annual rates imposed on all drivers from $14.41 in 2001 to $123 in 2007.
"Michigan consumers have a right to know how their rates are set," said State Representative Lee Gonzales (D-Flint Township). "If Michigan families are footing the bill, then the insurance industry needs to open itself up to public scrutiny."