GRAND RAPIDS, Mich. — Higher insurance costs could be in the headlights for Michigan drivers. The cause? Higher assessment costs on insurance companies from the Michigan Catastrophic Claims Association (MCCA).
"So, the MCCA will charge a flat fee depending on your [personal injury protection] election, and it goes into a fund so that, in the event that there's a catastrophic claim that goes over the threshold for the carrier, then the catastrophic claim will pick up, whatever the overage is," Willow Insurance Group President Rebecca Barens said.
New costs for drivers will depend on how much personal injury protection they choose to have on their insurance.
For those with unlimited benefits, while their premium decreased by $12 from last year, the full MCCA assessment will rise from $86 per vehicle per year in the 2022-2023 assessment to $122 in this year's assessment.
Those with lower or no benefits that were paying nothing will now pay $48.
The full cost of the increases, Barens said, will likely fall to the drivers.
"The MCCA will say how much the assessment is, and actually an insurance carrier will just pass through that that fee on to the individual policyholder," Barens said.
According to Michigan Department of Insurance and Financial Services Director Anita Fox, the $48 increase for policyholders is legally required due to a projected shortfall for the MCCA.
"By statute, the $48 assessment has to be recouped from every driver when [the MCCA is] recouping a deficit," Fox said. "The statute says that's an assessment on everyone."
The deficit, the MCCA says, comes from both lower investment returns as well as higher claims costs due to a successful appeals court lawsuit that challenged the state's 2019 no-fault insurance reforms.
For those looking to save some extra money in the face of the increases, Fox said there are things that can be done.
"What you can do is shop around for your other coverages," Fox said. "We have a competitive auto insurance industry with a lot of carriers, and it does make a difference. Ask about discounts that you might be entitled to, compare rates between insurance companies, do what you can to bring it down in other ways."
The new assessments will take effect on July 1, but it is unclear whether the extra $48 will last after the next year, as the appeals court decision that played into these higher costs is now on appeal in the Michigan Supreme Court.
A decision on that appeal, Fox said, could come as soon as this summer.
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