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IPS / Lighthouse Insurance Group Blog: mcca

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The Michigan Catastrophic Claims Association (the MCCA) assessment to insurance companies will be $186.00 per insured vehicle effective July 1, 2013 to June 30, 2014.  This is an increase of $11.00 per insured vehicle (a little more than 6%) over the previous year and will be reflected in the cost of auto insurance on policies with an effective or renewal date of July 1, 2013 and later.

The Michigan Catastrophic Claims Association (MCCA), a private non-profit unincorporated association, was created by the state Legislature in 1978. Michigan's unique auto insurance no-fault law provides unlimited lifetime coverage for medical expenses which result from auto accidents. The MCCA reimburses auto no-fault insurance companies for each Personal Injury Protection (PIP) medical claim paid in excess of a set amount. Currently that amount is $500,000. That means that the insurance company pays the entire claim, but is reimbursed by the MCCA for medical costs over $500,000.

A proposal is currently under consideration in the legislature to reduce auto insurance premiums by making significant changes to Michigan's no-fault law.  The proposal includes a $1 million cap on medical expenses in lieu of the current unlimited lifetime medical coverage.  Other components of the proposed reform to Michigan's no-fault auto insurance system include establishing:

  • Cost controls for medical expenses that would prevent health care providers from collecting higher fees from auto insurance comanies than those paid by other health insurance carriers or workers compensation
  • A state authority to fight auto insurance fraud

If passed, it is estimated that these changes will result in an annual premium savings of approximately $125.00 per insured vehicle.

Insurance Planning Service is an independent insurance agency offering a full range of insurance products – auto – home – business – life – health – to individuals, families and businesses throughout Michigan.  Call us at 800-220-5582 or contact us today for a quote on your insurance!


Michigan regulators approved rate hike requests from major insurers who said they are increasing prices to accommodate rising per-vehicle fees that fund the state’s no-fault system, highlighting the passage of costs from insurers to consumers that occurs in the only state in the U.S. offering lifetime compensation for crash-related medical expenses regardless of fault, according to Online Auto Insurance.

Insurers pay into the Michigan Catastrophic Claims Association (MCCA), which charges a $175 per-vehicle fee to reimburse insurers for claims exceeding $500,000. A $30 fee increase went into effect on July 1; that fee has increased year-after-year from $104 in 2008.

Critics have argued that increasing MCCA costs make it hard to get cheap car insurance coverage in Michigan, as insurers who pay the ballooning per-vehicle fee typically shift their costs onto policyholders in the form of higher premiums.

Allstate, Fremont and 21st Century were all approved for rate hikes of varying degrees that kicked in on July 1, 2012 - the same day that the higher MCCA fee went into effect. Regulators approved 21st Century’s request to hike rates 3 percent overall. Fremont submitted its request to increase rates by 2.1 percent. Allstate increased rates overall by 3 percent.

Industry experts and legislators have grappled with the cost of coverage in Michigan, which is one of the most-expensive states for coverage in the U.S.

American Insurance Association (AIA) president David Snyder  testified before members of a state House committee last October, saying the coverage system faces a “death spiral” if reforms were not made.

Several pieces of legislation establishing new exclusionary provisions into no-fault laws were introduced this year, including one that prohibits illegal aliens from seeking no-fault benefits and another that does the same for drivers who crash their cars while intoxicated.

Those bills were approved by committee members in June and are currently awaiting further consideration in the state House.  

To keep your auto insurance policy as reasonable as possible, contact the insurance experts at Insurance Planning Service today at 800-225-5582 or use our
online contact form!


Car AccidentLivonia, MI - The premium paid to the Michigan Catastrophic Claims Association (“MCCA”) by member insurance companies will be $175.00 per insured vehicle effective July 1, 2012 to June 30, 2013. This represents an increase of $30.00 (21%) over the current MCCA charge of $145.00. The $175.00 assessment represents $141.93 to cover claims; $32.72 to address the $2 billion estimated deficit and $.35 for administrative expenses. The current deficit is estimated at $310.78 per insured car. The MCCA premium charge is determined each year at this time following its annual actuarial evaluation.

Michigan's unique no-fault auto insurance law provides unlimited lifetime coverage for medical expenses resulting from auto accidents and is the only state in the nation that mandates these unlimited benefits. (The state with the next highest level of benefits mandates only $50,000).  Created by the state legislature in 1978, the MCCA is a private, non-profit association whose mission is to protect the financial integrity of Michigan’s auto insurance industry by providing reinsurance for these unlimited benefits. The MCCA reimburses auto insurance companies for Personal Injury Protection (PIP) benefits paid in excess of $500,000 per claim.

All auto insurance companies operating in Michigan are required to be members and pay premiums for the reinsurance provided by the MCCA. These premiums, together with the insurer’s PIP premium, represent the cost to cover the mandatory unlimited medical benefits which, like other costs and expenses, are reflected in the auto premiums all Michigan policyholders pay.

Each year, more individuals receive benefits resulting from catastrophic automobile accidents and their claim costs are rising. Estimating the ultimate costs of these benefits requires sophisticated analysis but the trend of increasing costs is a key driver of changes to the MCCA assessment.

The MCCA paid out $927 million (more than $133 per insured car) in 2011 for claim costs resulting from catastrophic injuries. The majority of these catastrophic injuries involve closed head injuries, paraplegia, quadriplegia and burns. Since 1979, there have been over 28,000 claims reported to the MCCA, which will cost an estimated $85 billion.

Additional information on the MCCA, including claim payment statistics, audit reports and answers to frequently asked questions can be obtained from its public website: and from the website of the Michigan Office of Financial and Insurance Regulations:

If you have questions about your Michigan Auto Insurance or how the Michigan Catastrophic Claims Association (MCCA) assessment affects you, or just to obtain a no-obligation quote on your auto insurance, the folks at Insurance Planning Service are here to assist.  Call us today at 734.421.9900 or 800.220.5582, or contact us online!

Source:  MCCA Press Release

MI LegislatureIf passed, HB-4936 will reform the Michigan No-Fault auto insurance law that was first created in the 1970’s.  Under the current No-Fault law, all Michigan auto insurance policies contain a coverage called Personal Injury Protection, or PIP.  PIP includes several provisions, including unlimited medical benefits and up to 85% of the insured’s lost income from work, subject to a monthly maximum amount.  Michigan is the only state that mandates unlimited medical coverage.

The crux of the issue is the rate at which the cost of catastrophic injury claims are increasing in combination with the way our No-Fault Law currently works.  At present, PIP benefits within the auto insurance policy must pay medical providers the full amount of fees they deem to be “reasonable and customary”.  Other medical insurance sources are able to pay reduced fees because of PPO or HMO agreements or, in the case of workers compensation, a fee schedule that is part of Michigan’s Workers Compensation Statute.
Auto Accident
At present, there is no dollar limit on the amount of PIP benefits payable for an injury stemming from an automobile accident.  There are two charges within a Michigan auto insurance policy that pay for this benefit:  One is the premium paid for PIP coverage.  This money is retained by the insurance company and is used to cover the first $500,000 of a claim for PIP benefits.  Another charge is the MCCA assessment.  The assessment, which will increase slightly to $145.00 per vehicle in 2012, is a fee the insurance companies are required to collect and pass on to the Michigan Catastrophic Claims Association (MCCA).  The MCCA fully reimburses the insurance company for the portion of an injury claim that exceeds $500,000.  According to the MCCA, the highest percentage of people whose PIP claim costs exceed $500,000 are between the age of 16-20 (12.4%).

According to a report presented by Sharon Tennyson Ph.D. as testimony before the Michigan House Insurance Committee on October 4, 2011, the average amount paid for a Michigan PIP claim during 2010 was $35,446.  The report also states that only 1% to 2% of all PIP claims in Michigan exceed $500,000.  The problem is that the few claims (1% to 2%) that exceed $500,000 account for 47% of all PIP claims costs.  In other words, once the claim cost exceeds $500,000, chances are that it may be huge. 

The goal of the proposed legislation is to help curb the rising cost of auto insurance in Michigan. According to a legislative analysis summary from the House Fiscal Agency, there are six key provisions to the proposed change in our No-Fault Law:

  • No-fault policies would no longer automatically cover unlimited lifetime medical and rehabilitation benefits.  Instead, drivers could choose personal injury protection (PIP) coverage with (1) a maximum of $500,000; (2) a maximum of $1,000,000; or (3) a maximum of $5,000,000.  The default amount would be $500,000.
  • The current Michigan Catastrophic Claims Association (MCCA), which currently pays medical and rehabilitation claims once they exceed $500,000, would be divided into two accounts:  (1) the MCCA Account, which would only apply to losses attributable to accidents before July 1, 2012; and (2) an Excess PIP Account, which would apply to losses attributable to accidents on or after July 1, 2012.  Each account would be self-supporting and assets and liabilities could not be transferred between them.
  • Under the bill, for loss occurrences attributable to accidents on or after July 1, 2012, each auto insurance company would pay for 100% of the ultimate loss under PIP coverage up to $500,000.  The MCCA would reimburse the auto insurance company 90% of the ultimate loss from $500,000 and $1,000,000 and 100% of the loss in excess of $1,000,000.
  • The fee schedule used in the Workers’ Compensation system would be applied to payments made by auto insurers to physicians, hospitals, and other providers treating an injured person or providing rehabilitation.  (The fee schedule would not apply to emergency medical services provided by ambulance operations.)
  • Individuals injured on a motorcycle involved in an accident with a motor vehicle could claim PIP benefits only up to a maximum of $250,000.
  • Specific limits would be placed in statue on attendant care or nursing services provided in an injured person’s home, including limits on hourly payment for the provision of basic services and skilled services.

If passed, how would claim costs be covered if they exceeded the limit of insurance chosen on the auto insurance policy?  Likely, they would become the responsibility of other insurance sources such as private medical insurance, VA Benefits or Medicaid.

The airwaves are alive with radio ads from both those who favor this change and those who oppose this change.  Insurance companies and many consumers favor the change as it would help contain spiraling medical costs resulting from auto accidents and help to keep auto insurance premiums reasonable.  Health care providers oppose the change.

Change to the Michigan No-Fault Law will affect every driver in the State of Michigan.  It is important to stay informed and determine how this major change might affect you. 

For more details on Michigan No-Fault reform may affect you, visit the Michigan Legislature’s website.  You can also contact us at 800.225.5582 for more information about Michigan auto insurance, or to get a free Michigan auto insurance quote.

734.421.9900  |  800.220.5582  |

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Lighthouse Group Main Office in Grand Rapids, MI
Mailing Address | P.O. Box 530009, Livonia, MI 48153

Phone: 734.421.9900 | Toll Free: 800.220.5582 | Fax: 734.421.9911

Also serving these Detroit area communities in Michigan: Livonia, Farmington Hills, Ann Arbor, Southfield, Plymouth, Canton, Westland, Northville, Novi, Dearborn, South Lyon & Walled Lake