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Lansing — Michigan’s special assessment on auto insurance policies will drop $36 per vehicle in the next fiscal year to $150, the Michigan Catastrophic Claims Association said Wednesday.

The assessment, used to cover the costs of treatment for accident victims who suffer profound injuries, was $186 per vehicle the last two fiscal years. The new assessment starts July 1 and runs through June 30, 2016.

According to the association, the new assessment includes $145.10 to cover anticipated new claims, $4.50 toward an estimated $292 million shortfall remaining in the fund and 40 cents toward administrative expenses.

MCCA Executive Director Gloria Feeland said motorists are getting a reduction because the fund’s stock market investments have been more profitable than expected and because more than $29 of the current assessment has helped reduce a predicted deficit.

In addition, the share of catastrophic claims auto insurers have to pay goes to $545,000 on July 1, up from $530,000 now, reducing the Catastrophic Claims Association’s liability, Freeland said.

All auto insurance companies operating in Michigan are required to pay the assessment. It’s added to auto insurance premiums paid under Michigan’s unique no-fault auto insurance law requiring unlimited lifetime coverage for medical expenses resulting from auto accidents.

Michigan is the only state to require drivers to purchase unlimited personal injury coverage. The state with the next highest mandatory benefit, New York, requires at least $50,000 of personal injury coverage.

This assessment reduction comes at an optimal time for Gov. Rick Snyder’s plan to raise an added $1.2 billion a year for road repairs through a complex proposal that includes sales, fuel and registration tax increases, offsetting some of the proposed hikes in motorist expenses.

The road proposal’s linchpin is a request for voters to approve a state sales tax increase to 7 percent, up from 6 percent, in a May 5 ballot proposition. That part of the plan would boost funding for schools, local governments and a state tax deduction available to the working poor.

But the Catastrophic Claims Association is being sued in a case before the Michigan Supreme Court regarding state transparency rules.

Coalition Protecting Auto No-Fault, or CPAN, in a 2012 lawsuit under the Michigan Freedom of Information Act, argues the association is a public body, created by the Legislature, that should be subject to full public scrutiny.

CPAN spokesman Josh Hovey, while acknowledging the assessment reduction is good news for motorists, said it’s also another example of why the group’s court case has merit.

“It reinforces the need for transparency,” Hovey said. “We’d like to see more details about why they’re reducing these rates and how these rates are set.”

The two sides most recently filed briefs regarding the process by which lawmakers grant exemptions from freedom of information requirements in some laws, Hovey said.

“The constitutional question the Supreme Court is interested in reviewing transcends the world of auto no-fault and focuses directly on the manner in which the Legislature exercises its constitutional power to amend existing laws,” CPAN President John Cornack said in a statement he issued about the high court case last Friday.

Catastrophic claims assessments are used to reimburse auto insurance companies for personal injury claims costing more than $530,000 now --$545,000 after July 1. Payments to full-time family or agency residential care providers comprise about 58 percent of claims payments, the association says.

Catastrophic Claims Association officials say they paid out $1 billion — more than $149 per car — for claims resulting from catastrophic injuries in 2014. Most such claims involved brain and spinal cord injuries, multiple fractures, and back and neck injuries, according to the organization.

The catastrophic claims assessment, which usually has increased annually since it began in 1978, has been the target of criticism from lawmakers who want to end Michigan’s unlimited lifetime coverage mandate as part of proposed no-fault auto insurance reforms. But the Legislature has been unable to agree on sweeping no-fault reform proposals in its last two sessions.

Other critics include interest groups arguing the association lacks accountability and may be holding more money than is necessary in its reserves.

An independent actuarial consultant helps set the annual assessment by evaluating expectations for medical costs, economic conditions, investment returns and the number of claims. The association says a projected $292 million deficit, or more than $44 per insured car, is factored into the new assessment rate.

gheinlein@detroitnews.com

Rising Assessment

2009: $124.89

2010: $143.09

2011: $145.00

2012: $175.00

2013: $187.00

2014: $187.00

Source: Michigan Catastrophic Claims Association

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