Michigan drivers should get refunds from $5 billion surplus, catastrophic claims board votes

Lansing — The board of the Michigan Catastrophic Claims Association voted Wednesday in favor of issuing refund checks to drivers across the state but the details of the rebates have not yet been set.

The specific information on the amount of refund per vehicle and proposed timeline will be announced in the "next several weeks," according to a statement from the association, which currently has a $5 billion surplus. Under state law, MCCA levies an assessment each year to cover claims for those catastrophically injured in car accidents.

The group's decision Wednesday came after a request from Michigan Gov. Gretchen Whitmer and will be an early financial boon for motorists two years after lawmakers overhauled auto insurance policies in the state. Under the legislation, a refund was supposed to be possible after an audit in 2022.

"The goal is to issue the largest possible refunds to consumers while maintaining sufficient funds to ensure high-quality care to those who have been catastrophically injured," the MCCA's press release said.

The vote came two days after Whitmer called on the association to return the $5 billion surplus through refund checks to every resident with auto insurance.

"It is great news that the Michigan Catastrophic Claims Association has swiftly taken action in response to my letter this week to begin the process of issuing refund checks to help drive down the costs and produce savings for Michiganders with auto insurance," Whitmer said Wednesday. "Michiganders have paid into the catastrophic care fund for decades, and these funds from the $5 billion surplus belong in the pockets of Michigan policyholders."

Likewise, Anita Fox, director of the state Department of Insurance and Financial Services, urged the MCCA board to act "promptly to determine the amount of and process and timetable for expeditiously issuing refunds to all Michiganders with auto insurance."

The association's surplus has grown from $2.4 billion at the end of 2020 to $5 billion as of June 30. The change is "partly a reflection of the cost-saving measures" included in the state's auto insurance reform approved in 2019 by the Legislature and signed by Whitmer, the governor said in a letter to Kevin Clinton, the MCCA's executive director, on Monday.

Clinton has said he doubted the MCCA's board would give away all of the organization's surplus.

Before the changes in 2019, Michigan drivers were broadly required to have unlimited personal injury protection as part of their auto insurance with the MCCA assessment being paid by everyone with a policy. After the changes, the MCCA had liability for policies issued before July 2, 2020, and for new policies in which drivers chose unlimited coverage — Clinton has said about 80% of Michigan drivers chose to stick with unlimited coverage.

Last November, the claims association announced its assessment charged per vehicle was decreasing to $86 for the period beginning July 1, 2021, through June 30, 2022, a 61% reduction from the $220 fee two years earlier. The association said the latest reduction was "primarily the result from savings created by cost controls for medical treatment and other changes" made in the 2019 auto insurance law.

The Legislature created the MCCA, but it's not considered a state agency. The MCCA's board includes five voting members who represent the insurance industry.

The Insurance Alliance of Michigan strongly supports the MCCA’s efforts to put money back into the pockets of Michigan drivers, said Erin McDonough, executive director of the alliance.

"It’s important for the MCCA board to do its due diligence and land on a refund amount that balances giving insured drivers back the money they deserve while protecting the longevity of a fund that pays for the cost of medical care for Michiganders seriously injured in car accidents," McDonough said.

House Speaker Jason Wentworth, R-Farwell, said he was glad the 2019 reforms have produced large enough savings for the MCCA to act immediately and return money to people.

"No fault reform is working, and the savings and benefits for Michigan families are getting better all the time," Wentworth said.

There's been a heavy push by accident victims and medical providers in recent months to alter elements of the 2019 law, including a requirement that as of July 1, 2021, medical providers' reimbursement eligibility be capped at 55%. In June, Whitmer urged the Legislature to act to "ensure some of our most vulnerable residents maintain access to their care."

cmauger@detroitnews.com