Whitmer calls for billions in auto insurance reimbursements for motorists

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LANSING – Gov. Gretchen Whitmer on Monday called on the auto insurance industry to send reimbursements that could total billions of dollars to all insured motorists in the state.

The Michigan Catastrophic Claims Association board of directors will consider the governor’s claim, but Whitmer is asking for a refund much sooner and much larger than the law requires, said Kevin Clinton, executive director of the association.

But a Republican lawmaker said Whitmer was “playing politics” in a way that could put victims of catastrophic road accidents at additional risk.

Whitmer said reimbursements are expected to result from the bipartisan auto insurance program she signed up to in 2019.

The MCCA, a non-profit company whose board of directors is controlled by the insurance industry and which operates a fund that pays for catastrophic care, is expected to issue the reimbursements, Whitmer said.

The fund, with more than $ 27 billion in assets, derives its money from surcharges paid by insured motorists. These surcharges have been reduced since the new auto insurance law took effect, to $ 86 per vehicle this year, from $ 220 per vehicle in 2019. The surtax, which previously applied to all premiums auto insurance, is now only billed to motorists who maintain catastrophic loss coverage for life.

Whitmer said in a letter to Clinton on Monday that financial reports show the fund’s surplus has still grown from $ 2.4 billion at the end of 2020 to $ 5 billion as of June 30, 2021.

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“The surplus reflects the additional premium costs and in part reflects the cost-cutting measures implemented in historic, bipartisan no-fault reform legislation,” Whitmer said in the letter.

The money “belongs to Michiganders and should be put in people’s pockets immediately with a refund check,” she said in a press release.

“A rebate check to working families will help us continue to put Michiganders first and keep costs down.”

When asked if Whitmer is seeking reimbursement of the full $ 5 billion, spokesman Bobby Leddy said the MCCA will have to make a decision, but the governor wants the association to “reimburse the maximum amount possible. while maintaining the viability of the fund “.

Michigan has 7.4 million insured vehicles. A $ 5 billion refund, if ever approved, would result in average checks of around $ 676 per vehicle.

Clinton said Monday it was true that the fund’s current assets exceeded its expected commitments by $ 5 billion, but said that giving up the entire surplus “can be a difficult thing to do.”

State insurance law requires the MCCA, beginning in September 2022 and every three years thereafter, to issue refunds when assets exceed 120% of liabilities, Clinton said. If that calculation were made today, which is almost a year ahead of schedule, it would provide for a reimbursement of $ 743 million, or roughly $ 100 per insured vehicle, he said.

“I don’t think there’s a law that says we can’t do it early,” Clinton said.

Whitmer, a Democrat, and the Republican-controlled legislature have both been criticized by advocates for catastrophic road accident victims and healthcare providers linked to the sharp cut in funded care since parts of the program of reform have entered into force.

Fewer motorists are opting for unlimited catastrophic coverage and catastrophic accident victims – even those injured before the law came into effect – face reduced care under a schedule of medical expenses greatly reduced. Many groups and lawmakers are now calling for improved levels of care for these victims, although many predicted such problems before the law was passed.

Devin Hutchings, chairman of CPAN, formerly known as Coalition Protecting Auto No-Fault, said Whitmer’s ad “seems designed to distract our attention from the real problem – that catastrophic car crash survivors suffer under the new law, and auto insurance companies continue to defraud consumers.

Whitmer is correct that motorists need a break from their premiums, but “taking money from the catastrophic claims fund – which was designed specifically to treat the seriously injured – is a slap in the face for survivors and families who have craved relief from Michigan’s catastrophic care crisis “created by the new law,” Hutchings said.

The 2019 legislation was set to offer Michigan drivers significant reductions from the nation’s highest premiums, guaranteed for eight years, by giving drivers five choices for their insurance, ranging from maintaining the current system of unlimited lifetime benefits to withdrawal. . entirely of the personal injury protection portion of the insurance coverage.

State Senator Lana Theis, R-Brighton, chair of the Senate Insurance and Banking Committee, said Whitmer “wants to take the reform savings without fail and use them for his own political advantage.” It is dangerous, she said in a statement released by the office of the Senate Majority Leader.

“The last time a governor played politics with the MCCA, he threatened funds that provided catastrophic wound care,” Theis said.

She was referring to 1998, when the MCCA, at the request of the two governors at the time. John Engler, a Republican and House Democrat, returned about half of his surplus to motorists in the form of checks for $ 180 per vehicle. Subsequent fee increases were charged to the resulting deficit.

Clinton said insurance companies are required to hold excess funds to handle contingencies, and the same principle could be applied to the MCCA. If there are adverse court rulings, or if the law is changed to provide for larger payments to victims of catastrophic accidents, the size of the surplus will be significantly reduced, he said.

Erin McDonough, executive director of the Insurance Alliance of Michigan, conveyed a similar message in a press release issued Monday.

“Increasing the repayment period, as the governor is now proposing, makes it even more important to stay the course with comprehensive reforms,” McDonough said.

“Long-term care is the main cost driver within the MCCA and is currently subject to the reasonable scale of medical fees. Changes to any part of the reform will have a domino effect that will change MCCA’s long-term debts, raise premiums, and spur up costs at a time when the Michiganders can least afford it.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on twitter @ paulegan4. Learn more about Michigan politics and subscribe to our election bulletin.

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