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While motorists in Michigan are being socked by higher gas prices and other costs, some drivers who opt for catastrophic auto insurance coverage will be catching a slight break starting next year.
The Michigan Catastrophic Claims Association on Monday, Oct. 12, announced a cheaper assessment fee for the incoming fiscal year 2027-28, meaning Michigan policyholders may look forward to saving money on insurance.
The claims group, a private, nonprofit reinsurer, cited auto insurance reforms for the lower per-vehicle fees. The bipartisan auto no-fault legislation was signed by Governor Gretchen Witmer in 2019.
“When we look at the data, we can clearly see the positive effects of the reforms,” said Kimberly Bezy, executive director of the association, in a news release. “At a time when the cost of everything from gas to groceries continues to rise, we are proud to announce this lower fee to keep more money in Michiganders’ pockets.”
For the upcoming fiscal year, Michigan policyholders may anticipate a $63 pure premium charge and a $10 deficit recoupment charge. This is cheaper than the current pay period, 2026-2027, where the pure premium charge is $65, and the deficit is $19.
“The pure premium reflects the funds needed to cover unlimited lifetime costs of care for people injured in catastrophic accidents anticipated to occur during the coming fiscal year,” the group said. “The pure premium is only paid by those who select unlimited PIP coverage” ― PIP as in the personal injury protection plan mandatory for all Michigan drivers to have.
The $10 deficit charge is added when the estimated liabilities exceed the association’s assets.
“The estimated liabilities are the amount of money the MCCA estimates will be needed to cover for the lifetime care of accident victims. By statute, the MCCA is required to charge an additional per-vehicle amount to all drivers to make up the deficit,” MCCA said.
Overall, assessment fees have declined since the bipartisan auto no-fault bill was signed.
During pay periods in the 2000s, assessment fees were more expensive, ranging in the $100s. From 2019 to 2020, the total assessment fee was $220, which was considered an “all-time high,” according to the release.
The association has served as Michigan’s reinsurer since 1978. The group reimburses property and casualty insurance companies for unlimited PIP claims.
Here’s what to know:
What is the Michigan Catastrophic Claims Association?
The MCCA is a nonprofit, private reinsurer for the state of Michigan. The group works with insurance companies to cover costs following catastrophic car accidents, meaning there is a pool of money for insurance companies to pull from when lifelong rehabilitation and medical expenses need to be covered. To work as a nonprofit, the reinsurer collects from assessment fees paid by policyholders, and such fees vary in cost per year.
Contact Sarah Moore @ [email protected]
This article originally appeared on Lansing State Journal: Michigan drivers to see lower fees for catastrophic coverage
