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Whitmer Orders Audit After Insurance Fee Rises Again

"Drivers are feeling the pinch of paying the highest auto insurance rates in the nation"

March 27, 2019 - 6:01 pm

LANSING, Mich. (WWJ) -- Gov. Gretchen Whitmer has ordered the Department of Insurance and Financial Services to conduct an audit into the Michigan Catastrophic Claims Association, after the association voted to increase an annual auto insurance fee by nearly 15 percent.

The increase of $28 per year makes the total fee Michigan drivers pay to cover unlimited benefits for injured drivers under the state's no-fault auto insurance system $220. The increase is set to take effect on July 1.

The MCCA -- a private non-profit association created by the Michigan Legislature in 1978 to provide unlimited lifetime coverage for medical expenses over $555,000 resulting from auto accidents -- is not subject to the Freedom of Information Act and Open Meetings Act.

Whitmer said in a press release she is ordering the audit "to provide drivers with the transparency they deserve."

"From Detroit to the Upper Peninsula, drivers are feeling the pinch of paying the highest auto insurance rates in the nation and it’s time to do something about it," Whitmer said. "Michiganders deserve to know why they are being forced to shell out hundreds of dollars in additional fees for car insurance."

The MCCA has made similar increases to the fee Michigan drivers pay to cover catastrophic medical claims each of the last three years. The fee increased by 6.3 percent in 2017, by 13 percent in 2018 and now by 14.5 percent.

The annual increases have amounted to Michigan drivers paying more than twice as much as they did in 2008 for catastrophic medical coverage. 

MCCA officials testified before the Senate Insurance and Banking Committee on March 13 that fee increases were the result of "waste and fraud" in the medical system. But Wednesday's increases come on the heels of a volatile market that caused the association’s investments to miss their projected returns, according to Whitmer's office. 

Whitmer says DIFS has the legal authority to visit the MCCA and "examine any and all documents to conduct a thorough review of the association’s operations, which was last conducted in 2015." Under Whitmer’s direction, the department will conduct an accelerated financial examination into the association. 

"Today we told the MCCA that we were concerned and strongly urged them to provide more information so the public can understand the basis for this fee increase," DIFS director Anita Fox said in the press release. "To provide greater transparency, we welcome Governor Whitmer’s direction to conduct a financial examination into the association’s operations."