Michigan motorists to pay more for auto insurance

Published 9:38 am Monday, March 29, 2004

By By JAMES COLLINS / Niles Daily Star
NILES -- A recent decision made by the Michigan Catastrophic Claims Association will raise insurance costs another $27 per car for Michigan drivers this year.
The increase, which will come into effect on July 1, will require Michigan drivers to pay $127.24 per car to help pay for the insurance costs of victims seriously injured in automobile accidents. This will be a 27 percent increase over the current MCCA mandated costs of $100 per car. This is the second consecutive year that an increase has been made.
Michigan is the only state in the nation that provides unlimited lifetime medical benefits for people who are catastrophically injured in automobile accidents.
Insurance agent Mel Bookout, of State Farm Insurance in Niles, located at 1001 Broadway, said Michigan drivers have the best medical coverage in the nation and thinks the options available to us are a large benefit.
He said Michigan drivers have to pay more for their car insurance than other states, but see much better coverage as a result.
Bookout said his office has been receiving calls from concerned customers, but once he explains to them that this is a state-mandated increase, the customers are more understanding of the increased rate.
The MCCA was established by the State of Michigan in 1978 to ease the burden of insurance companies required to comply with the no-fault insurance legislation.
The association's board of directors, which is made up of five insurance company representatives, approved the increase in a closed session meeting on March 17.
Jim Lunstedt, controller for the MCCA, said the increased insurance rate is necessary to help the association pay for its current deficit of $2.1 billion. He said the MCCA expects to recoup $225 million with the new increase.
He said the factors that have caused MCCA's costs to increase include an increase in the number of claims received and increases in medical costs and home care costs.
According to an MCCA press release, "it is difficult to predict the projected claim payments for long-term claims in which medical benefits are unlimited. This uncertainty in the estimates of the MCCA's liabilities is primarily due to difficulty in predicting life expectancies, increased medical cost inflation, investment returns and claim frequency."
The MCAA's money goes toward reimbursing auto insurance companies that have to pay for claims exceeding $350,000, an amount set by law.
The insurance companies are responsible for covering the initial $350,000 and that amount will gradually increase to $500,000 over the next seven years.
State Farm Insurance spokeswoman Angie Rinock agrees Michigan is the best state in the country in regards to no-fault insurance. "We have to realize we have some of the most generous auto insurance benefits in the nation," she said. "And those benefits come at a cost."