Without Transparency, Michigan Catastrophic Claims Association is Taxation Without Representation

LANSING – Coalition Protecting Auto No-Fault (CPAN) President John Cornack used today’s tax filing deadline to take the Michigan Catastrophic Claims Association (MCCA) to task for practicing “taxation without representation.”

The MCCA is a private non-profit organization created by Michigan Legislature in 1978. It serves as a reinsurance fund that reimburses auto insurance companies for personal injury claims exceeding $545,000. Each Michigan driver currently is required to pay $160 annually per vehicle to fund the MCCA. In June, that fee rises to $170.

“Our founding fathers were adamant that there should be no taxation without representation, yet that is exactly what we have happening with the MCCA,” said Cornack. “Here we have an organization created by the Legislature that holds more than $18 BILLION of the public’s money, operating with no real public oversight. It’s a travesty.”

MCCA’s board includes AAA Insurance, Auto-Owners, Citizens Insurance, Farmers Insurance and State Farm. The Michigan director of the Department of Insurance and Financial Services serves as a non-voting ex-officio member. MCCA board meetings are not subject to the Open Meetings Act, and the organization refuses to comply with state Freedom of Information Act laws.

CPAN has filed a FOIA lawsuit seeking to open the MCCA’s rate-making data. The Michigan Court of Appeals ruled last year that the MCCA is a public body as defined by Michigan law, but disagreed with CPAN’s assertion that the organization’s FOIA exemption is unconstitutional. The case is currently in the State Supreme Court.

In addition, legislation has been introduced in both the State House and Senate that would bring transparency to the MCCA. Senate Bills 240 and 241 would require MCCA to abide by Michigan’s Open Meetings and FOIA laws. House Bill 4354 would do the same but also require a member of the public to also sit on the MCCA board and give the State Insurance Commissioner the authority to disapprove of MCCA rate charges that are deemed excessive.

 

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