May 24, 2022

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Michigan auto insurance refunds to total $400 per vehicle

The Michigan Catastrophic Claims Association will issue refunds of $400 per vehicle totaling $3 billion during the second quarter of 2022, Gov. Gretchen Whitmer’s office said Tuesday.

The refunds are a result of cost-cutting measures in the 2019 auto insurance reform Whitmer signed into law.

“Michiganders have paid into the catastrophic care fund for decades, and I am pleased that the MCCA developed this plan so quickly after unanimously approving my request to return surplus funds to the pockets of Michiganders,” Whitmer said in a statement.

Last month, Whitmer called for the MCCA to issue refunds from an $5 billion projected surplus in the $27 billion trust fund for injured drivers.

The MCCA’s board, governed by auto insurance companies, quickly agreed to do so.

After a financial analysis, the MCCA “determined that approximately $3 billion of the surplus could be returned to policyholders while ensuring continuity of care for auto accident survivors,” according to a news release from Whitmer’s office.

On Monday, the MCCA submitted a refund plan to the Michigan Department of Insurance and Financial Services (DIFS) to issue $400 refunds to each vehicle with an auto insurance policy as of 11:59 p.m. on Oct. 31, 2021.

The MCCA will issue refunds to individual auto insurance carriers by March 9, 2022. Insurers will be responsible for issuing refund checks to their customers, according to Whitmer’s office.

State insurance regulators will direct insurance companies to issue refund checks within 60 days of receiving payment from the MCCA, DIFS Director Anita Fox said.

“In the coming months, DIFS will work to ensure that refund checks are issued to Michigan consumers as quickly as possible,” Fox said in a statement.

The MCCA is a reinsurance fund that pays for the long-term medical care of some 18,000 injured motorists whose catastrophic auto accident injuries exceed $580,000 in cost for personal injury protection (PIP), which includes medical bills, lost wages and home modifications.

For the fiscal year that began July 1, the annual MCCA fee is $86 per vehicle, a 60 percent decrease from the $220-per-vehicle fee that motorists were charged in early 2019 when Whitmer signed the legislation into law.

Severely injured drivers and their advocates have argued against issuing refunds as they lobby for the Legislature to reverse cost-containment measures in the 2019 law that slashed payments to home health care agencies and long-term rehabilitation centers by 45 percent.

The day after Whitmer called for refunds last month from the MCCA fund, one 44-year-old Kent County woman who was paralyzed in a car accident 29 years ago told Crain’s the Democratic governor’s move “was just a complete gut punch.”

The cost-cutting measures, which went into effect July 2, have led to ongoing billing disputes between providers and insurers. Some home health care companies have discharged patients, contending they can’t survive on 55 percent of what they previously charged.

The Michigan Brain Injury Provider Council, an industry group for rehabilitation facilities, said Tuesday the Legislature and Whitmer should now turn their attention to changing the fee schedule for providers that has hampered their industry.

“Now that the governor and the Republican-led Legislature have secured a refund for drivers, we echo the voices of their suffering constituents, pleading with them to put politics aside and turn their attention to a humanitarian crisis that is getting worse by the day,” MBIPC President Tom Judd said in a statement.