Auto insurance rates in the state of Michigan are set to increase by 13% per vehicle due to significant outstanding claims costs.
The Michigan Catastrophic Claim Association (MCCA) recently revealed that the assessment paid by auto insurance companies will be set at $192 per insured vehicle, from July 01, 2018 to June 30, 2019. The new cost represents an increase of $22 – or 13% – over the previous 2017-2018 assessment of $170.
A release from the MCCA explained that the increase is due to higher than anticipated claim costs, despite being partially offset by better-than-expected investment performance. The media release broke down the $192 assessment fee per insured vehicle, saying that $161 will be used to cover anticipated new claims and expenses, while the remaining $31 will be used to pay off an estimated $2.3 billion deficit related to existing claims.
Under Michigan’s no-fault insurance law, all auto insurers operating in the state are required to pay the assessment to the MCCA to cover the cost of Personal Injury Protection (PIP) benefits.
The assessment is used to compensate auto insurers for PIP benefits paid in excess of $555,000 per claim. Tri-County Times reported that catastrophic claims that call for the compensation include brain and spinal cord injuries, multiple fractures, as well as back and neck injuries.
