Michigan Catastrophic Claims Association (“MCCA”) was established by Public Act 136 of 1978, which amended the no-fault law by adding Section 3104 effective July 1, 1978. The Legislature created the MCCA because insurance companies had difficulty obtaining reinsurance for Michigan’s automobile no-fault policies, which provided for unlimited lifetime medical benefits for people who are catastrophically injured in auto accidents.
The MCCA is a non-profit unincorporated association of which every insurance company that sells automobile or motorcycle coverage in Michigan is required to be a member.
The MCCA is funded by an annual premium assessment to each insurance company based upon the number of automobile and motorcycle policies written in Michigan. The MCCA is required to assess an amount each year that is sufficient to cover the lifetime claims of all persons catastrophically injured in that year and in addition, may adjust future assessments for excesses or deficiencies in prior assessments.
These assessments provide the funds for the indemnification of those members against ultimate loss sustained under statutory required personal protection insurance in excess of the applicable amount set forth in section 3104(2) of the Michigan Insurance Code. Beginning July 1, 2002, as the result of the enactment of Public Act 3 of 2001, the member retention level increased from $250,000 to $300,000 and then gradually increased on an incremental basis over a ten year period until a $500,000 level was reached on July 1, 2011. Thereafter, beginning July 1, 2013, the retention will be increased each odd numbered year by 6% or the consumer price index, whichever is less. For the period July 1, 2023 through June 30, 2025, the member retention level is $635,000.
The MCCA is governed by a Board of Directors which consists of five members appointed by the Director of the Michigan Department of Insurance and Financial Services (DIFS). The Director of DIFS, or his/her representative, serves as an ex officio member of the Board.
The following standing committees provide assistance in the operation of the MCCA: (1) actuarial, (2) audit, (3) claims, (4) communications, (5) human resources, (6) information technology, and (7) investment. The MCCA maintains a full time staff to run the day to day operations.
The MCCA is subject to the state’s reporting, loss reserve, and investment requirements to the same extent as all auto insurance companies operating in Michigan. The MCCA’s financial statements are prepared on the basis of statutory accounting practices as prescribed or permitted by the State of Michigan Department of Insurance and Financial Services (DIFS). The Association’s fiscal year ends June 30.
An annual audit of the MCCA’s financial statements is conducted by an independent public accounting firm. In addition, pursuant to Section 3104(21) of the Michigan Insurance Code, the Director of DIFS or an authorized representative of the Director of DIFS may visit the Association at any time and examine any and all the Association’s affairs. The most recent financial examination of the MCCA conducted by DIFS was for the fiscal year ended June 30, 2022.