The cost of auto insurance in the state of Michigan is going up. The Michigan Catastrophic Claims Association (MCCA) is adding another $10 to its annual fee, coming in at $170 a year.
Thanks in part to Michigan auto insurance law, which requires that all drivers have no-fault insurance policies on their vehicles, the state has some of the highest insurance rates in the country.
So is it worth it?
That was the topic of discussion in this week’s Stateside political roundup, with Ken Sikkema, senior policy fellow at Public Sector Consultants and a former Republican legislative leader, and Vicki Barnett, former mayor of Farmington Hills and a former Democratic legislator.
Sikkema said that for older, wealthier, risk-averse people like himself, the high cost of insurance in the state makes sense.
“When I think about what can go wrong, and I look at my 26-year-old son, it’s clearly worth it,” he said. “But if you’re younger, and young people never think anything bad is going to happen to them, or not as wealthy, low-income, you’re going to question that.”
Several times in the years since it was passed, lawmakers in Lansing have tried to undo Michigan’s no-fault law, but those efforts have fallen short. Barnett said that idea behind the law was to reduce the number of lawsuits arising from car accidents.
“Let’s go back to 1972 when the law was originally passed, it was major tort reform,” Barnett said. “No-fault is a model in the country, and more states should adopt it. And it said, okay, if you’re in a car accident, instead of having a lawsuit, let’s just make sure that everybody’s covered, and we created this no-fault law.”
As for the recent fee increase, the public may never know what is behind it. The Michigan Catastrophic Claims Association sets the fee according to a complex formula, but is not required to divulge the details of that formula.
“The Catastrophic Claims Association is a re-insurer,” Barnett said. “And they are very closed, so we don’t know when we pay that $160 or $170 on our insurance, what hole it goes into, how it’s managed, how it’s overseen, are the expenses really what the catastrophic claims association says they are. And so people are suspicious of the entire auto insurance law because of that non-transparent part of it that adds a lot of money to our bills.”
Listen to our full conversation with Ken Sikkema and Vicki Barnett above.