The Real Facts on Auto No-Fault

by Tim Hoste

In the January 22, 2015 Detroit Free Press, readers were greeted by a full page advertisement about the Michigan Catastrophic Claims Association (MCCA).  In what appears to be nothing more than a poor attempt to gain attention for a new radio program on a small time, low end of the dial radio station, this sub par attempt at "informing" the public is missing one important element...fact.

The first glaring statement that proves this advertisement is nothing more than a poorly worded opinion piece is the reference to the MCCA having $20 billion in the fund.  The total amount of money in the MCCA's fund has been at the forefront of many auto no-fault related discussions for a number of years now, and even after numerous Freedom of Information Act requests and court battles, no definitive number has ever been presented.  There has long been speculation as to the amount of money in this fund, as well as its overall sustainability, but as described in numerous independent audits of the MCCA, the Michigan Catastrophic Claims Association uses accounting practices which differ from accounting principles generally accepted in the United States of America.[i]  This statement alone proves that before any statement can be made as to the financial status of the MCCA, further information is needed to truly understand the viability of the fund.

The second statement that shows whoever authored the advertisement does not have a strong understanding of how the MCCA operates in the sentence that reads, the MCCA reimburses a very small percentage of those not playing by the rules, meanwhile, a high percentage of people who play by the rules are paying for all of this.  The MCCA is simply a re-insurer for any insurance company that writes auto insurance policies in the State of Michigan.  While the responsibility of each claim falls on the various insurance companies, the MCCA will reimburse them for every dollar spent beyond the first $530,000.  The purpose of the MCCA was to even the playing field for all auto insurers, and help ensure that the smaller companies could still write policies in Michigan, which requires all reasonable charges incurred for reasonably necessary products, services, and accommodations for an injured person’s care, recovery or rehabilitation be covered for the accident victims lifetime.  That was and is all the MCCA does, so it is unclear as to how they only reimburse a very small percentage, when they reimburse ALL auto claims that exceed $530,000.

The third statement that continues to show the lack of knowledge from the people behind this advertisement is the one line that reads, We are for everyone who legitimately need assistance from this fund! (not the lowlifes who take advantage).  Once you look past the unnecessary use of slanderous rhetoric, this statement contradicts their text box on the right side of the page that says, Place a $500,000 cap on current and future claimants.  The reality is that anyone who sustains a catastrophic injury (such as a traumatic brain injury or a spinal cord injury), $500,000 will not even come close to covering the appropriate levels of care and rehabilitation they will require throughout their lifetime. 

It is my sincere hope that whoever is responsible for this advertisement truly takes the time to learn the facts of Michigan's Auto No-Fault Insurance and the Michigan Catastrophic Claims Associations.  All Michigan residents are fortunate to live in a state that allows all accident victims the chance to have a good quality of life post injury.  In other states, the sad reality is that if you get injured in an auto accident, financial ruin for you and your family occurs, followed up by the remainder of your life is spent in a state-run nursing home. 

If the "Ask Detroit" radio show and the staff at 680AM WNZK really want to delve into this topic, the focus should be on the MCCA and their refusal to present the real financial data that is needed to truly understand the status of that fund.  Or, they can focus on why the State of Michigan allows your credit score, occupation, level of education, and residential address to factor into to how much your pay in auto insurance premiums.  Better yet, I urge the hosts of "Ask Detroit" to spend some time learning the truth about Michigan Auto No-Fault Insurance, and witness firsthand some of the therapies and rehabilitation that are quintessential to the recovery and well being of auto accident victims. 

If the hosts of "Ask Detroit" or any other media member would like to learn more about Auto No-Fault, please do not hesitate to contact me at thoste@uniqueoptionsllc.com.  It is my goal to help everyone understand just how critical Michigan's Auto No-Fault System is to not only those who currently need it, but to anyone who might need it in the future. 

In a split second an auto accident can change someone's life forever, it could be yours.  What type of auto insurance coverage would you want?

[i] Michigan Catastrophic Claims Association: Financial Statements and Supplemental Schedules Statutory Basis of Accounting. June 30, 2014 and 2013. PricewaterhouseCoopers LLP