Lansing – Gov. Gretchen Whitmer calls on the Michigan Catastrophic Claims Association to return a $ 5 billion surplus and provide “refund checks” to every resident with auto insurance, something a key Republican lawmaker noted could occur under current law.

The Democratic governor made the request Monday in a letter to Kevin Clinton, executive director of the association, which under state law annually levies a membership fee to cover claims for catastrophic people injured in disasters. car accidents.

The association‘s surplus has grown from $ 2.4 billion at the end of 2020 to $ 5 billion as of June 30, according to Whitmer’s letter. The change is “in part a reflection of the cost-saving measures” included in the state auto insurance overhaul approved in 2019 by the legislature and signed by Whitmer.

“The surplus of over $ 5 billion accumulated by the MCCA belongs to the Michiganders and should immediately be put in people’s pockets with a refund check,” Whitmer said in a statement. “As we remain focused on growing our economy and starting a new era of prosperity, we must use all the resources we have to help people prosper.

“A rebate check to working families will help us continue to put Michiganders first and keep costs down.”

Clinton said in an interview Monday that he doubts the MCCA’s board of directors will give up all of the organization’s surplus. He also noted that the 2019 law provided for a mechanism by which a refund could take place. Still, he said the MCCA would likely consider at least early distribution.

“If they get something from the governor, they will give it serious thought,” Clinton said of the MCCA board of directors, which includes five voting members representing the insurance industry.

The MCCA board is due to meet on Wednesday, he said.

Senator Lana Theis, R-Brighton, chairman of the Insurance and Banking Commission, accused Whitmer of playing politics on Monday and pointed out that the new law already prescribes how and when repayments are to be made.

“We have to let the status play,” Theis said.

Prior to the 2019 changes, Michigan drivers were generally required to have unlimited personal injury protection as part of their auto insurance, with the MCCA assessment paid for by all policy holders.

After the changes, the MCCA was responsible for policies issued before July 2, 2020 and new policies in which drivers chose unlimited coverage – Clinton said about 80% of Michigan drivers chose to stick with one. unlimited coverage. The MCCA can only bill insurers for policies that continue to offer unlimited coverage.

Last November, the claims association announced that its valuation billed per vehicle was reduced to $ 86 for the period July 1, 2021 to June 30, 2022, a reduction of 14%. The association said the reduction was “primarily the result of savings created by controlling the costs of medical treatment and other changes” to the Motor Insurance Act of 2019.

The legislator created the MCCA, but it is not considered a state agency.

Its website describes the entity as “an unincorporated, not-for-profit association of which every insurance company that sells auto or motorcycle insurance in Michigan must be a member.”

Erin McDonough, executive director of the Insurance Alliance of Michigan, noted in a statement Monday that the 2019 law included a provision that contemplates reimbursement by the MCCA.

Effective July 1, 2022 and every three years thereafter, the Director of the State Department of Insurance and Financial Services must ensure that an MCCA audit is performed for the previous three years.

If the audit found that the MCCA’s assets exceeded 120% of its liabilities, the director should order the MCCA to reimburse the excess to its members “as long as it does not threaten the continued ability of the MCCA to reimburse the PIP. (personal injury protection)) benefits, ”said a 2019 House Fiscal Agency analysis.

“By law, this money goes to insured Michigan drivers, which the Insurance Alliance of Michigan and its members strongly support,” McDonough said. “Increasing the repayment period, as the governor is now proposing, makes it even more important to stay the course with comprehensive reforms.”

In recent months, there has been strong pressure from accident victims and healthcare providers to amend elements of the 2019 law, including requiring that from July 1, 2021, reimbursement eligibility for healthcare providers be capped at 55%. In June, Whitmer urged the legislature to act to “ensure that some of our most vulnerable residents retain access to their care.”

Theis, the GOP lawmaker, said calling for a refund from the MCCA and urging lawmakers to change the fee schedule were conflicting messages from the Democratic governor.

The association was not created to be a political account, Theis said.

Devin Hutchings, chairman of the Coalition to Protect Auto No Fault, said taking money from the claims association would be “a slap in the face for survivors and families who have craved relief from Michigan’s catastrophic care crisis. created by the 45% reduction in care imposed by the government under the new auto insurance law. “

23 years ago, in 1998, the MCCA voted to return $ 1.2 billion of its then surplus to its member insurance companies. The action came about because the association’s surplus exceeded “a level necessary to cover its expected losses and expenses,” according to a state bulletin.

The bulletin indicated that the return of the 1998 surplus was to be forwarded directly to policyholders for an amount of $ 180 per vehicle.

The current surplus is the largest that Clinton said he is aware of the MCCA ever having. The executive director of the association tied the stock to the investments and the amendment to the 2019 law.

“If you give away all of your surplus, you have no money in case something goes wrong,” Clinton warned.

The association has not always been in surplus. The MCCA began the fiscal year ending June 30, 2014, with a deficit of $ 1.87 billion, according to a State House Fiscal Agency report.

At the time, some lawmakers were proposing to take $ 1 billion out of money held by the MCCA and use it for road repairs. The proposal did not move forward.

The MCCA establishes its annual valuation by analyzing the amount needed to cover the lifetime claims of all those catastrophically injured in car crashes for the coming year, according to a 2007 summary from the State Department of Insurance and Services. financial.

“This analysis includes examining the return on investment the fund receives, medical expense inflation, any existing shortfalls or surpluses and any changes in coverage,” the summary said.

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Editor-in-chief Beth LeBlanc contributed.