Starting 1st July, 2010 till 30th June 2011, the cost of assessment by Michigan Catastrophic Claims Association for the insurance providers will cost $143.09 per vehicle insured by them.
Last year the prices dropped by $18, but then increased by around $20 and currently, the assessment by the MCCA stands at $124.89.
The no fault insurance law in Michigan states that the cost that might be incurred by the MCCA during the course of the coverage period should be covered by the premium for the policy. All or some of the deficits incurred by the MCCA also needs to be addressed.
According to the MCCA, the increase was due to the increased tenure for treatment of the injured victims and lesser assumptions for long term investment.
Among the 52 states in the United States, it is only Michigan that has made it compulsory to have unrestricted lifetime benefits for the victims of auto accidents in the following year. It is difficult to estimate the cost for unlimited medical benefits for lifetime treatment of the victims since it is dependent on multiple factors. Some of the factors that make it difficult to compute the estimate are the life expectancy, number of claims, returns on investment and the medical cost increase due to inflation.
The increase to $143.09 represents various costs that may be incurred on the auto insurance policy. A cost of $116.84 is set aside to cover the cost of claims; in order to address the deficit of $2 billion, an amount of $26 has been set aside and finally a meager amount of $0.25 is set aside for administrative expenses. An approximate amount of $290.71 per car insured is considered to be the estimate for the current deficit.
In the year 2009, the Michigan Catastrophic Claims Association paid over $811 million towards cost of claims resulting due to catastrophic injuries in auto accidents. This amount is in excess of $115 per car insured by the auto insurance providers. Burns, paraplegia, quadriplegia and head injuries account for a large chunk of catastrophic injuries caused due to the mishaps. For the last three decades, since 1979, the MCCA has received requests for close to 25,000 which incur an estimated cost of $71 million annually.
In 1978, the MCCA came into effect as a result of the state laws in Michigan. Every auto insurance company in the state that offers auto coverage has to be a part of this organization.
