Higher Michigan Premiums Blamed on State Supreme Court


The state Supreme Court of Michigan is under fire after voting to force an insurers’ association to reimburse insurance providers in connection with the health care of two brain-damaged car crash victims.

Higher Michigan Premiums Blamed on State Supreme CourtvThe court elected (4-3) to require the Michigan Catastrophic Claims Association (MCCA) to pay insurance companies for the providers’ payouts to the families of two seriously injured policyholders. The victims, Daniel Migdal and Robert Allen, require round-the-clock medical attention since they figured in two separate accidents. Both patients suffer from severe brain damage as a result of their injuries.

Insurance companies established the MCCA in 1978 to compensate providers if claims exceed $460,000. In Migdal and Allen’s cases, the association refused to reimburse the insurance companies, prompting the insurers to bring up the issue in court. The state Supreme Court sided with the providers and dismissed the MCCA’s claim that the decision to issue reimbursement would be unfair to the association. The MCCA gets its funds from annual fees of the insurance bills of the state’s motorists.

Because of the ruling, car owners in Michigan can expect to pay $20 more each year for the MCCA to have a reasonable amount of reserves. The association claims that it needs $64.5 million to have an extra $629 million in contingency funds to cover any reimbursement claims by insurance companies.

At present, motorists are billed $104 each year by the MCCA for its expenses. Instead of a four percent increase or $5, the association is looking for a 19 percent jump, bringing the annual fee to $124.

Even justices denounced the final decision, saying that it was an unwise decision. Justice Robert Young, Jr. (R) and two other Republican justices expressed dismay over the ruling, calling it “an expensive mistake.” They also added that car owners in Michigan would have to pay more for insurance as a result of the decision.

The dissenters’ colleagues, however, labeled speculations of higher premiums as “unfounded” and “highly speculative.” Justice Elizabeth Weaver says that they have not seen evidence that insurers will resort to slack negotiations because of the ruling. They also pointed out that the MCCA still has the right to deny compensation claims that they deem improbable.

Legal experts and industry specialists also weighed in on the issue. The state insurance commissioner, for his part, called the annual payments to the MCCA as “patently excessive.” There were even calls for a reduction in the fees charged to car owners’ annual insurance bill.