Measures address “file and use” practice, independent audit of MCCA

State Rep. Michael Webber, of Rochester Hills, today introduced two separate plans to reform Michigan’s no-fault auto insurance system and deliver lower rates for all drivers statewide.

Webber hopes his plans will be considered as part of a broader solution to end Michigan’s tenure as the state with the highest car insurance premiums in the nation.

House Bill 4079 would end the practice of “file and use”, where insurance companies file their rates with the Department of Insurance and Financial Services (DIFS) and begin charging these rates without approval from the state. Webber’s plan would require approval from the state agency before an insurer could set rates.

“We’ve all heard how important reducing auto insurance rates is to our constituents back home,” Webber said. “Ensuring the state has the opportunity to review and approve proposed rates before they are imposed on Michigan drivers is a simple step we can take to lower rates across the state once and for all.”

Webber’s second measure, House Bill 4080, would require DIFS to contract with a third party to conduct an independent audit of the Michigan Catastrophic Claims Association (MCCA) every five years to increase the fund’s transparency and accountability.

In 2018, the MCCA announced it would be increasing the assessment Michigan drivers pay into the fund to $192 per year for each vehicle – a $22 increase from the prior year. The MCCA has grown from approximately a value of $9 billion in 2009 to over $22 billion today, and no audit has been completed in over three years.

“We need an independent, non-partisan party to look into the funds of the MCCA and actually see if the MCCA is being overfunded by Michigan drivers,” Webber said. “If it is concluded the MCCA is operating with a surplus, Michigan drivers deserve a rebate. If the MCCA is operating as it should, there should absolutely be no surplus.”

Both bills now move to the House Insurance Committee for consideration.