What to Know about the MCCA Surplus and Refunds
By Lauren Dallas, Personal Lines Manager
As you may have heard, Michigan auto insurance policyholders are expecting refunds via check or direct deposit as the result of auto insurance reform in Michigan. To help Michiganders better understand how this might affect them, the Department of Insurance and Financial Services (DIFS) has posted a Frequently Asked Questions page to its website that provides many of the answers.
The refunds are the result of a surplus in a fund that auto policyholders have long been paying into as part of their insurance premiums: The Michigan Catastrophic Claims Association (MCCA). The MCCA’s Board of Directors unanimously decided to return approximately $3 billion of its estimated surplus to its member insurance companies to refund to policyholders, due to realized and expected savings from the 2019 reforms to the Michigan auto no-fault law and higher than projected investment returns. In addition to this surplus refund, the reforms to Michigan auto insurance have saved Michigan families and businesses $1 billion in MCCA fees over the last two years.
The MCCA has acted upon Governor Whitmer's call to return these surplus funds to Michigan policyholders in the amount of $400 per vehicle in the second quarter of 2022. The MCCA has released these funds to the auto insurance companies, and now it is the responsibility of insurers to pass along those funds to their policyholders.
Checks and direct deposits began on March 9th, so you may have already received your refund. If not, it is likely that the refund is being processed, as all refunds must be issued no later than May 9th, 2022.
Which Vehicles are Eligible?
The DIFS website indicates that “All vehicles that were insured as of 11:59 p.m. on October 31, 2021 are eligible to receive a refund” in the amount of $400 per eligible vehicle. This refers to all motorized vehicles, which includes motorcycles and RVs.
In general, the refunds will be paid to policyholders of “private passenger vehicles.” The DIFS site also points out that, “Historic vehicles are only charged 20% of the annual MCCA assessment due to their limited allowable use. Therefore, drivers will receive a refund of $80 for each historic vehicle they had insured as of 11:59 p.m. on October 31, 2021.”
Importantly, these refunds are not to be confused with insurance reform relative to Personal Injury Protection (PIP), as DIFS points out that, “All qualified vehicles are eligible to receive a refund regardless of the PIP medical coverage level chosen on the policy.”
“What Do I Need to Do as a Policyholder?”
If you haven’t yet received your refund, it’s likely that it’s on its way, so the best thing to do is monitor your mailbox and bank account tied to your insurance policy. You may also choose to review the auto insurance policies of the cars you owned on October 31, 2021 and compare your coverage against the eligibility guidelines outlined on the DIFS website.
Finally, beware of scammers who will try to take advantage of these refunds to prey upon unsuspecting victims. As Michigan Attorney General Dana Nessel told Fox 2 News, "Unfortunately, these refunds will likely attract bad actors who will turn this surplus into a scam. Remember, these are automatic payments back into your account. No one will call, write or email you for information prior to disbursing the money."