LANSING — After Michigan changed car insurance laws to give drivers the option to choose levels of injury coverage, the state’s has a surplus of mare than $5 billion in excess claims paid that could be getting back to drivers.

Governor Whitmer said Monday that the Michigan Catastrophic Claims Association (MCCA) should deliver refund checks to every Michigander with auto insurance.

This refund is possible in part because of the a bipartisan auto insurance reform signed into law by Whitmer in 2019.

“The over $5 billion surplus accumulated by the MCCA belongs to Michiganders and should be put in people’s pockets immediately with a refund check,” Whitmer said. “As we stay-laser focused on growing our economy and ushering in a new era of prosperity we need to use every resource we have to help people thrive. A refund check to working families will help us continue to put Michiganders first and drive down costs.”

The MCCA is a non-profit unincorporated association created by the Michigan Legislature in 1978, of which every insurance company that sells automobile or motorcycle coverage in Michigan is required to be a member.

The MCCA reimburses no-fault insurance companies for Personal Injury Protection (PIP) medical claims paid in excess of a set amount under policies of insurance providing unlimited lifetime coverage. Currently that amount is $600,000. That means that the insurance company pays the entire claim under policies providing unlimited lifetime coverage, but is reimbursed by the MCCA for medical costs over $600,000.

From the time the Legislature created the MCCA until July 2, 2020, Michigan’s unique no-fault insurance law required the owners and registrants of motor vehicles registered in Michigan to buy unlimited lifetime coverage for medical expenses resulting from motor vehicle accidents. Michigan no longer requires owners and registrants to buy unlimited lifetime coverage for medical expenses resulting from motor vehicle accidents, though that option remains available to them. 

Whitmer’s administration has claimed the state’s new insurance laws mean big savings for drivers. But critics point out that those lowered rates only come at the expense of lesser insurance pay outs for health care coverage in case of an injury due to an accident.

The new law also purports to increase consumer protections by banning companies from using non-driving factors to set rates like ZIP code, credit score, gender, marital status, occupation, educational attainment and homeownership.

Detroit and surrounding densely-populated cities like Dearborn and Hamtramck continue to see high rates. 

Earlier this summer, a new car insurance industry report said that though Michigan is no longer the most expensive state in the country to insure a car, it still remained in the top five most expensive insurance sates.

Penny Gusner, senior consumer analyst for Insure, had said that though insurance company practices may have changed, they have not totally eliminated discriminatory rating factors. For example, Michigan doesn’t allow the postal code to be used for rating car insurance now, but it does allow territories to be used.

The average annual premium for full car insurance coverage in Michigan is $2,309. A 2020 Insurify report showed residents in Detroit and Dearborn payed the highest rates. Bankrate says that in 2021, Detroit and Dearborn led the state in average annual premiums, at $5,046 and $4,083 respectively.