LANSING – In a move to increase transparency and accountability in the insurance industry and government, House Democrats today passed legislation that will shine a light on the way the state spends taxpayer dollars and force the Michigan Catastrophic Claims Association (MCCA) to answer to the public. The plan now heads to the Senate.
"Michigan residents deserve to know where their tax dollars are going," said State Representative Dan Scripps (D-Leland), who sponsored the plan to increase transparency in the state budget. "By opening state finances to public oversight, we can prevent taxpayer dollars from being needlessly wasted and allow our residents to hold government accountable."
Scripps' plan would create an easy-to-use, publicly accessible Web site that details state spending. The Web site would include state expenditures broken down by department, wages being paid to state employees, state contracts, the executive budget and annual reports. Under the terms of the plan, the site must be up and running by Oct. 1.
House Democrats also moved legislation that would force the MCCA to open its rate setting process for the catastrophic claims fund up to public scrutiny in order to protect ratepayers from dramatic rate increases.
"For far too long, the MCCA has worked out of the public eye, with its decisions affecting every driver in Michigan," said State Representative Kate Segal (D-Battle Creek). "We have to shine a light on the process of how the MCCA sets its assessment rate. Michigan residents who are struggling with rising costs deserve to know why their insurance rates are going up."
The House Democrats' plan requires the MCCA, an independent insurance fund that provides for the care of Michigan drivers who are catastrophically injured in an auto accident, to comply with the Open Meetings Act and the Freedom of Information Act. The plan would also allow for public visibility of the MCCA by appointing three members of the public to its Board of Directors, and require an annual audit.
"We're all paying for auto insurance, and the public has a right to know why the MCCA fee has increased so drastically over the past decade," said State Representative Barb Byrum (D-Onondaga), Chair of the House Insurance Committee. "The decisions of the MCCA impact the lives of every motorist in Michigan. This plan will increase transparency and accountability in this process."
This week, the MCCA raised its assessment by $20.31 a year, charges that are passed on to Michigan consumers. Since 2000, the board has raised its rates from $5.60 to $124.89, with no public oversight over its activities.
"Since 2000, the fee that every Michigan driver pays in their auto insurance rates has dramatically increased," said State Representative Lee Gonzales (D-Flint Township). "That's absolutely astonishing. We need to give the public a voice in this process and hold the insurance industry accountable."
Michigan is the only state in the nation that offers motorists unlimited personal injury protection. The MCCA serves to reimburse no-fault auto insurers for all benefits that exceed $400,000. The association spreads these costs among all Michigan motorists, yet is a private organization that deals exclusively with insurance companies and not the general public.
"By making sure that members of the public are on the MCCA Board – not insurance company executives – we can be sure that Michigan motorists are not being taken advantage of," said State Representative Richard LeBlanc (D-Westland). "We all have to pay into this fund, and drivers deserve a seat at the table when it's their money that is being spent. This plan is a step toward greater transparency and accountability for the insurance industry."