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Insurance Coverage and Rating FAQ

What is the Michigan Catastrophic Claims Association recoupment fee that I may see on my auto policy?
What is the Michigan Automobile Insurance Placement Facility and how can it help me?
What is the Michigan Basic Property Insurance Association and how can it help me?
What is the Michigan Workers Compensation Placement Facility and how can it help me?
How can a business be excluded from having to purchase workers compensation coverage?
What agency do I contact if the workers compensation insurer is not paying my claim in a timely manner?
How do I obtain a workers' compensation policy for Wrap Up projects?
What do I do if I have a complaint against a bail bond writer?
What can I do about rate increases on my insurance coverage?
How can I confirm the approval of rates and final premium for coverage I am interested in purchasing?
 
Question What is the Michigan Catastrophic Claims Association recoupment fee that I may see on my auto policy?
Answer This Michigan Catastrophic Claims Association (MCCA) recoupment fee is an annual per car assessment that may have administrative expense fees added to it. In the past, some insurers have displayed this fee on their automobile insurance declarations page. The assessment that is the foundation of the recoupment fee is determined by the MCCA board of directors, which is made up of five representatives of automobile insurers who underwrite coverage in Michigan.

This non-profit non-governmental association was created by the state legislature in 1978 to cover automobile insurance personal injury protection (PIP) claims over a certain dollar threshold for each person injured by an automobile accident covered by a Michigan no-fault policy. An injured person submits his/her PIP claim to the responsible insurer who pays the claim and then seeks reimbursement from the MCCA for costs over the monetary threshold. Insurers should handle the payment of PIP claims so that insureds do not notice a difference in how the claim is paid prior to and after the threshold has been exceeded.

 
Question What is the Michigan Automobile Insurance Placement Facility and how can it help me?
Answer The Michigan Automobile Insurance Placement Facility (Facility) is a non-profit non-governmental association formed by the Legislature in 1969 to provide auto insurance to Michigan consumers who cannot obtain coverage from private insurers. It will accept most people who pay the premium that it charges; however Chapter 33 of the Michigan Code allows it to refuse certain applicants based on their risk background. A person who is eligible for coverage with private insurers can also obtain coverage with the Facility.

Its personal auto rates are an average of the top five personal auto writers in Michigan with various surcharges added up to 25% of the territorial premium, except in Detroit. Its commercial auto rates are not based on a statutory formula, so the Facility uses a firm that provides actuarial services to help determine the appropriate rates for this coverage. Because it insures a higher percentage of people who would be ineligible or more risky for private insurers, its rates for many consumers may be higher than rates for comparable coverage with a private insurer.

It uses private insurers as servicing carriers for its business. They use the Facility's eligibility and rating plan to underwrite Facility policies. However, they issue policy forms with the respective servicing carrier's name and logo. Thus, most policyholders would think coverage is underwritten by one of the top five Michigan insurers for personal auto (State Farm, AAA, Auto-Owners, or Citizens) or by Amerisure for commercial auto. If you need auto insurance and cannot find it from private insurers call the Facility at 734-464-1100 or click here.

 
Question What is the Michigan Basic Property Insurance Association and how can it help me?
Answer The Michigan Basic Property Insurance Association is a non-profit non-governmental association formed by the Legislature in 1968 to provide home insurance to Michigan consumers who cannot obtain coverage from private insurers. It will accept most people who pay the premium that it charges; however Chapter 29 of the Michigan Code allows it to refuse certain applicants based on their risk background. A person who is statutorily eligible for coverage with private insurers can also obtain coverage with the Michigan Basic.

Its HO-2 rates are an average of the top ten home insurers in Michigan. Its HO-3 rates and commercial property rates are not based on statutory formulas, so it uses a firm that provides actuarial services to help determine the appropriate rates for these coverages. Because it insures a higher percentage of people who would be ineligible or more risky for private insurers, its rates for many consumers may be higher than rates for comparable coverage with a private insurer.

It does not use private insurers as servicing carriers for its business. Its staff utilizes filed eligibility and rating plan rules to underwrite policies. However, it issues policy forms carrying its own name and logo. If you need home, dwelling, or renters insurance and cannot find it from private insurers call the Facility at 313-877-7400 or click here.

 
Question What is the Michigan Workers Compensation Placement Facility and how can it help me?
Answer The Michigan Workers Compensation Placement Facility is a non-profit non-governmental association formed by the Legislature in 1982 to provide workers compensation insurance to Michigan businesses that cannot obtain coverage from private insurers. Its coverage and rating parameters are based on Chapter 23 of the Michigan Code. A business that is eligible for coverage with private insurers can also obtain coverage with the Facility.

Its rates are not based on a statutory formula, so the facility uses a firm that provides actuarial services to help determine the appropriate rates for coverage. Because it insures a higher percentage of people who would be ineligible or more risky for private insurers, its rates for many consumers may be higher than rates for comparable coverage with a private insurer.

It uses private insurers as servicing carriers for its business. Each one use the Facility's eligibility and rating plan to underwrite Facility policies, but each issues the Facility policy forms containing its respective servicing carrier name and logo. Thus, most policyholders would think coverage is underwritten by one of the top Servicing carriers (Accident Fund, Liberty Mutual, etc.). If you need workers compensation insurance and cannot find it from private insurers you should call the Facility at 734-462-9600 or click here.

 
Question How can a business be excluded from having to purchase workers compensation coverage?
Answer The Michigan Workers' Compensation Disability Act contains the guidelines for which businesses must purchase a workers' compensation policy (Section 418.115). In some instances the Bureau of Workers' Compensation, a state agency, may allow a business to file form BWC 337 (Workers Compensation Exemption). Contact the Compliance & Employer Records Division at 517-322-1195 with questions regarding who is eligible for an exemption.
 
Question What agency do I contact if the workers compensation insurer is not paying my claim in a timely manner?
Answer The Bureau of Workers' Compensation, a state agency, helps injured employees obtain required coverage from insurers and employers. Call 517-322-1195 with questions regarding the dispute resolution process.
 
Question How do I obtain a workers' compensation policy for Wrap Up projects?
Answer Shop for coverage with different insurers to determine if they offer coverage for such projects in accordance with MCLA 418.621(3) and Administrative Rules R 408.42 through 42b. The Bureau of Workers' Compensation, a state agency, oversees the approval of workers compensation coverage for wrap up projects. Call 517-322-1195 for details.
 
Question What do I do if I have a complaint against a bail bond writer?
Answer File a complaint with our Consumer Assistance Section by calling 877-999-6442 or by utilizing our complaint form.

Also file a complaint with the judge or chief justice of the court to whom your case is assigned. Our agency will be able to investigate and take necessary action against bail bond writers who are under our regulatory jurisdiction pursuant to the Michigan Insurance Code, whereas the courts should be able to remove egregious violators from their list of acceptable bail bond writers and take other actions allowed pursuant to Michigan laws covering court operations.

 
Question What can I do about rate increases on my insurance coverage?
Answer

The Michigan Insurance Code allows each insurer to determine its own rate level for coverage based on loss and expense data, sound actuarial principles, and judgment. However, it does in some instances such as personal auto and home insurance impose restrictions on the criteria that can be used to determine rates for individuals. For example, if a criteria is not specifically identified in Section 500.2111 then it cannot be used to develop base rates, discounts, or surcharges except that any criteria meeting the requirements of Section 500.2110a could be used to develop a discount plan.

In addition, as long as there is competition in the market (numerous insurers writing coverage) the Code makes it almost impossible for us to consider the rates of an insurer excessive based on the difference between it and other insurers' rates. Currently, there are hundreds of competing insurers for the various types of coverage offered in Michigan. Though insurers are allowed this freedom from rate regulation, it is important to note that anti-collusion laws do not allow non-affiliated insurers (those who do not have the same owner) to discuss rate levels with one another to collectively determine the rate to be used in the market. In addition, consumers who are "eligible persons" pursuant to MCLA 500.2103 are provided access to personal auto and home insurance coverage from any insurer they choose via Sections 500.2117 and 2118. They cannot be denied these insurance coverages.

Within this competitive rating scenario, rates from insurer to insurer may vary by tens to hundreds of dollars for essentially the same coverage. Yet, market pressures force insurers to keep their rates at the lowest possible level in order to retain existing business and obtain new business, otherwise consumers will obtain coverage from other insurers who charge a lower total premium. Shop (compare quotes) with at least five to ten different insurers prior to purchasing new or renewal coverage.

 
Question How can I confirm the approval of rates and final premium for coverage I am interested in purchasing?
Answer

We make available the opportunity for consumers to schedule an appointment at our office with an appropriate regulation analyst to review the filings that have been submitted by insurers. Currently, over three quarters of the filings we receive are in paper form and we have no ability to convert these filings for website viewing. The other third are sent through an electronic system (SERFF) that will not allow viewing at any location other than our agency office (North Ottawa Tower 3rd Floor, Lansing MI, corner of Pine and Ottawa Streets).

We make available at our office a public information terminal from which SERFF filings can be viewed during a scheduled appointment time. Also, when we can specifically ascertain what a requester wants and that we have it on file we will mail paper copies at a cost of 25 cents per page plus postage and handling. This may require that you post a deposit with us before we mail materials to you. Contact us at 877-999-6442 to schedule an appointment and/or request copies.

Protecting consumers requires that this agency review the materials submitted by insurers to, as best we are able, determine whether they comply with Michigan law. The vast majority of consumers would not know what an insurer can or cannot do in relation to filed materials and underwriting and rating transactions because they would not be familiar with all the mandatory requirements and prohibited actions in Michigan law.

To help consumers better understand coverage, we have buyers guides for home and personal auto insurance and insurance brochures on our website at the link below that display sample rates (at the time the guide was published) for a large number of insurers to show consumers the large difference that an applicant would find from the lowest to the highest rates for essentially the same coverage. For example, using substantially similar characteristics the premium for Company A may be $390 every six months while the premium for Company B may be $2500.

In addition, our agency provides a complaint division that accepts consumer complaints and reviews them (where possible) to determine if insurers have acted appropriately or inappropriately. You can file a complaint or call 877-999-6442. After this process has run its course, consumers can take further action (if needed) by requesting a hearing against the insurer before an administrative law judge and appeal any decisions not in his/her favor to circuit court, appeals court, etc.

The type of information and processes described above help educate consumers and show them how to take action where they believe they have been wronged and not received an acceptable coverage or service from their insurer.

Final premiums are made from the rates assigned to many different rating characteristics. These characteristics will vary based on the type of insurance. In addition, insurers do not submit commercial insurance filings to OFIR when they have exempted the coverage pursuant to MCL 500.2236(8)(e)(ii), 500.2401(2)(d), and/or 500.2601(3)(f). Even if all rates could be posted, which they cannot at this time, it is no easy matter to go through an entire manual for any particular type of coverage and put all the characteristics together along with their rates.

Doing this manually (as inquiring consumers would be forced to do because we do not receive nor does Michigan law require insurers to provide computer formulas for assigning characteristics and calculating premiums using the associated rates) would take hours on end for the most astute person, especially given the fact that manuals from each company vary in their design and when and where they use characteristics and associated rates for determining final premium.

When insurers make filings they rarely submit entire programs. Usually, they file revised pieces of their manuals throughout the year in no certain order (one or two rules/rates out of a hundred, etc.). So, posting each filing would not give you all you need to develop a premium for comparison purposes. You would have to look at a variety of filings submitted over many previous years in order to put together all the rules and rates used by the company.

Also, rating characteristics like insurance credit score do not allow this agency or consumers to calculate their score and thus they would be unable to calculate final premium for a policy for insurance that use such a characteristic. The Commissioner has been on record as opposed to this rating characteristic for personal insurance (personal auto, home, etc.). She has also developed an administrative rule to remove the criteria from rating plans and has appealed a decision by a Michigan circuit court that allows insurers to continue to utilize this characteristic.

For all the reasons explained above, we do not have the capability to display coverage rates on our website, but do indeed provide opportunities for comparing rates for some coverage and complaint resolution as described above. We look forward to enhancing technology in the future to help us with our regulatory responsibilities, consumer protection, and information enhancement.

If you desire to review rule, rate, and form filings that have been submitted to us, please contact the Product Review Unit for property/casualty coverage and the Health Plans Division for life/health coverage at 877-999-6442. We will put you in contact with an analyst who can explain what we have available and send you requested materials (if we have it) or schedule an appointment for you to look at filed material, when necessary.

 

The answers provided are not meant to be a substitute for legal advice.