State Representative Julie Alexander joined WKHM last week to talk about the hot topic in Lansing, auto insurance.
Specifically, Representative Alexander discussed the Catastrophic Claims Fund, which is about to see yet another fee increase added to the already high amount charged. “Our House has a select committee that has been studying this. Representative (Lana) Theis, now Senator Theis (R-D22, covering Brighton, Chelsea, and Howell), spent significant time a few years ago doing the same. We’ve had a vote in front of us, I was in favor of modifying the options and availability for our insurance rates, I’m on record for that.”
While Representative Alexander didn’t outright dismiss the need for the Governor’s call for an audit, she said that the time is now to engage lawmakers to do something about it. “We simply need legislation to change it”. This policy is something that is not negotiable when it comes to having coverage in the state of Michigan. “Everyone must have this coverage on every vehicle that they drive,” Alexander said.
The fund was established in 1978, at a nominal fee, which has since exploded. “It was established because insurance companies were finding it hard to purchase the reinsurance for Michigan’s unlimited and lifetime personal injury protection for catastrophic claims,” Alexander said. “So this additional policy component was put it place on all the existing plans and policies and it has skyrocketed. In the very near future, it’s going to go up to $220 per policy; but let’s go back to 1978 when this association was created, the fee was $3 per vehicle.” For comparison, $3 in 1978 is equal to $12.18 in 2019 dollars.
She also said that most of the fee goes toward saving for an issue that may never present itself. “$177 of that $220 is going toward future anticipated claims.”
