TIN:
SCHEDULE O
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
Supplemental Information to Form 990 or 990-EZ
Complete to provide information for responses to specific questions on
Form 990 or 990-EZ or to provide any additional information.
Attach to Form 990 or 990-EZ.
Go to www.irs.gov/Form990 for the latest information.
OMB No. 1545-0047
2018
Open to Public
Inspection
Inspection
Name of the organization
MICHIGAN CATASTROPHIC CLAIMS ASSOCIATION
Employer identification number
38-2227794
38-2227794
| Return Reference | Explanation |
|---|---|
| FORM 990, PART III, LINE 1 - ORGANIZATION'S MISSION | MICHIGAN CATASTROPHIC CLAIMS ASSOCIATION ("MCCA") WAS ESTABLISHED BY PUBLIC ACT 136 OF 1978, WHICH AMENDED THE NO-FAULT LAW BY ADDING SECTION 3104 EFFECTIVE JULY 1, 1978. THE LEGISLATURE CREATED MCCA BECAUSE SMALLER INSURANCE COMPANIES HAD DIFFICULTY OBTAINING REINSURANCE FOR MICHIGAN'S AUTOMOBILE NO-FAULT POLICIES, WHICH PROVIDED FOR UNLIMITED LIFETIME MEDICAL BENEFITS FOR PEOPLE WHO ARE CATASTROPHICALLY INJURED IN AUTO ACCIDENTS. THE MCCA IS AN UNINCORPORATED NON-PROFIT ASSOCIATION OF WHICH EVERY INSURER THAT SELLS AUTOMOBILE OR MOTORCYCLE COVERAGE IN MICHIGAN IS REQUIRED TO BE A MEMBER. THE MCCA IS FUNDED BY AN ANNUAL PREMIUM ASSESSMENT TO ITS MEMBER INSURANCE COMPANIES BASED ON THE NUMBER OF POLICIES COVERING AUTOMOBILES AND MOTORCYCLES WRITTEN IN MICHIGAN. THE MCCA IS REQUIRED TO ASSESS AN AMOUNT EACH YEAR THAT IS SUFFICIENT TO COVER THE LIFETIME CLAIMS OF ALL PERSONS CATASTROPHICALLY INJURED IN THAT YEAR AND IN ADDITION, MAY ADJUST FUTURE ASSESSMENTS FOR EXCESSES OR DEFICIENCIES IN PRIOR ASSESSMENTS. THESE ASSESSMENTS PROVIDE FUNDS FOR THE INDEMNIFICATION OF THOSE MEMBERS AGAINST ULTIMATE LOSS SUSTAINED UNDER STATUTORY REQUIRED PERSONAL PROTECTION INSURANCE IN EXCESS OF THE APPLICABLE AMOUNT SET FORTH IN SECTION 3104(2) OF THE MICHIGAN INSURANCE CODE. BEGINNING JULY 1, 2002, AS A RESULT OF THE ENACTMENT OF PUBLIC ACT 3 OF 2001, THE MEMBER RETENTION LEVEL INCREASED FROM $250,000 TO $300,000 AND THEN GRADUALLY INCREASED ON AN INCREMENTAL BASIS OVER A TEN YEAR PERIOD UNTIL A $500,000 LEVEL WAS REACHED ON JULY 1, 2011. THEREAFTER, BEGINNING JULY 1, 2013, THE RETENTION WILL BE INCREASED EACH ODD NUMBERED YEAR BY 6% OR THE CONSUMER PRICE INDEX, WHICHEVER IS LESS. THE MEMBER RETENTION LEVEL FOR THE PERIOD JULY 1, 2015 THROUGH JUNE 30, 2017 IS $545,000, AND THE MEMBER RETENTION LEVEL FOR THE PERIOD JULY 1, 2017 THROUGH JUNE 30, 2019 IS $555,000. EFFECTIVE JUNE 11, 2019, PUBLIC ACTS 21 AND 22 OF 2019, PROVIDED FOR REFORMS IN MICHIGANS NO-FAULT AUTO INSURANCE LAW. FOR AUTO INSURANCE POLICIES ISSUED OR RENEWED AFTER JULY 1, 2020, DRIVERS WILL HAVE THE CHOICE OF THE FOLLOWING NO-FAULT MEDICAL BENEFIT COVERAGE LEVELS: $50,000 (IF A DRIVER IS ENROLLED IN MEDICAID), $250,000, $500,000, OR UNLIMITED. DRIVERS WITH QUALIFYING HEALTH INSURANCE COVERAGE MAY CHOOSE TO OPT OUT OF PERSONAL INJURY PROTECTION (PIP) MEDICAL BENEFITS ALTOGETHER. UNDER THE NEW LAW, THE MCCA CONTINUES TO BE LIABLE FOR REIMBURSEMENT OF CATASTROPHIC INJURY BENEFITS PAYABLE UNDER POLICIES ISSUED OR RENEWED BEFORE JULY 2, 2020 AND FOR POLICIES AFTER JULY 1, 2020 WHERE DRIVERS MAINTAIN UNLIMITED NO-FAULT PIP MEDICAL BENEFITS. THE NEW LAW INCLUDES A MEDICARE-BASED FEE SCHEDULE THAT WILL GOVERN PAYMENTS TO MEDICAL PROVIDERS, INCLUDING DOCTORS, HOSPITALS, CLINICS AND REHABILITATION FACILITIES FOR TREATMENT RENDERED AFTER JULY 1, 2021. FOR PRODUCTS, SERVICES AND ACCOMMODATIONS PROVIDED AFTER JULY 1, 2021 FOR WHICH THERE IS NO MEDICARE AMOUNT PAYABLE, PAYMENTS WILL BE REDUCED TO 55% OF THE PROVIDERS CHARGE DESCRIPTION MASTER IN EFFECT ON JANUARY 1, 2019. IF THE PROVIDER DID NOT HAVE A CHARGE DESCRIPTION MASTER ON THAT DATE, PAYMENTS WILL BE REDUCED TO 55% OF THE AVERAGE AMOUNT THE PROVIDER CHARGED ON THAT DATE. THE PERCENTAGE DECREASES TO 54% ON JULY 1, 2022, AND 52.5% ON JULY 1, 2023. ALTHOUGH MOST OF THE COST CONTROLS IN THE NEW LAW DO NOT TAKE EFFECT UNTIL JULY 2021, ACTUARIAL STANDARDS REQUIRE THE INCLUSION OF THE EFFECTS OF THE NEW LAW IN RESERVE ESTIMATES, AS IT IS EXPECTED TO REDUCE FUTURE PAYMENTS, WHICH REDUCE THE NEEDED RESERVES AS OF JUNE 30, 2019. THE LIABILITIES FOR LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES AS OF JUNE 30, 2019 OF $20,009,127,000 REFLECT A REDUCTION OF $3,263,579,000 DUE TO THE IMPACT OF COST CONTROLS. |
| FORM 990, PART VI, LINE 6 - MEMBERS OR STOCKHOLDERS | THE ASSOCIATION IS A PRIVATE UNINCORPORATED NON-PROFIT ASSOCIATION OF WHICH EVERY INSURER THAT SELLS AUTOMOBILE OR MOTORCYCLE COVERAGE IN MICHIGAN IS REQUIRED TO BE A MEMBER. FORM 990, PART VI, LINE 7B - DECISIONS RESERVED TO MEMBERS OR STOCKHOLDERS CHANGES TO THE MCCA PLAN OF OPERATION REQUIRE APPROVAL OF THE STATE OF MICHIGAN DIRECTOR OF THE DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES AND A MAJORITY VOTE OF THE MEMBER COMPANIES. |
| FORM 990, PART VI, LINE 11B - PROCESS USED TO REVIEW THE FORM 990 | AN INDEPENDENT PAID PREPARER PREPARES FORM 990, WHICH IS THEN REVIEWED BY MANAGEMENT. UPON COMPLETION OF THE REVIEW PROCESS, AN ELECTRONIC COPY IS MAILED TO THE AUDIT COMMITTEE CHAIR, GENERAL COUNSEL AND TO THE CHAIR OF THE BOARD OF DIRECTORS. OTHER DIRECTORS MAY REQUEST A COPY OF THE FORM. |
| FORM 990, PART VI, LINE 12C - PROCESS TO MONITOR FOR CONFLICTS OF INTEREST | ALL EMPLOYEES, BOARD MEMBERS AND STANDING COMMITTEE MEMBERS ARE REQUIRED TO COMPLETE A CONFLICT OF INTEREST DISCLOSURE STATEMENT ANNUALLY. IN THE EVENT THAT A CONFLICT OF INTEREST ARISES, FOR A DIRECTOR, STANDING COMMITTEE MEMBER OR EMPLOYEE, THAT INDIVIDUAL IS REQUIRED TO PROMPTLY INFORM THE EXECUTIVE DIRECTOR OF THE MCCA. IN THE EVENT THAT AN ACTUAL OR POTENTIAL CONFLICT ARISES FOR THE EXECUTIVE DIRECTOR, THAT INDIVIDUAL IS REQUIRED TO PROMPTLY INFORM THE CHAIR OF THE BOARD OF DIRECTORS OF THE MCCA. ANY REPORTED CONFLICTS ARE REVIEWED BY THE EXECUTIVE DIRECTOR, THE CHAIR OF THE AUDIT COMMITTEE, AND THE CHAIR OF THE BOARD OF DIRECTORS, AND A RECORD IS KEPT OF EACH CONFLICT WHEN THE INTEREST BECOMES SUBJECT TO AND REQUIRES ACTION. ADDITIONALLY, ALL DIRECTORS ARE REQUIRED TO RECUSE THEMSELVES FROM ANY BOARD ACTION OR DECISION THAT INVOLVES THEIR COMPANY OR PERSONAL INTERESTS, INCLUDING NOT VOTING ON THE MATTER, NOT TAKING ACTION AND NOT USING PERSONAL INFLUENCE ON THE MATTER. |
| FORM 990, PART VI, LINES 15A & 15B - PROCESS FOR DETERMINING | COMPENSATION A HUMAN RESOURCES CONSULTANT IS RETAINED ON AN AS NEEDED BASIS TO VALIDATE THE MARKET SALARY RANGES FOR EACH POSITION. THE MCCA PERSONNEL COMMITTEE REVIEWS THE DATA AND MAKES A RECOMMENDATION OF ANY ADJUSTMENTS THAT THE FULL BOARD OF DIRECTORS DISCUSSES AND VOTES ON. IN ADDITION, ON AN ANNUAL BASIS, THE PERSONNEL COMMITTEE REVIEWS NATIONAL COMPARABILITY DATA REGARDING THE AVERAGE SALARY RANGE AND MERIT INCREASES AND MAKES A RECOMMENDATION THAT THE FULL BOARD OF DIRECTORS DISCUSSES AND VOTES ON. |
| FORM 990, PART VI, LINE 19 - DOCUMENTS AVAILABLE TO THE PUBLIC | THE MCCA'S FORM 990 AND CONFLICT OF INTEREST POLICY ARE AVAILABLE UPON REQUEST. THE MCCA'S GOVERNING DOCUMENTS (THE STATUTE THAT CREATED THE MCCA AND THE PLAN OF OPERATION) AND THE FINANCIAL STATEMENTS ARE AVAILABLE ON THE MCCA'S PUBLIC WEBSITE. FORM 990, PART IX, LINE 11B, 16, & 24A - EXPLANATION FOR NEGATIVE EXPENSES FOR LINES 11B AND 16, MCCA IS REFLECTING A NEGATIVE EXPENSE ON THESE EXPENSE LINES DUE TO THE CHANGE IN UNALLOCATED LOSS ADJUSTMENT EXPENSE RESERVES FROM FISCAL YEAR 2019 TO FISCAL YEAR 2020 IN WHICH THE DECREASE IN UNALLOCATED EXPENSE RESERVES WAS GREATER THAN THE AMOUNT PAID IN FISCAL YEAR 2020. FOR LINE 24a, MCCA IS REFLECTING THE IMPACT OF CHANGES TO THE MICHIGAN NO-FAULT LAW. (SEE PART III, LINE 1 MISSION, PARAGRAPH 2 ABOVE) |
| FORM 990, PART XI, LINE 9 - OTHER CHANGES IN NET ASSETS | OTHER REALIZED ADJUSTMENTS AS A RESULT OF ASSET IMPAIRMENT $(8,008,481) CHANGE IN UNRECOGNIZED PENSION LIABILITY $ (411,645) MISCELLANEOUS ITEMS (TAXES) $ (622,106) ------------ TOTAL OTHER CHANGES IN NET ASSETS $(9,042,232) |
| FORM 990, PART XII & PART IV, LINE 12 - FINANCIAL STATEMENTS AND REPORTING | THE ORGANIZATION DID NOT RECEIVE AN AUDITED FINANCIAL STATEMENT FOR THE YEAR FOR WHICH IT IS COMPLETING THIS RETURN THAT WAS PREPARED IN ACCORDANCE WITH GAAP. THE ORGANIZATION RECEIVED AN AUDITED FINANCIAL STATEMENT FOR THE YEAR FOR WHICH IT IS COMPLETING THIS RETURN THAT WAS PREPARED IN ACCORDANCE WITH STATUTORY ACCOUNTING PRACTICES AS PRESCRIBED OR PERMITTED BY THE STATE OF MICHIGAN'S DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES. PRESCRIBED STATUTORY ACCOUNTING PRACTICES INCLUDE THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS' STATEMENTS OF STATUTORY ACCOUNTING PRINCIPLES, AS WELL AS STATE LAWS, REGULATIONS AND GENERAL ADMINISTRATIVE RULES. PERMITTED STATUTORY ACCOUNTING PRACTICES ENCOMPASS ALL ACCOUNTING PRACTICES NOT SO PRESCRIBED. |
For Paperwork Reduction Act Notice, see the Instructions for Form 990 or 990-EZ.
Cat. No. 51056K
Schedule O (Form 990 or 990-EZ) 2018
Additional Data
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