TIN:
SCHEDULE O
(Form 990)
Department of the Treasury
Internal Revenue Service
(Form 990)
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
2021
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 | 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, 2021, THROUGH JUNE 30, 2023, IS $600,000, AND THE MEMBER RETENTION LEVEL FOR THE PERIOD JULY 1, 2023, THROUGH JUNE 30, 2025, IS $635,000. EFFECTIVE JUNE 11, 2019, PUBLIC ACTS 21 AND 22 OF 2019, PROVIDED FOR REFORMS IN MICHIGAN'S 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, OR, IF THE PROVIDER DID NOT HAVE A CHARGE DESCRIPTION MASTER ON THAT DATE, 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, 2020. THE LIABILITIES FOR LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES AS OF JUNE 30, 2021, of $21,230,339,000 REFLECT A REDUCTION OF $4,396,465,000 DUE TO THE IMPACT OF COST CONTROLS. AS OF JUNE 30, 2021, THE MCCA'S ASSETS OF $27.290 BILLION EXCEEDED ITS THEN ESTIMATED LIABILITIES OF $22.254 BILLION, RESULTING IN AN ESTIMATED SURPLUS OF $5.036 BILLION. THUS, THE MCCA'S ASSETS EXCEEDED ITS ESTIMATED LIABILITIES BY APPROXIMATELY 22.63% AS OF JUNE 30, 2021. THE ESTIMATED SURPLUS RESULTED FROM REALIZED AND EXPECTED SAVINGS FROM REFORMS TO MICHIGAN's NO-FAULT INSURANCE LAW AND HIGHER THAN PROJECTED INVESTMENT RETURNS. IN NOVEMBER 2021, THE MCCA'S BOARD OF DIRECTORS UNANIMOUSLY DETERMINED THAT IT COULD FUND ALL ANTICIPATED LIABILITIES WHILE RETURNING APPROXIMATELY $3.000 BILLION OF ITS ESTIMATED SURPLUS TO ITS MEMBER INSURANCE COMPANIES TO REFUND TO POLICYHOLDERS. THE REMAINING SURPLUS BALANCE WAS RETAINED IN AN EFFORT TO ENSURE THAT THE MCCA CAN CONTINUE TO PROVIDE REIMBURSMENTS FOR PERSONAL PROTECTION INSURANCE BENEFITS IN THE EVENT OF UNFORESEEN CIRCUMSTANCES THAT MIGHT ARISE. BASED ON TOTAL APPLICABLE POLICIES IN-FORCE AS OF OCTOBER 31, 2021, THE MCCA DISTRIBUTED A LARGE PORTION OF ITS ESTIMATED SURPLUS TO ITS MEMBERS ON MARCH 9, 2022. MEMBERS WERE THEN RESPONSIBLE TO RETURN THOSE FUNDS TO POLICYHOLDERS ($400 PER VEHICLE AND $80 PER HISTORICAL VEHICLE) NO LATER THAN MAY 9, 2022. ON AUGUST 25, 2022, THE MICHIGAN COURT OF APPEALS DECISION IN ANDARY V USAA CASUALTY INSURANCE CO., COURT OF APPEALS DOCKET NO. 356487, HELD THAT THE FAMILY ATTENDANT CARE HOURLY LIMITS AND THE MEDICAL FEE SCHEDULE CREATED AS PART OF THE 2019 CHANGE TO MICHIGAN's NO-FAULT ACT CANNOT BE APPLIED TO LOSSES OCCURRING BEFORE JUNE 11, 2019. THIS INCREASED ESTIMATED LIABILITIES FOR LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES AS OF JUNE 30, 2022, BY $3.709 BILLION. THE COST CONTROLS FOR LOSSES OCCURRING JUNE 11, 2019, AND AFTER AND THE IMPACT OF ORDER OF PRIORITY CHANGES DECREASED ESTIMATED LIABILITIES FOR LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES AS OF JUNE 30, 2022, BY $0.995 BILLION. THE ESTIMATED LIABILITIES FOR LOSS AND LOSS ADJUSTMENT EXPENSE RESERVE AS OF JUNE 30, 2022, OF $24.646 BILLION REFLECT THESE CHANGES. ON SEPTEMBER 29, 2022, THE MICHIGAN SUPREME COURT DENIED A MOTION TO STAY THE ANDARY DECISION BUT AGREED TO HEAR THE CASE AND SCHEDULED ORAL ARGUMENTS IN MARCH 2023. AS OF JUNE 30, 2022, THE MCCA's ASSETS OF $21.855 BILLION WAS LESS THAN ITS THEN ESTIMATED LIABILITIES OF $25.530 BILLION, RESULTING IN AN ESTIMATED DEFICIT OF $3.675 BILLION. ON JULY 31, 2023, THE MICHIGAN SUPREME COURT ISSUED A DECISION THAT (1) UPHELD THE ANDARY DECISION THAT THE 2019 AMENDMENTS DO NOT APPLY TO CLAIMS ARISING UNDER POLICIES ISSUED BEFORE THE JUNE 19 AMENDMENTS (REVISED STATUTE DOES NOT APPLY RETROACTIVELY), AND (2) REVERSED THE COURT OF APPEALS DECISION TO REMAND THE CASE TO THE TRIAL COURT TO DETERMINE IF THE STATUTE IS CONSTITUTIONAL AS TO CLAIMS ARISING UNDER POLICIES ISSUED ON AND AFTER JUNE 11, 2019 (REVISED STATUTE APPLIES PROSPECTIVELY). THE ESTIMATED LIABILITIES FOR LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES AS OF JUNE 30, 2023, OF $23.231 BILLION REFLECT THE MICHIGAN SUPREME COURT DECISION. AS OF JUNE 30, 2023, THE MCCA's ASSETS OF $21.618 BILLION WAS LESS THAN ITS THEN ESTIMATED LIABILTIES OF $23.667 BILLION, RESULTING IN AN ESTIMATED DEFICIT OF $2.054 BILLION. |
| Form 990, Part VI, Line 6 Classes of 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 requiring approval by 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 Review of form 990 by governing body | 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 Conflict of interest policy | 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, Line 15a Process to establish compensation of top management official | 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 15b Process to establish compensation of other employees | 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 Required 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, Column (A) LINES 22, 24a & 24b | EXPLANATIONS FOR NEGATIVE EXPENSES FOR LINE 22, DEPRECIATION, AND LINES FOR LOSSES INCURRED & ALLOCATED LOSS ADJUSTMENT EXPENSES, MCCA IS REFLECTING NEGATIVE EXPENSES DUE TO THE CHANGE IN UNALLOCATED LOSS ADJUSTMENT EXPENSE RESERVES FROM FISCAL YEAR 2022 TO FISCAL YEAR 2023 IN WHICH THE DECREASE IN UNALLOCATED EXPENSE RESERVES WAS GREATER THAN THE AMOUNT PAID IN FISCAL YEAR 2023 |
| Form 990, Part XI, Line 9 Other changes in net assets or fund balances | OTHER REALIZED ADJUSTMENTS AS A RESULT OF ASSET IMPAIRMENT - -XXX-XX-XXXX; CHANGE IN UNRECOGNIZED PENSION LIABILITY - 409635; SURPLUS DISTRIBUTION TO MEMBERS - -22688717; |
| Form 990, Part XII, Line 2b PART XII AND PART IV, LINE 12 | 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) 2021
Additional Data
| Software ID: | 22016089 |
| Software Version: | 2022v5.0 |