The answer to my second question is easy: Money. Most people don’t even notice, but part of their auto insurance premium every year is a payment to Michigan Catastrophic Claims fund, or Cat Fund for short. This publicly financed fund was established in 1978 as part of the Michigan No-Fault insurance system. Since them the fund has been collecting every year, from every insured Michigan driver. We know that the fund currently holds about $17 billion (yes, billion with a B) but that is basically all we know about it. We only found out the amount accrued in the fund last winter during the road funding debate as state representatives sought a way around state law to rob the fund to finance a new road bill.
The Cat Fund has a Board of Directors that consists of five representatives from insurance companies, appointed by the Director of the Department of Insurance and Financial Services (DIFS) according to statute. The insurance companies appointed to serve on this board are among the top writers, by volume of business, of auto insurance in Michigan. These insurance executives have forcefully refused sharing their books, alleging that despite being a publicly funded entity they are exempted from the FOIA under a 1988 amendment to the state Insurance Code, which says “a record of an association or facility shall be exempt from disclosure,” and defines an association or facility to include “the catastrophic claims association.” (Detroit Free Press). Despite repeated assertions that the Cat fund is under-capitalized the accounting and actuarial assessments of the Cat Fund have never been provided to the public.
Following last winters release of the 17 billion figure per vehicle assessments were reduced by $36.00, the first rate reduction in a long time. (Michigan Radio)