IN RE CERTIFIED QUESTION

BOYLE, J.

The United States Court of Appeals for the Sixth Circuit has certified, pursuant to MCR 7.305(B), the following question to this Court:

We have accepted the certification,1 and now hold that the no-fault act does not require the Michigan Catastrophic Claims Association (CCA) to indemnify its member insurers for losses paid to insureds who are not considered residents of this state. We note, however, that in the context of this question as certified, we understand the term "resident" to refer not only to those insureds who actually live within this state and who must therefore purchase no-fault automobile insurance policies written in this state which provide the compulsory security requirements of MCL 500.3101(1); MSA 24.13101(1) for the owners or registrants of motor vehicles required to be registered in this state, but also to certain insureds who do not live within this state but who are nonetheless required to register, and thus insure, their vehicles in this state.

I

The CCA is an organization comprising all insurance companies who write insurance in this state. It was created by the Legislature in 1978 in response to concerns that Michigan's no-fault law provision for unlimited personal injury protection benefits placed too great a burden on insurers, particularly small insurers, in the event of "catastrophic" injury claims.2 Its primary purpose is to indemnify member insurers for losses sustained as a result of the payment of personal protection insurance benefits beyond the "catastrophic" level, which has been set at $250,000 for a single claimant. MCL 500.3104; MSA 24.13104 governs its operation.

In practice, the CCA acts as a kind of "reinsurer" for its member insurers. Initially, § 3104(1) requires membership in the CCA as a condition of authority to write insurance in this state for all insurers "engaged in writing insurance coverages which provide the security required by section 3101(1) within this state...."3 Membership in the CCA entitles the insurer to indemnification for certain losses under § 3104(2), which provides in full:

Like any insurer, the CCA charges each of its members a premium for the coverage it provides, which is based on the number of car years of insurance the member writes in Michigan.5

In this case, plaintiff Preferred Risk paid Michigan no-fault benefits in excess of $250,000 to an Illinois resident whom it had insured under a policy written in that state, but who was injured in an automobile accident in Michigan. Plaintiff's insured was a passenger in a car owned and insured by a Michigan resident.

Plaintiff's liability for such benefits is not contested here. The parties agree that § 3163(1) of the no-fault act required plaintiff, as an insurer authorized to write insurance in this state, to provide Michigan no-fault benefits to its insured in the event that he traveled to Michigan and was injured in an automobile accident.6 The parties also agree that § 3114(1) of the no-fault act, which requires that the insured first seek personal protection benefits from his own insurer, established plaintiff as the primary insurer in this case.

There is also no question that at the time of this claim plaintiff was a member insurer of the CCA. A member need not write all of its automobile liability insurance in this state, although some do, and while it also wrote insurance coverages in other states, plaintiff was clearly "engaged in writing insurance coverages which provide the security required by section 3101(1) within this state."7

Plaintiff eventually paid over $340,000 in personal injury protection benefits to the claimant in this case. It applied to the CCA for indemnification for the amount over $250,000, reasoning that while it had provided insurance coverage to an Illinois resident, for an Illinois-registered vehicle, it had paid Michigan no-fault benefits, which should be reimbursable under § 3104(2). The CCA denied plaintiff's application, however, claiming that under its plan of operation8 reimbursement was limited to losses paid out "under policies of insurance issued to residents of the State of Michigan...."9

Following the denial of its claim by the CCA, plaintiff instituted the present action in the United States District Court for the Eastern District of Michigan (Southern Division). Both parties moved for summary judgment. Plaintiff claimed that since it was a member insurer who had paid benefits under the Michigan no-fault system in excess of $250,000, the CCA was obligated under § 3104(2) to provide it with "indemnification for 100% of the amount of ultimate loss" it had sustained over that amount, regardless of the non-resident status of its insured, and it was required to accept such indemnification. The "resident only" requirement imposed by the CCA in its plan of operation, plaintiff argued, conflicted with the language and purpose of § 3104, and was beyond the CCA'S authority to impose.

The CCA argued in response that its plan of operation, including its limitation of indemnification to coverages written for residents of this state, was a valid interpretation of § 3104. Specifically, the CCA claimed that the Legislature had left it up to the association to determine, through its plan of operation, which particular policies were subject to indemnification under § 3104, and that its limitation of indemnification to policies written for residents was in any event consistent with § 3104(7)(d), which allows it to charge premiums only on the basis of insurance coverages written in this state.

The district court granted summary judgment in favor of Preferred Risk. The association appealed in the United States Court of Appeals for the Sixth Circuit which, after oral argument, granted its motion to certify the question to this Court. The question as certified asks whether the CCA must indemnify its member insurers for losses suffered over $250,000 under policies issued to insureds who are not "residents" of this state but who were injured here.

II

We believe that the CCA has properly interpreted the indemnification requirement of § 3104(2). For the reasons set forth below, we conclude that § 3104(2) requires indemnification only when the member insurer has paid benefits in excess of $250,000 under a policy which was written in this state to provide the security required by § 3101(1) of the no-fault act for the "owner or registrant of a motor vehicle required to be registered in this state...." The CCA, whose policy of restricting indemnification to "residents of this state" is the subject of this dispute, has acknowledged that for purposes of indemnification under § 3104(2) it considers all owners or registrants of motor vehicles required to be registered here to be "resident[s] of the State for purposes of the Act," regardless of whether they actually live within this state.10 With this acknowledgment in mind, we must conclude, in answering the question as certified, that the CCA is required to indemnify member insurers only for losses paid to "residents" of this state.

We wish, however, to emphasize that the analysis which follows in support of this conclusion is based solely upon our interpretation of the Catastrophic Claims Act itself. In particular, we emphasize that our analysis does not rest upon any finding by this Court that the association's plan of operation constitutes a "reasonable interpretation" of § 3104 in light of the Legislature's deference to its expertise in this area. In our opinion, the Legislature did not leave it up to the CCA to decide who will receive indemnification. As plaintiff aptly argues, the requirement in § 3104(2) that the CCA "shall provide" indemnification for losses in excess of $250,000 can hardly be called deferential. Thus, while we agree with the CCA'S interpretation of § 3104(2)'s indemnification requirement, we do so on the basis of the language of the statute itself.11

A

The question before the Court essentially asks on which coverages will the CCA be liable for indemnification in the event of a catastrophic loss. The answer to that question lies, of course, within § 3104(2), which again provides in relevant part:

Plaintiff contends that the phrase "personal protection insurance coverages" in § 3104(2) refers generally to any coverages under which it may be required to pay Michigan no-fault benefits, regardless of where or for whom written. According to plaintiff, once it had established that it was a member of the association and that it had sustained a loss under a "personal protection insurance coverage" in excess of $250,000, the language of § 3104(2) "clearly and unambiguously" obligated the CCA to reimburse it for that loss.

It is axiomatic, as plaintiff states, that this Court must enforce "clear and unambiguous" statutory provisions as written. Owendale-Gagetown School Dist v Bd of Ed, 413 Mich. 1, 8; 317 N.W.2d 529 (1982); Dussia v Monroe Co Employees Retirement System, 386 Mich. 244; 191 N.W.2d 307 (1971). This rule of statutory construction must be applied, however, with the understanding that "[w]hat is `plain and unambiguous' often depends on one's frame of reference." Shiffer v Gibraltar School Bd of Ed, 393 Mich. 190, 194; 224 N.W.2d 255 (1974). That frame of reference is supplied, in most cases, by the entire act of which the provision to be interpreted and applied is only a part. As this Court has often observed "[a] statute must be read in its entirety and the meaning given to one section arrived at after due consideration of other sections so as to produce, if possible, an harmonious and consistent enactment as a whole." State Treasurer v Wilson, 423 Mich. 138, 145; 377 N.W.2d 703 (1985). See also Williams v Secretary of State, 338 Mich. 202, 207; 60 N.W.2d 910 (1953).

The fundamental purpose of any rule of statutory construction, of course, is to assist the court in discovering and giving effect to the intent of the Legislature. It is thus equally axiomatic that "`the intention of the Legislature, when discovered, must prevail, any existing rule of construction to the contrary.'" Metropolitan Council No 23 v Oakland Co Prosecutor, 409 Mich. 299, 318-319; 294 N.W.2d 578 (1980), quoting Michigan Central R Co v Michigan, 148 Mich. 151, 156; 111 NW 735 (1907). As Justice WILLIAMS elaborated in Metropolitan Council No 23:

Ultimately, "`[t]he particular inquiry is not what is the abstract force of the words or what they may comprehend, but in what sense were they intended to be understood or what understanding do they convey as used in the particular act.'" People v Lynch, 410 Mich. 343, 354; 301 N.W.2d 796 (1981), quoting 2A Sands, Sutherland Statutory Construction (4th ed), § 46.07, p 110.

In our opinion, when § 3104 is read as a whole, and § 3104(2) is examined in the proper context of the entire section, it becomes clear that the reference to "personal protection insurance coverages" under which the CCA may be liable for indemnification in the event of a catastrophic loss is not simply a general reference to all insurance coverages under which an insurer might be required to pay Michigan no-fault benefits. Rather, it is a shorthand reference to the no-fault personal protection insurance coverages that are generally the subject of the act, i.e., those which were written in this state to provide the compulsory security requirements of § 3101(1) of the no-fault act for the "owner or registrant of a motor vehicle required to be registered in this state" — "residents," in the language of the CCA'S plan of operation.12 In this case, plaintiff did not pay benefits in excess of $250,000 under a policy issued pursuant to § 3101(1) to a "resident," but rather paid benefits to a nonresident pursuant to its certification under § 3163.

B

In reaching this conclusion, we note initially that the only other reference in § 3104 to "insurance coverages" is found in § 3104(1), which makes membership in the association mandatory for each insurer "engaged in writing insurance coverages which provide the security required by section 3101(1)." Section 3101(1), again, requires only the owner or registrant of a motor vehicle "required to be registered in this state" to maintain personal protection, property protection, and residual liability insurance on the vehicle.13 By its terms, § 3101(1) does not apply to vehicles that are not required to be registered in Michigan. See Parks v DAIIE, 426 Mich. 191; 393 N.W.2d 833 (1986).14

It is upon § 3104(7)(d), however, that we squarely rest our finding of a legislative intent to limit indemnification under § 3104(2). Section 3104(7)(d) provides the manner and method in which the CCA is to calculate and assess to member insurers the premiums which fund its operation. Under that section, the CCA first arrives at a figure which represents its expected losses and costs for the assessment period. This "total premium" is divided by the total earned car years of insurance "providing the security required by section 3101(1) ... written in this state" by all insurers to arrive at an average premium per car. The average premium is then multiplied by each member's total earned car years of insurance "providing the security required by section 3101(1) ... written in this state" to arrive at that member's total premium for the assessment period.15

In our view, the fact that the Legislature granted the CCA the authority to charge premiums only with respect to policies written in Michigan providing the security required by § 3101(1) for the owners or registrants of vehicles required to be registered in the state, compels the conclusion that it intended to similarly limit the CCA'S liability for indemnification under § 3104(2). Put simply, we can think of no reason why the Legislature would want to provide such indemnification coverage to insurers, even member insurers who do a significant amount of business within this state, absolutely free of charge or, perhaps more appropriately, at no cost to them.

The language of § 3104(7)(d) confirms initially the clear purpose behind the creation of the CCA to reduce, in this state's insurance market, both the inequity of competition resulting from the unpredictability of catastrophic claims and the inherent inability of insurance companies, both large and small, to effectively manage this particular kind of liability. Thus, it is important to realize that any benefits paid by an insurer such as plaintiff to its out-of-state insureds are paid by virtue of the certification filed pursuant to § 3163(1), under a policy actually written and sold in another state's insurance market, rather than by virtue of a policy providing the security required by § 3101(1) written and sold in this state's insurance market. We simply cannot believe that the Legislature could have intended to provide indemnification for losses under both kinds of coverage and yet deny the CCA the ability to charge premiums with respect to the former.16

We find unpersuasive plaintiff's proffered rationale that since § 3163(1) subjects the insurers of nonresidents (if they write coverages in Michigan) to liability under the Michigan no-fault system, including its open-ended personal protection benefits provisions, they likewise should be entitled to all of its protections. Clearly, as to those out-of-state insureds, such insurers have not paid for this particular protection. This conclusion is perhaps best illustrated by reference to another provision of § 3163.

Under § 3163(2), an insurer not otherwise authorized to write insurance coverages in this state may voluntarily file the written certification described in § 3163(1) similarly subjecting itself and its insureds to the Michigan no-fault system. Although such voluntary filing is perhaps not a frequent occurrence, neither is it unheard of. See, e.g., Kriko v Allstate Ins Co of Canada, 137 Mich.App. 528; 357 N.W.2d 882 (1984).17 An insurer who so files under § 3163(2) does not become a member of the CCA, since it is not engaged in writing any policies under § 3101(1). It is thus obviously not entitled to indemnification under § 3104(2).

As a practical matter, however, it would make little sense to provide such an insurer with the protection of § 3104, even though it has paid Michigan no-fault benefits, since the insurer who has paid benefits pursuant to § 3163(2) has not paid any kind of premium to the CCA for such protection. The same reasoning must certainly apply to the plaintiff insurer who is required to provide benefits under § 3163(1) because it is authorized to write policies in Michigan. As to its out-of-state insureds, whatever percentage of its business they make up, the plaintiff simply has not paid for the protection of § 3104.

Plaintiff's general assertion that its liability under § 3163 entitled it to "all of the rights and immunities under the Michigan no-fault law irrespective of" the nonresident status of its insured, including the right of catastrophic loss protection under § 3104, is simply unfounded. As defendant CCA points out, § 3163(3) states that the insurer and insured shall have the rights and immunities of "personal and property protection insureds." (Emphasis added.) Section 3104 is not intended to protect or benefit no-fault insureds. The rights and benefits it establishes flow only to insurers.

Moreover, even if we were to conclude that § 3163(3) generally provides insurers who file the proper certification with all the rights of an insurer who has written a policy pursuant to § 3101(1) — a question not before this Court — we would still be unable to find a right to indemnification in this case. It is § 3104 itself which limits the right to indemnification to insurers who have provided coverages pursuant to § 3101(1). As a specific and subsequently enacted provision § 3104 must control as against the more general § 3163(3). Thus, the "system" of which plaintiff contends it is a part as a result of its certification under § 3163(1) does not in fact establish plaintiff's right to indemnification.

We must remember that insurers such as plaintiff ran the risk of exposure to such catastrophic claims as a result of § 3163 long before the CCA was created. Plaintiff in this case did not gain additional exposure as a result of the creation of the CCA. Moreover, to the extent that the liability of the CCA is limited to policies of insurance written in this state for Michigan-registered vehicles, insurers such as plaintiff remain free to seek reinsurance elsewhere or act otherwise to limit that risk. Plaintiff's argument that it thought it was somehow "precluded" from seeking reinsurance elsewhere for its out-of-state insureds by the "shall accept" language of § 3104(2) is without merit. The association's plan of operation quite clearly explained that the indemnification was to be provided only for policies written for Michigan residents. Plaintiff was therefore not justified in believing that it was precluded from seeking, and accepting, other reinsurance with respect to its nonresident insureds.

Finally, our conclusion that the Legislature did not intend to confer such a substantial benefit upon such insurers is confirmed by our view that it did not intend to impose so substantial a burden upon those who would be ultimately liable for the cost of such coverage, that is, this state's no-fault insurance consumers, to whom any and all costs of such indemnification coverage inevitably would be passed. Under plaintiff's reading of the statute, these insureds would be required to cover not only the costs of the claims made by their fellow Michigan insureds, who, it must be remembered, have also actually contributed to the fund through passed-on premiums, but also the costs of the claims of insureds from other states, who have not paid into the fund in the same manner. Plaintiff's reading of the statute would thus undoubtedly have a great effect on the cost to consumers of buying insurance in Michigan. Quite obviously, if the CCA were required to take into account the possible claims of nonresidents in arriving at its total premium, the average premium per car, which, again, is passed on only to resident insureds, would necessarily be higher.18

In sum, unlike plaintiff, we see no inequity in treating an insurer differently depending upon whether it has paid benefits to its out-of-state insureds pursuant to its certification under § 3163 or pursuant to a policy of insurance written in this state for a vehicle registered here. While the language of § 3104(2) does state only that indemnification shall be provided where catastrophic losses are sustained under "personal protection insurance coverages," we believe that the Legislature clearly intended that phrase to refer only to such coverages as are written in this state for the owners and registrants of vehicles required to be registered here. Again, we are simply unable to conclude that the Legislature intended the CCA to be liable on policies of insurance for which it has not charged, and in fact cannot charge, its members premiums.

III

The United States Court of Appeals for the Sixth Circuit has asked this Court to consider whether the Michigan Catastrophic Claims Association's obligation under § 3104(2) of the no-fault act to indemnify member insurers for losses incurred over $250,000 for personal protection benefits applies where such benefits are paid to a nonresident pursuant to § 3163.

We answer that the CCA has correctly interpreted § 3104(2) to apply only to personal protection insurance coverages written for "residents" of this state, who, as that term is intended under the CCA'S plan of operation, include not only those insureds who actually live within the state, but also out-of-state residents who have purchased such coverages in this state as a result of the compulsory security requirements of § 3101(1).

RILEY, C.J., and BRICKLEY, CAVANAGH, ARCHER, and GRIFFIN, JJ., concurred with BOYLE, J.

LEVIN, J. (separate opinion).

I am in substantial agreement with the conclusion and the views stated in the majority opinion.

I write separately to indicate my continued adherence to the view expressed in In re Certified Question (Bankey v Storer Broadcasting Co), 432 Mich. 438, 458; 443 N.W.2d 112 (1989), that there is a substantial question whether the Court has jurisdiction to respond to a certified question.