SB-0001, As Passed House, May 24, 2019

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE SUBSTITUTE FOR

 

SENATE BILL NO. 1

 

 

 

 

 

 

 

 

 

 

 

      A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 150, 224, 1244, 2038, 2040, 2069, 2105, 2106,

 

2108, 2111, 2118, 2120, 2151, 3009, 3101, 3101a, 3104, 3107, 3109a,

 

3111, 3112, 3113, 3114, 3115, 3135, 3142, 3145, 3148, 3151, 3157,

 

3163, 3172, 3173a, 3174, 3175, and 3177 (MCL 500.150, 500.224,

 

500.1244, 500.2038, 500.2040, 500.2069, 500.2105, 500.2106,

 

500.2108, 500.2111, 500.2118, 500.2120, 500.2151, 500.3009,

 

500.3101, 500.3101a, 500.3104, 500.3107, 500.3109a, 500.3111,

 

500.3112, 500.3113, 500.3114, 500.3115, 500.3135, 500.3142,

 

500.3145, 500.3148, 500.3151, 500.3157, 500.3163, 500.3172,

 

500.3173a, 500.3174, 500.3175, and 500.3177), section 150 as

 

amended by 1992 PA 182, section 224 as amended by 2007 PA 187,

 

section 1244 as amended by 2001 PA 228, section 2069 as amended by

 

1989 PA 306, section 2108 as amended by 2015 PA 141, section 2111

 

as amended by 2012 PA 441, sections 2118 and 2120 as amended by

 

2007 PA 35, section 2151 as added by 2012 PA 165, sections 3009 and

 

3113 as amended by 2016 PA 346, section 3101 as amended by 2017 PA

 

140, section 3101a as amended by 2018 PA 510, section 3104 as

 

amended by 2002 PA 662, section 3107 as amended by 2012 PA 542,

 

section 3109a as amended by 2012 PA 454, section 3114 as amended by

 

2016 PA 347, section 3135 as amended by 2012 PA 158, section 3163

 

as amended by 2002 PA 697, sections 3172, 3173a, 3174, and 3175 as

 

amended by 2012 PA 204, and section 3177 as amended by 1984 PA 426,

 

and by adding sections 261, 271, 2013a, 2111f, 2116b, 2162, 3107c,

 

3107d, 3107e, 3157a, and 3157b and chapters 31A and 63.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

 1        Sec. 150. (1) Any person who violates any provision of this

 

 2  act for which a specific penalty is not provided under any other

 

 3  provision of this act or of other laws applicable to the violation

 

 4  shall must be afforded an opportunity for a hearing before the

 

 5  commissioner pursuant to director under the administrative

 

 6  procedures act of 1969, Act No. 306 of the Public Acts of 1969,

 

 7  being sections 1969 PA 306, MCL 24.201 to 24.328. of the Michigan

 

 8  Compiled Laws. If the commissioner director finds that a violation

 

 9  has occurred, the commissioner director shall reduce the findings

 

10  and decision to writing and shall issue and cause to be served upon

 

11  on the person charged with the violation a copy of the findings and

 

12  an order requiring the person to cease and desist from the

 

13  violation. In addition, the commissioner director may order any of

 

14  the following:

 

 1        (a) Payment of a civil fine of not more than $500.00 $1,000.00

 

 2  for each violation. However, if the person knew or reasonably

 

 3  should have known that he or she was in violation of this act, the

 

 4  commissioner director may order the payment of a civil fine of not

 

 5  more than $2,500.00 $5,000.00 for each violation. With respect to

 

 6  filings made under chapters 21, 22, 23, 24, and 26, "violation"

 

 7  means a filing not in compliance with the provisions of those

 

 8  chapters and does not include an action with respect to an

 

 9  individual policy based upon on a noncomplying filing. An order of

 

10  the commissioner director under this subdivision shall must not

 

11  require the payment of civil fines exceeding $25,000.00.

 

12  $50,000.00. A fine collected under this subdivision shall must be

 

13  turned over to the state treasurer and credited to the general

 

14  fund.

 

15        (b) The suspension, limitation, or revocation of the person's

 

16  license or certificate of authority.

 

17        (2) After notice and opportunity for hearing, the commissioner

 

18  director may by order reopen and alter, modify, or set aside, in

 

19  whole or in part, an order issued under this section if, in the

 

20  commissioner's director's opinion, conditions of fact or law have

 

21  changed to require that action or the public interest requires that

 

22  action.

 

23        (3) If a person knowingly violates a cease and desist order

 

24  under this section and has been given notice and an opportunity for

 

25  a hearing held pursuant to Act No. 306 of the Public Acts under the

 

26  administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

27  24.328, the commissioner director may order a civil fine of

 1  $10,000.00 $20,000.00 for each violation, or a suspension,

 

 2  limitation, or revocation of a the person's license, or both. A

 

 3  fine collected under this subsection shall must be turned over to

 

 4  the state treasurer and credited to the general fund.

 

 5        (4) The commissioner director may apply to the Ingham county

 

 6  circuit court of claims for an order of the court enjoining a

 

 7  violation of this act.

 

 8        Sec. 224. (1) All actual and necessary expenses incurred in

 

 9  connection with the examination or other investigation of an

 

10  insurer or other person regulated under the commissioner's

 

11  director's authority shall must be certified by the commissioner,

 

12  director, together with a statement of the work performed including

 

13  the number of days spent by the commissioner director and each of

 

14  the commissioner's director's deputies, assistants, employees, and

 

15  others acting under the commissioner's director's authority. If

 

16  correct, the expenses shall must be paid to the persons by whom

 

17  they were incurred, upon on the warrant of the state treasurer

 

18  payable from appropriations made by the legislature for this

 

19  purpose.

 

20        (2) Except as otherwise provided in subsection (4), the

 

21  commissioner director shall prepare and present to the insurer or

 

22  other person examined or investigated a statement of the expenses

 

23  and reasonable cost incurred for each person engaged upon on the

 

24  examination or investigation, including amounts necessary to cover

 

25  the pay and allowances granted to the persons by the Michigan civil

 

26  service commission, and the administration and supervisory expense

 

27  including an amount necessary to cover fringe benefits in

 1  conjunction with the examination or investigation. Except as

 

 2  otherwise provided in subsection (4), the insurer or other person,

 

 3  upon on receiving the statement, shall pay to the commissioner

 

 4  director the stated amount. The commissioner director shall deposit

 

 5  the funds money with the state treasurer as provided in section

 

 6  225.

 

 7        (3) The commissioner director may employ attorneys, actuaries,

 

 8  accountants, investment advisers, and other expert personnel not

 

 9  otherwise employees of this state reasonably necessary to assist in

 

10  the conduct of the examination or investigation or proceeding with

 

11  respect to an insurer or other person regulated under the

 

12  commissioner's director's authority at the insurer's or other

 

13  person's expense except as otherwise provided in subsection (4).

 

14  Except as otherwise provided in subsection (4), upon on

 

15  certification by the commissioner director of the reasonable

 

16  expenses incurred under this section, the insurer or other person

 

17  examined or investigated shall pay those expenses directly to the

 

18  person or firm rendering assistance to the commissioner. director.

 

19  Expenses paid directly to such person or firm and the regulatory

 

20  fees imposed by this section shall be are examination expenses

 

21  under section 22e of the former single business tax act, 1975 PA

 

22  228, or under section 239(1) of the Michigan business tax act, 2007

 

23  PA 36, MCL 208.1239.

 

24        (4) An insurer is subject to a regulatory fee instead of the

 

25  costs and expenses provided for in subsections (2) and (3). By June

 

26  30 of each year or within 30 days after the enactment into law of

 

27  any appropriation for the insurance bureau's department's

 1  operation, the commissioner director shall impose upon on all

 

 2  insurers authorized to do business in this state a regulatory fee

 

 3  calculated as follows:

 

 4        (a) As used in this subsection:

 

 5        (i) "A" means total annuity considerations written in this

 

 6  state in the immediately preceding year.

 

 7        (ii) "B" means base assessment rate. The base assessment rate

 

 8  shall must not exceed .00038 and shall must be a fraction, the

 

 9  numerator of which is the total regulatory fee and the denominator

 

10  of which is the total amount of direct underwritten premiums

 

11  written in this state by all insurers for the immediately preceding

 

12  calendar year, as reported to the commissioner director on the

 

13  insurer's annual statements filed with the commissioner.director.

 

14        (iii) "I" means all direct underwritten premiums other than

 

15  life insurance premiums and annuity considerations written in this

 

16  state in the immediately preceding year by all insurers.

 

17        (iv) "L" means all direct underwritten life insurance premiums

 

18  written in this state in the immediately preceding year by all life

 

19  insurers.

 

20        (v) Total regulatory fee shall must not exceed 80% of the

 

21  gross appropriations for the insurance bureau's department's

 

22  operation for a fiscal year and shall must be the difference

 

23  between the gross appropriations for the insurance bureau's

 

24  department's operation for that current fiscal year and any

 

25  restricted revenues, other than the regulatory fee itself, as

 

26  identified in the gross appropriation for the insurance bureau's

 

27  department's operation.

 1        (vi) Direct premiums written in this state do not include any

 

 2  amounts that represent claims payments that are made on behalf of,

 

 3  or administrative fees that are paid in connection with, any

 

 4  administrative service contract, cost-plus arrangement, or any

 

 5  other noninsured or self-insured business.

 

 6        (b) Two actual assessment rates shall must be calculated so as

 

 7  to distribute 75% of the burden of the regulatory fee shortfall

 

 8  created by the exclusion of annuity considerations from the

 

 9  assessment base to life insurance and 25% to all other insurance.

 

10  The 2 actual assessment rates shall must be determined as follows:

 

 

11		(i)	L x B + .75 x B x A = assessment rate for life
12			L             insurance.
13		(ii)	I x B + .25 x B x A = assessment rate for insurance
14			I             other than life insurance.

 

 

15        (c) Each insurer's regulatory fee shall must be a minimum fee

 

16  of $250.00 and shall must be determined by multiplying the actual

 

17  assessment rate by the assessment base of that insurer as

 

18  determined by the commissioner director from the insurer's annual

 

19  statement for the immediately preceding calendar year filed with

 

20  the commissioner.director.

 

21        (5) Not less than 67% 55% of the revenue derived from the

 

22  regulatory fee under subsection (4) shall may be used for the

 

23  regulation of financial conduct of persons regulated under the

 

24  commissioner's director's authority and for the regulation of

 

25  persons regulated under the commissioner's director's authority

 

26  engaged in the business of health care and health insurance in this

 

27  state.

 1        (6) The amount, if any, by which amounts credited to the

 

 2  commissioner pursuant to director under section 225 exceed actual

 

 3  expenditures pursuant to under appropriations for the insurance

 

 4  bureau's department's operation for a fiscal year shall must be

 

 5  credited toward the appropriation for the insurance bureau

 

 6  department in the next fiscal year.

 

 7        (7) All money paid into the state treasury by an insurer under

 

 8  this section shall must be credited as provided under section 225.

 

 9        (8) A An insurer shall not treat a regulatory fee under this

 

10  section shall not be treated by an insurer as a levy or excise upon

 

11  on premium but as a regulatory burden that is apportioned in

 

12  relation to insurance activity in this state. and A regulatory fee

 

13  under this section reflects the insurance regulatory burden on this

 

14  state as a result of this insurance activity. A foreign or alien

 

15  insurer authorized to do business in this state may consider the

 

16  liability required under this section as a burden imposed by this

 

17  state in the calculation of the insurer's liability required under

 

18  section 476a.

 

19        (9) An insurer may file with the commissioner director a

 

20  protest to the regulatory fee imposed not later than 15 days after

 

21  receipt of the regulatory fee. The commissioner director shall

 

22  review the grounds for the protest and shall hold a conference with

 

23  the insurer at the insurer's request. The commissioner director

 

24  shall transmit his or her findings to the insurer with a

 

25  restatement of the regulatory fee based upon on the findings.

 

26  Statements of regulatory fees to which protests have not been made

 

27  and restatements of regulatory fees are due and shall must be paid

 1  not later than 30 days after their receipt. Regulatory fees that

 

 2  are not paid when due bear interest on the unpaid fee, which shall

 

 3  must be calculated at 6-month intervals from the date the fee was

 

 4  due at a rate of interest equal to 1% plus the average interest

 

 5  rate paid at auctions of 5-year United States treasury notes during

 

 6  the 6 months immediately preceding July 1 and January 1, as

 

 7  certified by the state treasurer, and compounded annually, until

 

 8  the assessment is paid in full. An insurer who fails to pay its

 

 9  regulatory fee within the prescribed time limits may have its

 

10  certificate of authority or license suspended, limited, or revoked

 

11  as the commissioner director considers warranted until the

 

12  regulatory fee is paid. If the commissioner director determines

 

13  that a regulatory fee or a part of a regulatory fee paid by an

 

14  insurer is in excess of the amount legally due and payable, the

 

15  amount of the excess shall must be refunded or, at the insurer's

 

16  option, be applied as a credit against the regulatory fee for the

 

17  next fiscal year. An overpayment of $100.00 or less shall must be

 

18  applied as a credit against the insurer's regulatory fee for the

 

19  next fiscal year unless the insurer had a $100.00 or less

 

20  overpayment in the immediately preceding fiscal year. If the

 

21  insurer had a $100.00 or less overpayment in the immediately

 

22  preceding fiscal year, at the insurer's option, the current fiscal

 

23  year overpayment of $100.00 or less shall must be refunded.

 

24        (10) Any amounts stated and presented to or certified,

 

25  assessed, or imposed upon on an insurer as provided in subsections

 

26  (2), (3), and (4) that are unpaid as of the date that the insurer

 

27  is subjected to a delinquency proceeding pursuant to under chapter

 1  81 shall be are regarded as an expense of administering the

 

 2  delinquency proceeding and shall be are payable as such from the

 

 3  general assets of the insurer.

 

 4        (11) In addition to the regulatory fee provided in subsection

 

 5  (4), each insurer that locates records or personnel knowledgeable

 

 6  about those records outside this state pursuant to under section

 

 7  476a(3) or section 5256 shall reimburse the insurance bureau

 

 8  department for expenses and reasonable costs incurred by the

 

 9  insurance bureau department as a result of travel and other costs

 

10  related to examinations or investigations of those records or

 

11  personnel. The reimbursement shall must not include any costs that

 

12  the insurance bureau department would have incurred if the

 

13  examination had taken place in this state.

 

14        (12) As used in this section:

 

15        (a) "Annuity considerations" means receipts on the sale of

 

16  annuities as used in section 22a of the former single business tax

 

17  act, 1975 PA 228, or in section 235 of the Michigan business tax

 

18  act, 2007 PA 36, MCL 208.1235.

 

19        (b) "Insurer" means an insurer authorized to do business in

 

20  this state and includes nonprofit health care corporations, dental

 

21  care corporations, and health maintenance organizations.

 

22        Sec. 261. (1) The department shall maintain on its internet

 

23  website a page that does all of the following:

 

24        (a) Advises that the department may be able to assist a person

 

25  who believes that an automobile insurer is not paying benefits, not

 

26  making timely payments, or otherwise not performing as it is

 

27  obligated to do under an insurance policy.

 1        (b) Advises the person of selected important rights that the

 

 2  person has under chapter 20 that specifically relate to automobile

 

 3  insurers and the payment of benefits by automobile insurers.

 

 4        (c) Allows the person to submit an explanation of the facts of

 

 5  the person's problems with the automobile insurer.

 

 6        (d) Allows the person to submit electronically, or instructs

 

 7  the person how to provide paper copies of, any documentation to

 

 8  support the facts submitted under subdivision (c).

 

 9        (e) Explains to the person the steps that the department will

 

10  take and that may be taken after information is submitted under

 

11  this section.

 

12        (2) The department shall maintain on its internet website a

 

13  page that advises consumers about the changes to automobile

 

14  insurance in this state that were made by the amendatory act that

 

15  added this section, including, among any other information that the

 

16  director determines to be important, ways to shop for insurance.

 

17        (3) The department shall maintain on its internet website a

 

18  page or pages that allow a person to report fraud and unfair

 

19  settlement and claims practices.

 

20        Sec. 271. By December 31 of 2022 and every year afterward

 

21  through 2030, the department shall review the effect of changes

 

22  made to section 3157 by the amendatory act that added this section

 

23  and provide a report to the legislature on the department's

 

24  findings.

 

25        Sec. 1244. (1) If the commissioner director finds that a

 

26  person has violated this chapter, after an opportunity for a

 

27  hearing pursuant to under the administrative procedures act of

 1  1969, 1969 PA 306, MCL 24.201 to 24.328, the commissioner director

 

 2  shall reduce the findings and decision to writing and shall issue

 

 3  and cause to be served upon on the person charged with the

 

 4  violation a copy of the findings and an order requiring the person

 

 5  to cease and desist from the violation. In addition, the

 

 6  commissioner director may order any of the following:

 

 7        (a) Payment of a civil fine of not more than $500.00 $1,000.00

 

 8  for each violation. However, if the person knew or reasonably

 

 9  should have known that he or she was in violation of this chapter,

 

10  the commissioner director may order the payment of a civil fine of

 

11  not more than $2,500.00 $5,000.00 for each violation. An order of

 

12  the commissioner director under this subsection shall must not

 

13  require the payment of civil fines exceeding $25,000.00.

 

14  $50,000.00. A fine collected under this subdivision shall must be

 

15  turned over to the state treasurer and credited to the general fund

 

16  of the this state.

 

17        (b) A refund of any overcharges.

 

18        (c) That restitution be made to the insured or other claimant

 

19  to cover incurred losses, damages, or other harm attributable to

 

20  the acts of the person found to be in violation of this chapter.

 

21        (d) The suspension or revocation of the person's license.

 

22        (2) The commissioner director may by order, after notice and

 

23  opportunity for hearing, reopen and alter, modify, or set aside, in

 

24  whole or in part, an order issued under this section, if in the

 

25  opinion of the commissioner director conditions of fact or of law

 

26  have changed to require that action, or if the public interest

 

27  requires that action.

Senate Bill No. 1 as amended May 24, 2019

 1        (3) If a person knowingly violates a cease and desist order

 

 2  under this chapter and has been given notice and an opportunity for

 

 3  a hearing held pursuant to under the administrative procedures act

 

 4  of 1969, 1969 PA 306, MCL 24.201 to 24.328, the commissioner

 

 5  director may order a civil fine of not more than $10,000.00

 

 6  $20,000.00 for each violation, or a suspension or revocation of the

 

 7  person's license, or both. An order issued by the commissioner

 

 8  pursuant to director under this subsection shall must not require

 

 9  the payment of civil fines exceeding $50,000.00. $100,000.00. A

 

10  fine collected under this subsection shall must be turned over to

 

11  the state treasurer and credited to the general fund of the this

 

12  state.

 

13        (4) The commissioner director may apply to the [circuit court

 

14  of Ingham county       court of claims] for an order of the court

 enjoining a

 

15  violation of this chapter.

 

16        Sec. 2013a. (1) The failure of an insurer to materially comply

 

17  with section 3107e is an unfair method of competition and an unfair

 

18  or deceptive act or practice in the business of insurance.

 

19        (2) This section does not affect any other right of a person

 

20  under this chapter.

 

21        Sec. 2038. (1) If, after opportunity for a hearing held

 

22  pursuant to Act No. 306 of the Public Acts of under the

 

23  administrative procedures act of 1969, as amended, 1969 PA 306, MCL

 

24  24.201 to 24.328, the commissioner director determines that the

 

25  person complained of has engaged in methods of competition or

 

26  unfair or deceptive acts or practices prohibited by sections 2001

 

27  to 2050, the commissioner director shall reduce his or her findings

 1  and decision to writing and shall issue and cause to be served upon

 

 2  on the person charged with the violation a copy of the findings and

 

 3  an order requiring the person to cease and desist from engaging in

 

 4  that method of competition, act, or practice. and the commissioner

 

 5  The director may also order any of the following:

 

 6        (a) Payment of a monetary penalty of not more than $500.00

 

 7  $1,000.00 for each violation but not to exceed an aggregate penalty

 

 8  of $5,000.00, $10,000.00, unless the person knew or reasonably

 

 9  should have known he was in violation of this chapter, in which

 

10  case the penalty shall must not be more than $2,500.00 $5,000.00

 

11  for each violation and shall must not exceed an aggregate penalty

 

12  of $25,000.00 $50,000.00 for all violations committed in a 6-month

 

13  period.

 

14        (b) Suspension or revocation of the person's license or

 

15  certificate of authority if the person knowingly and persistently

 

16  violated a provision of this chapter.

 

17        (c) Refund of any overcharges.

 

18        (2) The filing of a petition for review does not stay

 

19  enforcement of action pursuant to under this section, but the

 

20  commissioner director may grant, or the appropriate court may

 

21  order, a stay upon on appropriate terms.

 

22        (3) Until the expiration of If a petition for review has not

 

23  been filed within the time allowed under section 244, for filing a

 

24  petition for review if a petition has not been duly filed within

 

25  that time until the time for filing the petition expires or, if a

 

26  petition for review has been filed within that time, then until the

 

27  transcript of the record in the proceeding has been filed in the

 1  circuit court, as hereinafter provided in this chapter, the

 

 2  commissioner, upon director, on notice and in a manner as he shall

 

 3  deem or she considers proper, may modify or set aside in whole or

 

 4  in part an order issued by him under this section.

 

 5        (4) After the expiration of the time allowed for filing a

 

 6  petition for review, if a petition has not been duly filed within

 

 7  that time, the commissioner director may at any time, by order,

 

 8  after notice and opportunity for hearing, reopen and alter, modify,

 

 9  or set aside, in whole or in part, an order issued by him under

 

10  this section, when if in his the director's opinion conditions of

 

11  fact or of law have so changed as to require that action or if

 

12  required by the public interest. shall so require.

 

13        Sec. 2040. (1) A person who violates a cease and desist order

 

14  of the commissioner director under this chapter while the order is

 

15  in effect, after notice and an opportunity for a hearing and upon

 

16  on order of the commissioner, director, may be subject to any of

 

17  the following:

 

18        (a) A monetary penalty of not more than $10,000.00 $20,000.00

 

19  for each violation.

 

20        (b) Suspension or revocation of the person's license or

 

21  certificate of authority.

 

22        (2) The filing of a petition for review does not stay

 

23  enforcement pursuant to under this section, but the commissioner

 

24  director may grant, or the appropriate court may order, a stay upon

 

25  on appropriate terms.

 

26        (3) A cease and desist order issued by the commissioner

 

27  pursuant to director under section 2043 shall must not contain

 1  fines or other penalties applicable to acts or omissions occurring

 

 2  prior to that occur before the date of the cease and desist order.

 

 3        Sec. 2069. Any An insurer, agent, solicitor, or any other

 

 4  person , firm, association, or corporation, violating any of the

 

 5  provisions of sections that violates section 2064 and or 2066 shall

 

 6  be is guilty of a misdemeanor. Upon On conviction of violating

 

 7  section 2066, the offender shall must be sentenced to pay a fine of

 

 8  not more than $100.00 for each violation, or in the discretion of

 

 9  the court, to imprisonment in the county jail of the county in

 

10  which the offense is committed. Upon On conviction of violating

 

11  section 2064, the offender shall must be sentenced to pay a fine of

 

12  not more than $1,000.00 $2,000.00 for each violation, or in the

 

13  discretion of the court, to imprisonment in the county jail of the

 

14  county in which the offense is committed.

 

15        Sec. 2105. (1) No A policy of automobile insurance or home

 

16  insurance shall must not be offered, bound, made, issued, delivered

 

17  or renewed in this state on and after January 1, 1981, except in

 

18  conformity with unless the policy conforms to this chapter. This

 

19  chapter shall not apply to policies of automobile insurance or home

 

20  insurance offered, bound, made, issued, delivered or renewed in

 

21  this state before January 1, 1981.

 

22        (2) This Except as otherwise expressly provided in subsection

 

23  (4) and this chapter, this chapter shall does not apply to

 

24  insurance written on a group, franchise, blanket policy, or similar

 

25  basis which that offers home insurance or automobile insurance to

 

26  all members of the group, franchise plan, or blanket coverage who

 

27  are eligible persons.

 1        (3) For purposes of this section, a group plan includes a

 

 2  franchise plan, and, except as provided in subsection (4), is

 

 3  exempt from this chapter if the group meets all of the following

 

 4  criteria:

 

 5        (a) Individuals in the group share a common enterprise or an

 

 6  economic or social affinity or relationship.

 

 7        (b) The group was not created for the purposes of obtaining

 

 8  insurance.

 

 9        (c) Membership in the group is not conditioned on the purchase

 

10  of insurance.

 

11        (d) The individual members of the group can be specifically

 

12  identified.

 

13        (e) Any other criteria as prescribed by a rule promulgated by

 

14  the director under the administrative procedures act of 1969, 1969

 

15  PA 306, MCL 24.201 to 24.328.

 

16        (4) An insurer, including, but not limited to, an insurer that

 

17  writes insurance as described in subsection (2), shall not

 

18  establish or maintain rates or rating classifications for

 

19  automobile insurance based on a factor that is not allowed, or that

 

20  is prohibited, under section 2111. This subsection does not

 

21  prohibit a group discount offered to a group based on the losses or

 

22  expenses, or both, of the group but does prohibit group membership

 

23  based on home ownership or postal zone.

 

24        (5) The amendments to this chapter made by the amendatory act

 

25  that added this subsection apply to an insurer exempted from any of

 

26  the requirements of this chapter under section 2129.

 

27        (6) The amendments to this chapter made by the amendatory act

 1  that added this subsection apply beginning July 1, 2020.

 

 2        Sec. 2106. (1) Except as specifically provided in this

 

 3  chapter, the provisions of chapter 24 and chapter 26 shall do not

 

 4  apply to automobile insurance and home insurance.

 

 5        (2) Subject to section 2108(6), an insurer shall file rates

 

 6  with the department for approval in compliance with this act.

 

 7        (3) An insurer may use rates for automobile insurance or home

 

 8  insurance as soon as those rates are filed.

 

 9        (4) To the extent that other provisions of this code act are

 

10  inconsistent with the provisions of this chapter, this chapter

 

11  shall govern governs with respect to automobile insurance and home

 

12  insurance.

 

13        Sec. 2108. (1) On the effective date of a manual of

 

14  classification, manual of rules and rates, rating plan, or

 

15  modification of a manual of classification, manual of rules and

 

16  rates, or rating plan that an insurer proposes to use for

 

17  automobile insurance or home insurance, the insurer shall file the

 

18  manual or plan with the director. For automobile insurance, an

 

19  insurer shall file a manual or plan described in this subsection in

 

20  accordance with subsection (6). Each filing under this subsection

 

21  must state the character and extent of the coverage contemplated.

 

22  An insurer that is subject to this chapter and that maintains rates

 

23  in any part of this state shall at all times maintain rates in

 

24  effect for all eligible persons meeting the underwriting criteria

 

25  of the insurer.

 

26        (2) An insurer may satisfy its obligation to make filings

 

27  under subsection (1) by becoming a member of, or a subscriber to, a

 1  rating organization licensed under chapter 24 or chapter 26 that

 

 2  makes the filings, and by filing with the director a copy of its

 

 3  authorization of the rating organization to make the filings on its

 

 4  behalf. This chapter does not require an insurer to become a member

 

 5  of or a subscriber to a rating organization. An insurer may file

 

 6  and use deviations from filings made on its behalf. The deviations

 

 7  are subject to this chapter.

 

 8        (3) A filing under this section must be accompanied by a

 

 9  certification by or on behalf of the insurer that, to the best of

 

10  the insurer's information and belief, the filing conforms to the

 

11  requirements of this chapter.

 

12        (4) A filing under this section must include information that

 

13  supports the filing with respect to the requirements of section

 

14  2109. The information may include 1 or more of the following:

 

15        (a) The experience or judgment of the insurer or rating

 

16  organization making the filing.

 

17        (b) The interpretation of the insurer or rating organization

 

18  of any statistical data it relies on.

 

19        (c) The experience of other insurers or rating organizations.

 

20        (d) Any other relevant information.

 

21        (5) Except as otherwise provided in this subsection, the

 

22  department shall make a filing under this section and any

 

23  accompanying information open to public inspection on filing. An

 

24  insurer or a rating organization filing on the insurer's behalf may

 

25  designate information included in the filing or any accompanying

 

26  information as a trade secret. The insurer or the rating

 

27  organization filing on behalf of the insurer shall demonstrate to

 1  the director that the designated information is a trade secret. If

 

 2  the director determines that the information is a trade secret, the

 

 3  information is not subject to public inspection and is exempt from

 

 4  disclosure under the freedom of information act, 1976 PA 442, MCL

 

 5  15.231 to 15.246. As used in this subsection, "trade secret" means

 

 6  that term as defined in section 2 of the uniform trade secrets act,

 

 7  1998 PA 448, MCL 445.1902. However, trade secret does not include

 

 8  filings and information accompanying filings under this section

 

 9  that were subject to public inspection before the effective date of

 

10  the amendatory act that added this sentence.January 11, 2016.

 

11        (6) For automobile insurance, an insurer shall file a manual

 

12  or plan in accordance with chapter 24, except that the manual or

 

13  plan must remain on file for a waiting period of 90 days before it

 

14  becomes effective, which period may not be extended by the

 

15  director, and the waiting period applies regardless of whether

 

16  supporting information is required by the director under section

 

17  2406(1). Upon written application by the insurer, the director may

 

18  authorize a filing that he or she has reviewed to become effective

 

19  before expiration of the waiting period.

 

20        (7) (6) An insurer shall not make, issue, or renew a contract

 

21  or policy except in accordance with filings that are in effect for

 

22  the insurer under this chapter.

 

23        (8) A filing under this chapter must specify that the insurer

 

24  will not refuse to insure, refuse to continue to insure, or limit

 

25  the amount of coverage available because of the location of the

 

26  risk, and that the insurer recognizes those practices to constitute

 

27  redlining. An insurer shall not engage in redlining as described in

 1  this subsection.

 

 2        Sec. 2111. (1) Notwithstanding any provision of this act or

 

 3  this chapter to the contrary, classifications and territorial base

 

 4  rates used by an insurer in this state with respect to automobile

 

 5  insurance or home insurance shall must conform to the applicable

 

 6  requirements of this section.

 

 7        (2) Classifications established under this section for

 

 8  automobile insurance shall must be based only on 1 or more of the

 

 9  following factors, which shall must be applied by an insurer on a

 

10  uniform basis throughout this state:

 

11        (a) With respect to all automobile insurance coverages:

 

12        (i) Either the age of the driver; the length of driving

 

13  experience; or the number of years licensed to operate a motor

 

14  vehicle.

 

15        (ii) Driver primacy, based on the proportionate use of each

 

16  vehicle insured under the policy by individual drivers insured or

 

17  to be insured under the policy.

 

18        (iii) Average miles driven weekly, annually, or both.

 

19        (iv) Type of use, such as business, farm, or pleasure use.

 

20        (v) Vehicle characteristics, features, and options, such as

 

21  engine displacement, ability of the vehicle and its equipment to

 

22  protect passengers from injury, and other similar items, including

 

23  vehicle make and model.

 

24        (vi) Daily or weekly commuting mileage.

 

25        (vii) Number of cars insured by the insurer or number of

 

26  licensed operators in the household. However, number of licensed

 

27  operators shall must not be used as an indirect measure of marital

 1  status.

 

 2        (viii) Amount of insurance.

 

 3        (b) In addition to the factors prescribed in subdivision (a),

 

 4  with respect to personal protection insurance coverage:

 

 5        (i) Earned income.

 

 6        (ii) Number of dependents of income earners insured under the

 

 7  policy.

 

 8        (iii) Coordination of benefits.

 

 9        (iv) Use of a safety belt.

 

10        (c) In addition to the factors prescribed in subdivision (a),

 

11  with respect to collision and comprehensive coverages:

 

12        (i) The anticipated cost of vehicle repairs or replacement,

 

13  which may be measured by age, price, cost new, or value of the

 

14  insured automobile, and other factors directly relating to that

 

15  anticipated cost.

 

16        (ii) Vehicle make and model.

 

17        (iii) Vehicle design characteristics related to vehicle

 

18  damageability.

 

19        (iv) Vehicle characteristics relating to automobile theft

 

20  prevention devices.

 

21        (d) With respect to all automobile insurance coverage other

 

22  than comprehensive, successful completion by the individual driver

 

23  or drivers insured under the policy of an accident prevention

 

24  education course that meets the following criteria:

 

25        (i) The course shall must include a minimum of 8 hours of

 

26  classroom instruction.

 

27        (ii) The course shall must include, but not be limited to, a

 1  review of all of the following:

 

 2        (A) The effects of aging on driving behavior.

 

 3        (B) The shapes, colors, and types of road signs.

 

 4        (C) The effects of alcohol and medication on driving.

 

 5        (D) The laws relating to the proper use of a motor vehicle.

 

 6        (E) Accident prevention measures.

 

 7        (F) The benefits of safety belts and child restraints.

 

 8        (G) Major driving hazards.

 

 9        (H) Interaction with other highway users, such as

 

10  motorcyclists, bicyclists, and pedestrians.

 

11        (3) Each insurer shall establish a secondary or merit rating

 

12  plan for automobile insurance, other than comprehensive coverage. A

 

13  secondary or merit rating plan required under this subsection shall

 

14  must provide for premium surcharges for any or all coverages for

 

15  automobile insurance, other than comprehensive coverage, based upon

 

16  on any or all of the following, when that information becomes

 

17  available to the insurer:

 

18        (a) Substantially at-fault accidents.

 

19        (b) Convictions for, determinations of responsibility for

 

20  civil infractions for, or findings of responsibility in probate

 

21  court for civil infractions for violations under chapter VI of the

 

22  Michigan vehicle code, 1949 PA 300, MCL 257.601 to 257.750.

 

23  However, an insured shall must not be merit rated for a civil

 

24  infraction under chapter VI of the Michigan vehicle code, 1949 PA

 

25  300, MCL 257.601 to 257.750, for a period of time longer than that

 

26  which the secretary of state's office carries points for that

 

27  infraction on the insured's motor vehicle record.

 1        (4) An insurer shall not establish or maintain rates or rating

 

 2  classifications for automobile insurance based on sex or marital

 

 3  any of the following:

 

 4        (a) Sex.

 

 5        (b) Marital status.

 

 6        (c) Home ownership.

 

 7        (d) Educational level attained.

 

 8        (e) Occupation.

 

 9        (f) The postal zone in which the insured resides.

 

10        (g) Credit score as provided in section 2162.

 

11        (5) Notwithstanding other provisions of this chapter,

 

12  automobile insurance risks may be grouped by territory.

 

13        (6) This section does not limit insurers or rating

 

14  organizations from establishing and maintaining statistical

 

15  reporting territories. This section does not prohibit an insurer

 

16  from establishing or maintaining, for automobile insurance, a

 

17  premium discount plan for senior citizens in this state who are 65

 

18  years of age or older, if the plan is uniformly applied by the

 

19  insurer throughout this state. If an insurer has not established

 

20  and maintained a premium discount plan for senior citizens, the

 

21  insurer shall offer reduced premium rates to senior citizens in

 

22  this state who are 65 years of age or older and who drive less than

 

23  3,000 miles per year, regardless of statistical data.

 

24        (7) Classifications established under this section for home

 

25  insurance other than inland marine insurance provided by policy

 

26  floaters or endorsements shall must be based only on 1 or more of

 

27  the following factors:

 1        (a) Amount and types of coverage.

 

 2        (b) Security and safety devices, including locks, smoke

 

 3  detectors, and similar, related devices.

 

 4        (c) Repairable structural defects reasonably related to risk.

 

 5        (d) Fire protection class.

 

 6        (e) Construction of structure, based on structure size,

 

 7  building material components, and number of units.

 

 8        (f) Loss experience of the insured, based on prior claims

 

 9  attributable to factors under the control of the insured that have

 

10  been paid by an insurer. An insured's failure, after written notice

 

11  from the insurer, to correct a physical condition that presents a

 

12  risk of repeated loss shall be considered is a factor under the

 

13  control of the insured for purposes of this subdivision.

 

14        (g) Use of smoking materials within the structure.

 

15        (h) Distance of the structure from a fire hydrant.

 

16        (i) Availability of law enforcement or crime prevention

 

17  services.

 

18        (8) Notwithstanding other provisions of this chapter, home

 

19  insurance risks may be grouped by territory.

 

20        (9) An insurer may use factors in addition to those permitted

 

21  by this section for insurance if the plan is consistent with the

 

22  purposes of this act and reflects reasonably anticipated reductions

 

23  or increases in losses or expenses.

 

24        Sec. 2111f. (1) Before July 1, 2020, an insurer that offers

 

25  automobile insurance in this state shall file premium rates for

 

26  personal protection insurance coverage for automobile insurance

 

27  policies effective after July 1, 2020.

 1        (2) Subject to subsections (6) and (7), the premium rates

 

 2  filed as required by subsection (1), and any subsequent premium

 

 3  rates filed by the insurer for personal protection insurance

 

 4  coverage under automobile insurance policies effective before July

 

 5  1, 2028, must result, as nearly as practicable, in an average

 

 6  reduction per vehicle from the premium rates for personal

 

 7  protection insurance coverage that were in effect for the insurer

 

 8  on May 1, 2019 as follows:

 

 9        (a) For policies subject to the coverage limits under section

 

10  3107c(1)(a), an average 45% or greater reduction per vehicle.

 

11        (b) For policies subject to the coverage limits under section

 

12  3107c(1)(b), an average 35% or greater reduction per vehicle.

 

13        (c) For policies subject to the coverage limits under section

 

14  3107c(1)(c), an average 20% or greater reduction per vehicle.

 

15        (d) For policies not subject to any coverage limit under

 

16  section 3107c(1)(d), an average 10% or greater reduction per

 

17  vehicle.

 

18        (3) For a policy under which an election under section 3107d

 

19  has been made to not maintain coverage for personal protection

 

20  insurance benefits payable under section 3107(1)(a), or for a

 

21  policy to which an exclusion under section 3109a(2) applies, the

 

22  premium rates filed under subsection (1), and any subsequent

 

23  premium rates filed by the insurer for personal protection

 

24  insurance coverage must result in no premium charge for coverage

 

25  for personal protection insurance benefits payable under section

 

26  3107(1)(a).

 

27        (4) The director shall review a filing submitted by an insurer

Senate Bill No. 1 as amended May 24, 2019

 1  under subsections (1) to (3) for compliance with this section.

 

 2  Subject to subsection (7), the director shall disapprove a filing

 

 3  if after review the director determines that the filing does not

 

 4  result in the premium reductions required by subsections (2) and

 

 5  (3).

 

 6        (5) If the director disapproves a premium rate filing under

 

 7  subsection (4), the insurer shall submit a revised premium rate

 

 8  filing to the director within 15 days after the disapproval. The

 

 9  premium rate filing is subject to review in the same manner as an

 

10  original premium rate filing under subsection (4).

 

11        (6) For policies issued [or renewed in] the year beginning

 July 1, 2024

 

12  and for the year beginning July 1, 2026, an automobile insurer that

 

13  offers automobile insurance in this state shall make filings

 

14  demonstrating its compliance with this section.

 

15        (7) At any time, an insurer may apply to the director for

 

16  approval to file rates that result in a lower premium reduction

 

17  level or an exemption from the requirements of subsection (2) and

 

18  the director shall approve the application if the rates otherwise

 

19  comply with this act and compliance with the premium reductions

 

20  required by subsection (2) will result in any of the following:

 

21        (a) The insurer reaching the company action level risk based

 

22  capital.

 

23        (b) A violation of the Fourteenth Amendment of the United

 

24  States Constitution as to the insurer. This subdivision does not

 

25  apply after July 1, 2023.

 

26        (c) A violation of section 17 of article I of the state

 

27  constitution of 1963, as to deprivation of property without due

Senate Bill No. 1 as amended May 24, 2019

 1  process. This subdivision does not apply after July 1, 2023.

 

 2        [(8) An insurer shall pass on, in filings to which this section

 

3 applies, savings realized from the application of section 3157(2) to (12)

 

4 to treatment, products, services, accommodations, or training rendered to

 

5 individuals who suffered accidental bodily injury from motor vehicle

 

6 accidents that occurred before the effective date of the amendatory act

 

7 that added this section. An insurer shall provide the director with all

 

8 documents and information requested by the director that the director

 

9 Determines are necessary to allow the director to evaluate the insurer's

 

10 compliance with this subsection. after July 1, 2022, the director shall

 

11 review all rate filings to which this section applies for compliance with

 

12 this subsection.]

 

13        (9) This section does not prohibit an increase for any

 

14  individual insurance policy premium if the increase results from

 

15  applying rating factors as approved under this chapter, including

 

16  the requirements of this section.

 

17        (10) After July 1, 2020 and before July 1, 2028, an insurer

 

18  shall not issue or renew an automobile insurance policy in this

 

19  state unless the premium rates filed by the insurer for personal

 

20  protection insurance coverage are approved under this section.

 

21        (11) For purposes of calculating a personal protection

 

22  insurance premium or premium rate under this section, the premium

 

23  [must] include the catastrophic claims assessment imposed under

 

24  section 3104.

 

25        (12) If subsection (2) or the application of subsection (2) to

 

26  any insurer is found to be invalid by a court, the remaining

 

27  portions of the amendatory act that added this section are not

 1  severable and shall be deemed invalid and inoperable.

 

 2        (13) As used in this section:

 

 3        (a) "Authorized control level RBC" means the number determined

 

 4  under the risk-based capital formula in accordance with the RBC

 

 5  report, including risk-based capital instructions adopted by the

 

 6  National Association of Insurance Commissioners and the director.

 

 7        (b) "Company action level risk based capital" means 2 times

 

 8  the insurer's authorized control level RBC.

 

 9        (c) "RBC report" means the report of the insurer's RBC levels

 

10  as required by the annual statement instructions.

 

11        Sec. 2116b. (1) Subject to subsection (2), an automobile

 

12  insurer shall not refuse to insure, refuse to continue to insure,

 

13  limit coverage available to, charge a reinstatement fee for, or

 

14  increase the premiums for automobile insurance for an eligible

 

15  person solely because the person previously failed to maintain

 

16  insurance required by section 3101 for a vehicle owned by the

 

17  person.

 

18        (2) This section only applies to an eligible person that

 

19  applies for automobile insurance before January 1, 2022.

 

20        Sec. 2118. (1) As a condition of maintaining its certificate

 

21  of authority, an insurer shall not refuse to insure, refuse to

 

22  continue to insure, or limit coverage available to an eligible

 

23  person for automobile insurance, except in accordance with

 

24  underwriting rules established pursuant to as provided in this

 

25  section and sections 2119 and 2120.

 

26        (2) The underwriting rules that an insurer may establish for

 

27  automobile insurance shall must be based only on the following:

 1        (a) Criteria identical to the standards set forth in section

 

 2  2103(1).

 

 3        (b) The insurance eligibility point accumulation in excess of

 

 4  the amounts established by section 2103(1) of a member of the

 

 5  household of the eligible person insured or to be insured, if the

 

 6  member of the household usually accounts for 10% or more of the use

 

 7  of a vehicle insured or to be insured. For purposes of this

 

 8  subdivision, a person who is the principal driver for 1 automobile

 

 9  insurance policy shall be is rebuttably presumed not to usually

 

10  account for more than 10% of the use of other vehicles of the

 

11  household not insured under the policy of that person.

 

12        (c) With respect to a vehicle insured or to be insured,

 

13  substantial modifications from the vehicle's original manufactured

 

14  state for purposes of increasing the speed or acceleration

 

15  capabilities of the vehicle.

 

16        (d) Except as otherwise provided in section 2116a or 2116b,

 

17  failure by the person to provide proof that insurance required by

 

18  section 3101 was maintained in force with respect to any vehicle

 

19  that was both owned by the person and driven or moved by the person

 

20  or by a member of the household of the person during the 6-month

 

21  period immediately preceding application. Such The proof shall must

 

22  take the form of a certification by the person on a form provided

 

23  by the insurer that the vehicle was not driven or moved without

 

24  maintaining the insurance required by section 3101 during the 6-

 

25  month period immediately preceding application.

 

26        (e) Type of vehicle insured or to be insured, based on 1 of

 

27  the following, without regard to the age of the vehicle:

 1        (i) The vehicle is of limited production or of custom

 

 2  manufacture.

 

 3        (ii) The insurer does not have a rate lawfully in effect for

 

 4  the type of vehicle.

 

 5        (iii) The vehicle represents exposure to extraordinary expense

 

 6  for repair or replacement under comprehensive or collision

 

 7  coverage.

 

 8        (f) Use of a vehicle insured or to be insured for

 

 9  transportation of passengers for hire, for rental purposes, or for

 

10  commercial purposes. Rules under this subdivision shall must not be

 

11  based on the use of a vehicle for volunteer or charitable purposes

 

12  or for which reimbursement for normal operating expenses is

 

13  received.

 

14        (g) Payment of a minimum deposit at the time of application or

 

15  renewal, not to exceed the smallest deposit required under an

 

16  extended payment or premium finance plan customarily used by the

 

17  insurer.

 

18        (h) For purposes of requiring comprehensive deductibles of not

 

19  more than $150.00, or of refusing to insure if the person refuses

 

20  to accept a required deductible, the claim experience of the person

 

21  with respect to comprehensive coverage.

 

22        (i) Total abstinence from the consumption of alcoholic

 

23  beverages except if such beverages are consumed as part of a

 

24  religious ceremony. However, an insurer shall not utilize use an

 

25  underwriting rule based on this subdivision unless the insurer has

 

26  been was authorized to transact automobile insurance in this state

 

27  prior to before January 1, 1981, and has consistently utilized used

 1  such an underwriting rule as part of the insurer's automobile

 

 2  insurance underwriting since being authorized to transact

 

 3  automobile insurance in this state.

 

 4        (j) One or more incidents involving a threat, harassment, or

 

 5  physical assault by the insured or applicant for insurance on an

 

 6  insurer employee, agent, or agent employee while acting within the

 

 7  scope of his or her employment, so long as if a report of the

 

 8  incident was filed with an appropriate law enforcement agency.

 

 9        Sec. 2120. (1) Affiliated insurers may establish underwriting

 

10  rules so that each affiliate will provide automobile insurance only

 

11  to certain eligible persons. This subsection shall apply applies

 

12  only if an eligible person can obtain automobile insurance from 1

 

13  of the affiliates. The underwriting rules shall must be in

 

14  compliance with this section and sections 2118 and 2119.

 

15        (2) An insurer may establish separate rating plans so that

 

16  certain eligible persons are provided automobile insurance under 1

 

17  rating plan and other eligible persons are provided automobile

 

18  insurance under another rating plan. This subsection shall apply

 

19  applies only if all eligible persons can obtain automobile

 

20  insurance under a rating plan of the insurer. Underwriting rules

 

21  consistent with this section and sections 2118 and 2119 shall must

 

22  be established to define the rating plan applicable to each

 

23  eligible person.

 

24        (3) Underwriting rules under this section shall must be based

 

25  only on the following:

 

26        (a) With respect to a vehicle insured or to be insured,

 

27  substantial modifications from the vehicle's original manufactured

 1  state for purposes of increasing the speed or acceleration

 

 2  capabilities of the vehicle.

 

 3        (b) Except as otherwise provided in section 2116a or 2116b,

 

 4  failure of the person to provide proof that insurance required by

 

 5  section 3101 was maintained in force with respect to any vehicle

 

 6  owned and operated by the person or by a member of the household of

 

 7  the person during the 6-month period immediately preceding

 

 8  application or renewal of the policy. Such The proof shall must

 

 9  take the form of a certification by the person that the required

 

10  insurance was maintained in force for the 6-month period with

 

11  respect to such the vehicle.

 

12        (c) For purposes of insuring persons who have refused a

 

13  deductible lawfully required under section 2118(2)(h), the claim

 

14  experience of the person with respect to comprehensive coverage.

 

15        (d) Refusal of the person to pay a minimum deposit required

 

16  under section 2118(2)(g).

 

17        (e) A person's insurance eligibility point accumulation under

 

18  section 2103(1)(h), or the total insurance eligibility point

 

19  accumulation of all persons who account for 10% or more of the use

 

20  of 1 or more vehicles insured or to be insured under the policy.

 

21        (f) The type of vehicle insured or to be insured as provided

 

22  in section 2118(2)(e).

 

23        Sec. 2151. As used in this chapter:

 

24        (a) "Adverse action" means an increase in any charge for, or a

 

25  reduction or other adverse or unfavorable change in the terms of

 

26  coverage or amount of, any personal insurance, existing or applied

 

27  for.

 1        (b) "Consumer reporting agency" means any person which, that,

 

 2  for monetary fees or dues or on a cooperative nonprofit basis,

 

 3  regularly engages in whole or in part in the practice of assembling

 

 4  or evaluating consumer credit information or other information on

 

 5  consumers for the purpose of furnishing consumer reports to third

 

 6  parties.

 

 7        (c) "Credit information" means any credit-related information

 

 8  derived from a credit report, found on a credit report itself, or

 

 9  provided on an application for personal insurance. Information that

 

10  is not credit-related shall must not be considered credit

 

11  information, regardless of whether it is contained in a credit

 

12  report or in an application, or is used to calculate an insurance

 

13  score.

 

14        (d) "Credit report" means any written, oral, or other

 

15  communication of information by a consumer reporting agency bearing

 

16  on a consumer's credit worthiness, credit standing, or credit

 

17  capacity that is used or expected to be used or collected in whole

 

18  or in part for the purpose of serving as a factor in the rating of

 

19  personal insurance.

 

20        (e) "Credit score" means the numerical score ranging from 300

 

21  to 850 assigned by a consumer reporting agency to measure credit

 

22  risk and includes FICO credit score.

 

23        (f) (e) "Insurance score" means a number or rating that is

 

24  derived from an algorithm, computer application, model, or other

 

25  process that is based in whole or in part on credit information for

 

26  the purposes of predicting the future insurance loss exposure of an

 

27  individual applicant or insured.

 1        (g) (f) "Personal insurance" means property/casualty insurance

 

 2  written for personal, family, or household use, including

 

 3  automobile, home, motorcycle, mobile home, noncommercial dwelling

 

 4  fire, boat, personal watercraft, snowmobile, and recreational

 

 5  vehicle, whether written on an individual, group, franchise,

 

 6  blanket policy, or similar basis.

 

 7        Sec. 2162. An insurer shall not use an individual's credit

 

 8  score to establish or maintain rates or rating classifications for

 

 9  automobile insurance.

 

10        Sec. 3009. (1) An Subject to subsections (5) to (8), an

 

11  automobile liability or motor vehicle liability policy insuring

 

12  that insures against loss resulting from liability imposed by law

 

13  for property damage, bodily injury, or death suffered by any person

 

14  arising out of the ownership, maintenance, or use of a motor

 

15  vehicle shall must not be delivered or issued for delivery in this

 

16  state with respect to any motor vehicle registered or principally

 

17  garaged in this state unless the liability coverage is subject to

 

18  all of the following limits:

 

19        (a) A limit, exclusive of interest and costs, of not less than

 

20  $20,000.00 $250,000.00 because of bodily injury to or death of 1

 

21  person in any 1 accident.

 

22        (b) Subject to the limit for 1 person in subdivision (a), a

 

23  limit of not less than $40,000.00 $500,000.00 because of bodily

 

24  injury to or death of 2 or more persons in any 1 accident.

 

25        (c) A limit of not less than $10,000.00 because of injury to

 

26  or destruction of property of others in any accident.

 

27        (2) If authorized by the insured, automobile liability or

 1  motor vehicle liability coverage may be excluded when a vehicle is

 

 2  operated by a named person. An exclusion under this subsection is

 

 3  not valid unless the following notice is on the face of the policy

 

 4  or the declaration page or certificate of the policy and on the

 

 5  certificate of insurance:

 

 6        Warning—when a named excluded person operates a vehicle all

 

 7  liability coverage is void—no one is insured. Owners of the vehicle

 

 8  and others legally responsible for the acts of the named excluded

 

 9  person remain fully personally liable.

 

10        (3) A liability policy described in subsection (1) may exclude

 

11  coverage for liability as provided in section 3017.

 

12        (4) If an insurer deletes coverages from an automobile

 

13  insurance policy pursuant to under section 3101, the insurer shall

 

14  send documentary evidence of the deletion to the insured.

 

15        (5) An applicant for or named insured in the automobile

 

16  liability or motor vehicle liability policy described in subsection

 

17  (1) may choose to purchase lower limits than required under

 

18  subsection (1)(a) and (b), but not lower than $50,000.00 under

 

19  subsection (1)(a) and $100,000.00 under subsection (1)(b). To

 

20  exercise an option under this subsection, the person shall complete

 

21  a form issued by the director and provided as required by section

 

22  3107e, that meets the requirements of subsection (7).

 

23        (6) On application for the issuance of a new policy or renewal

 

24  of an existing policy, an insurer shall do all of the following:

 

25        (a) Provide the applicant or named insured the liability

 

26  options available under this section.

 

27        (b) Provide the applicant or named insured a price for each

Senate Bill No. 1 as amended May 24, 2019

 1  option available under this section.

 

 2        (c) Offer the applicant or named insured the option and form

 

 3  under this subsection.

 

 4        (7) The form required under subsection (5) must do all of the

 

 5  following:

 

 6        (a) State, in a conspicuous manner, the risks of choosing

 

 7  liability limits lower than those required by subsection (1)(a) and

 

 8  (b).

 

 9        (b) Provide a way for the person to mark the form to

 

10  acknowledge that he or she has received a list of the liability

 

11  options available under this section and the price for each option.

 

12        (c) Provide a way for the person to mark the form to

 

13  acknowledge that he or she has read the form and understands the

 

14  risks of choosing the lower liability limits.

 

15        (d) Allow the person to sign the form.

 

16        (8) If an insurance policy is issued or renewed as described

 

17  in subsection (1) and the person named in the policy has not made

 

18  an effective choice under subsection (5), the limits under

 

19  subsection (1)(a) and (b) apply to the policy.

 

20        Sec. 3101. (1) The Except as provided in sections 3107d and

 

21  3109a, the owner or registrant of a motor vehicle required to be

 

22  registered in this state shall maintain security for payment of

 

23  benefits under personal protection insurance , and property

 

24  protection insurance as required under this chapter, and residual

 

25  liability insurance. Security is only required to be in effect

 

26  during the period the motor vehicle is driven or moved on a

 

27  highway. [Notwithstanding any other provision in this act, an

Senate Bill No. 1 as amended May 24, 2019

 1  insurer that has issued an automobile insurance policy on a motor

 

 2  vehicle that is not driven or moved on a highway may allow the

 

 3  insured owner or registrant of the motor vehicle to delete a

 

 4  portion of the coverages under the policy and maintain the

 

 5  comprehensive coverage portion of the policy in effect.

(2) EXCEPT AS PROVIDED IN SECTION 3107D, ALL AUTOMOBILE INSURANCE POLICIES OFFERED IN THIS STATE MUST INCLUDE BENEFITS UNDER PERSONAL PROTECTION INSURANCE, AND PROPERTY PROTECTION INSURANCE AS PROVIDED IN THIS CHAPTER, AND RESIDUAL LIABILITY INSURANCE.  NOTWITHSTANDING ANY OTHER PROVISION IN THIS ACT, AN INSURER THAT HAS ISSUED AN AUTOMOBILE INSURANCE POLICY MAY ONLY DELETE PORTIONS OF THE COVERAGES UNDER THE POLICY AND MAINTAIN THE COMPREHENSIVE COVERAGE PORTION ON A MOTOR VEHICLE THAT IS NOT DRIVEN OR MOVED ON A HIGHWAY IN ACCORDANCE WITH SECTION 3009(4).

 

 6        (2)(3)] As used in this chapter:

 7        (a) "Automobile insurance" means that term as defined in

 8  section 2102.

 9        (b) "Commercial quadricycle" means a vehicle to which all of

 

10  the following apply:

 

11        (i) The vehicle has fully operative pedals for propulsion

 

12  entirely by human power.

 

13        (ii) The vehicle has at least 4 wheels and is operated in a

 

14  manner similar to a bicycle.

 

15        (iii) The vehicle has at least 6 seats for passengers.

 

16        (iv) The vehicle is designed to be occupied by a driver and

 

17  powered either by passengers providing pedal power to the drive

 

18  train of the vehicle or by a motor capable of propelling the

 

19  vehicle in the absence of human power.

 

20        (v) The vehicle is used for commercial purposes.

 

21        (vi) The vehicle is operated by the owner of the vehicle or an

 

22  employee of the owner of the vehicle.

 

23        (c) "Electric bicycle" means that term as defined in section

 

24  13e of the Michigan vehicle code, 1949 PA 300, MCL 257.13e.

 

25        (d) "Golf cart" means a vehicle designed for transportation

 

26  while playing the game of golf.

 

27        (e) "Highway" means highway or street as that term is defined

 1  in section 20 of the Michigan vehicle code, 1949 PA 300, MCL

 

 2  257.20.

 

 3        (f) "Moped" means that term as defined in section 32b of the

 

 4  Michigan vehicle code, 1949 PA 300, MCL 257.32b.

 

 5        (g) "Motorcycle" means a vehicle that has a saddle or seat for

 

 6  the use of the rider, is designed to travel on not more than 3

 

 7  wheels in contact with the ground, and is equipped with a motor

 

 8  that exceeds 50 cubic centimeters piston displacement. For purposes

 

 9  of this subdivision, the wheels on any attachment to the vehicle

 

10  are not considered as wheels in contact with the ground. Motorcycle

 

11  does not include a moped or an ORV.

 

12        (h) "Motorcycle accident" means a loss that involves the

 

13  ownership, operation, maintenance, or use of a motorcycle as a

 

14  motorcycle, but does not involve the ownership, operation,

 

15  maintenance, or use of a motor vehicle as a motor vehicle.

 

16        (i) "Motor vehicle" means a vehicle, including a trailer, that

 

17  is operated or designed for operation on a public highway by power

 

18  other than muscular power and has more than 2 wheels. Motor vehicle

 

19  does not include any of the following:

 

20        (i) A motorcycle.

 

21        (ii) A moped.

 

22        (iii) A farm tractor or other implement of husbandry that is

 

23  not subject to the registration requirements of the Michigan

 

24  vehicle code under section 216 of the Michigan vehicle code, 1949

 

25  PA 300, MCL 257.216.

 

26        (iv) An ORV.

 

27        (v) A golf cart.

 1        (vi) A power-driven mobility device.

 

 2        (vii) A commercial quadricycle.

 

 3        (viii) An electric bicycle.

 

 4        (j) "Motor vehicle accident" means a loss that involves the

 

 5  ownership, operation, maintenance, or use of a motor vehicle as a

 

 6  motor vehicle regardless of whether the accident also involves the

 

 7  ownership, operation, maintenance, or use of a motorcycle as a

 

 8  motorcycle.

 

 9        (k) "ORV" means a motor-driven recreation vehicle designed for

 

10  off-road use and capable of cross-country travel without benefit of

 

11  road or trail, on or immediately over land, snow, ice, marsh,

 

12  swampland, or other natural terrain. ORV includes, but is not

 

13  limited to, a multitrack or multiwheel drive vehicle, a motorcycle

 

14  or related 2-wheel, 3-wheel, or 4-wheel vehicle, an amphibious

 

15  machine, a ground effect air cushion vehicle, an ATV as defined in

 

16  section 81101 of the natural resources and environmental protection

 

17  act, 1994 PA 451, MCL 324.81101, or other means of transportation

 

18  deriving motive power from a source other than muscle or wind. ORV

 

19  does not include a vehicle described in this subdivision that is

 

20  registered for use on a public highway and has the security

 

21  required under subsection (1) or section 3103 in effect.

 

22        (l) "Owner" means any of the following:

 

23        (i) A person renting a motor vehicle or having the use of a

 

24  motor vehicle, under a lease or otherwise, for a period that is

 

25  greater than 30 days.

 

26        (ii) A person renting a motorcycle or having the use of a

 

27  motorcycle under a lease for a period that is greater than 30 days,

Senate Bill No. 1 as amended May 29, 2019

 1  or otherwise for a period that is greater than 30 consecutive days.

 

 2  A person who borrows a motorcycle for a period that is less than 30

 

 3  consecutive days with the consent of the owner is not an owner

 

 4  under this subparagraph.

 

 5        (iii) A person that holds the legal title to a motor vehicle

 

 6  or motorcycle, other than a person engaged in the business of

 

 7  leasing motor vehicles or motorcycles that is the lessor of a motor

 

 8  vehicle or motorcycle under a lease that provides for the use of

 

 9  the motor vehicle or motorcycle by the lessee for a period that is

 

10  greater than 30 days.

 

11        (iv) A person that has the immediate right of possession of a

 

12  motor vehicle or motorcycle under an installment sale contract.

 

13        (m) "Power-driven mobility device" means a wheelchair or other

 

14  mobility device powered by a battery, fuel, or other engine and

 

15  designed to be used by an individual with a mobility disability for

 

16  the purpose of locomotion.

 

17        (n) "Registrant" does not include a person engaged in the

 

18  business of leasing motor vehicles or motorcycles that is the

 

19  lessor of a motor vehicle or motorcycle under a lease that provides

 

20  for the use of the motor vehicle or motorcycle by the lessee for a

 

21  period that is longer than 30 days.

 

22        [(3)(4)] Security required by subsection (1) may be provided under

 

23  a policy issued by an authorized insurer that affords insurance for

 

24  the payment of benefits described in subsection (1). A policy of

 

25  insurance represented or sold as providing security is considered

 

26  to provide insurance for the payment of the benefits.

 

27        [(4)(5)] Security required by subsection (1) may be provided by any

Senate Bill No. 1 as amended May 29, 2019

 1  other method approved by the secretary of state as affording

 

 2  security equivalent to that afforded by a policy of insurance, if

 

 3  proof of the security is filed and continuously maintained with the

 

 4  secretary of state throughout the period the motor vehicle is

 

 5  driven or moved on a highway. The person filing the security has

 

 6  all the obligations and rights of an insurer under this chapter.

 

 7  When the context permits, "insurer" as used in this chapter,

 

 8  includes a person that files the security as provided in this

 

 9  section.

 

10        [(5)(6)] An insurer that issues a policy that provides the security

 

11  required under subsection (1) may exclude coverage under the policy

 

12  as provided in section 3017.

 

13        Sec. 3101a. (1) An insurer, in conjunction with the issuance

 

14  of an automobile insurance policy, shall provide to the insured 1

 

15  certificate of insurance for each insured vehicle and for private

 

16  passenger nonfleet automobiles listed on the policy shall supply to

 

17  the secretary of state the automobile insurer's name, the name of

 

18  the named insured, the named insured's address, the vehicle

 

19  identification number for each vehicle listed on the policy, and

 

20  the policy number. The insurer shall transmit the information

 

21  required under this subsection in a format as required by the

 

22  secretary of state. The secretary of state shall not require the

 

23  information to be transmitted more frequently than every 14 days.

 

24        (2) The secretary of state shall provide policy information

 

25  received under subsection (1) to the Michigan automobile insurance

 

26  placement facility as required for the Michigan automobile

 

27  insurance placement facility to comply with this act. Information

 1  received by the Michigan automobile insurance placement facility

 

 2  under this subsection is confidential and is not subject to the

 

 3  freedom of information act, 1976 PA 442, MCL 15.231 to 15.246. The

 

 4  Michigan automobile insurance placement facility shall only use the

 

 5  information for purposes of administering the assigned claims plan

 

 6  under this chapter and shall not disclose the information to any

 

 7  person unless it is for the purpose of administering the assigned

 

 8  claims plan or in compliance with an order by a court of competent

 

 9  jurisdiction in connection with a fraud investigation or

 

10  prosecution.

 

11        (3) (2) The secretary of state shall provide policy

 

12  information received under subsection (1) to the department of

 

13  health and human services as required for the department of health

 

14  and human services to comply with 2006 PA 593, MCL 550.281 to

 

15  550.289.

 

16        (4) (3) The secretary of state shall accept as proof of

 

17  vehicle insurance a transmission of the insured vehicle's vehicle

 

18  identification number. Policy information submitted by an insurer

 

19  and received by the secretary of state under this section is

 

20  confidential, is not subject to the freedom of information act,

 

21  1976 PA 442, MCL 15.231 to 15.246, and shall must not be disclosed

 

22  to any person except the department of health and human services

 

23  for purposes of 2006 PA 593, MCL 550.281 to 550.289, or pursuant to

 

24  an order by a court of competent jurisdiction in connection with a

 

25  claim or fraud investigation or prosecution. The transmission to

 

26  the secretary of state of a vehicle identification number is proof

 

27  of insurance to the secretary of state for motor vehicle

 1  registration purposes only and is not evidence that a policy of

 

 2  insurance actually exists between an insurer and an individual.

 

 3        (5) (4) A person who supplies false information to the

 

 4  secretary of state under this section or who issues or uses an

 

 5  altered, fraudulent, or counterfeit certificate of insurance is

 

 6  guilty of a misdemeanor punishable by imprisonment for not more

 

 7  than 1 year or a fine of not more than $1,000.00, or both.

 

 8        (6) (5) The department of health and human services shall

 

 9  report to the senate and house of representatives appropriations

 

10  committees and standing committees concerning insurance issues on

 

11  the number of claims and total dollar amount recovered from

 

12  automobile insurers under 2006 PA 593, MCL 550.281 to 550.289. The

 

13  reports required by this subsection must be given to the

 

14  appropriations committees and standing committees concerning

 

15  insurance issues by December 30 of each year and must cover the

 

16  preceding 12-month period.

 

17        (7) (6) As used in this section:

 

18        (a) "Automobile insurance" means that term as defined in

 

19  section 3303.

 

20        (b) "Private passenger nonfleet automobile" means that term as

 

21  defined in section 3303.

 

22        Sec. 3104. (1) An The catastrophic claims association is

 

23  created as an unincorporated, nonprofit association. to be known as

 

24  the catastrophic claims association, hereinafter referred to as the

 

25  association, is created. Each insurer engaged in writing insurance

 

26  coverages that provide the security required by section 3101(1)

 

27  within in this state, as a condition of its authority to transact

 1  insurance in this state, shall be a member of the association and

 

 2  shall be is bound by the plan of operation of the association. Each

 

 3  An insurer engaged in writing insurance coverages that provide the

 

 4  security required by section 3103(1) within in this state, as a

 

 5  condition of its authority to transact insurance in this state,

 

 6  shall be is considered to be a member of the association, but only

 

 7  for purposes of premiums under subsection (7)(d). Except as

 

 8  expressly provided in this section, the association is not subject

 

 9  to any laws of this state with respect to insurers, but in all

 

10  other respects the association is subject to the laws of this state

 

11  to the extent that the association would be if it were an insurer

 

12  organized and subsisting under chapter 50.

 

13        (2) The For all motor vehicle accident policies issued or

 

14  renewed before July 2, 2020 and for a motor vehicle accident policy

 

15  issued or renewed after July 1, 2020 to which section 3107c(1)(d)

 

16  applies, the association shall provide and each member shall accept

 

17  indemnification for 100% of the amount of ultimate loss sustained

 

18  under personal protection insurance coverages in excess of the

 

19  following amounts in each loss occurrence:

 

20        (a) For a motor vehicle accident policy issued or renewed

 

21  before July 1, 2002, $250,000.00.

 

22        (b) For a motor vehicle accident policy issued or renewed

 

23  during the period July 1, 2002 to June 30, 2003, $300,000.00.

 

24        (c) For a motor vehicle accident policy issued or renewed

 

25  during the period July 1, 2003 to June 30, 2004, $325,000.00.

 

26        (d) For a motor vehicle accident policy issued or renewed

 

27  during the period July 1, 2004 to June 30, 2005, $350,000.00.

 1        (e) For a motor vehicle accident policy issued or renewed

 

 2  during the period July 1, 2005 to June 30, 2006, $375,000.00.

 

 3        (f) For a motor vehicle accident policy issued or renewed

 

 4  during the period July 1, 2006 to June 30, 2007, $400,000.00.

 

 5        (g) For a motor vehicle accident policy issued or renewed

 

 6  during the period July 1, 2007 to June 30, 2008, $420,000.00.

 

 7        (h) For a motor vehicle accident policy issued or renewed

 

 8  during the period July 1, 2008 to June 30, 2009, $440,000.00.

 

 9        (i) For a motor vehicle accident policy issued or renewed

 

10  during the period July 1, 2009 to June 30, 2010, $460,000.00.

 

11        (j) For a motor vehicle accident policy issued or renewed

 

12  during the period July 1, 2010 to June 30, 2011, $480,000.00.

 

13        (k) For a motor vehicle accident policy issued or renewed

 

14  during the period July 1, 2011 to June 30, 2013, $500,000.00.

 

15        (l) For a motor vehicle accident policy issued or renewed

 

16  during the period July 1, 2013 to June 30, 2015, $530,000.00.

 

17        (m) For a motor vehicle accident policy issued or renewed

 

18  during the period July 1, 2015 to June 30, 2017, $545,000.00.

 

19        (n) For a motor vehicle accident policy issued or renewed

 

20  during the period July 1, 2017 to June 30, 2019, $555,000.00.

 

21        (o) For a motor vehicle accident policy issued or renewed

 

22  during the period July 1, 2019 to June 30, 2021, $580,000.00.

 

23  Beginning July 1, 2013, 2021, this $500,000.00 $580,000.00 amount

 

24  shall must be increased biennially on July 1 of each odd-numbered

 

25  year, for policies issued or renewed before July 1 of the following

 

26  odd-numbered year, by the lesser of 6% or the consumer price index,

 

27  Consumer Price Index, and rounded to the nearest $5,000.00. This

 1  The association shall calculate this biennial adjustment shall be

 

 2  calculated by the association by January 1 of the year of its July

 

 3  1 effective date.

 

 4        (3) An insurer may withdraw from the association only upon on

 

 5  ceasing to write insurance that provides the security required by

 

 6  section 3101(1) in this state.

 

 7        (4) An insurer whose membership in the association has been

 

 8  terminated by withdrawal shall continue continues to be bound by

 

 9  the plan of operation, and upon on withdrawal, all unpaid premiums

 

10  that have been charged to the withdrawing member are payable as of

 

11  the effective date of the withdrawal.

 

12        (5) An unsatisfied net liability to the association of an

 

13  insolvent member shall must be assumed by and apportioned among the

 

14  remaining members of the association as provided in the plan of

 

15  operation. The association has all rights allowed by law on behalf

 

16  of the remaining members against the estate or funds of the

 

17  insolvent member for sums money due the association.

 

18        (6) If a member has been merged or consolidated into another

 

19  insurer or another insurer has reinsured a member's entire business

 

20  that provides the security required by section 3101(1) in this

 

21  state, the member and successors in interest of the member remain

 

22  liable for the member's obligations.

 

23        (7) The association shall do all of the following on behalf of

 

24  the members of the association:

 

25        (a) Assume 100% of all liability as provided in subsection

 

26  (2).

 

27        (b) Establish procedures by which members shall must promptly

 1  report to the association each claim that, on the basis of the

 

 2  injuries or damages sustained, may reasonably be anticipated to

 

 3  involve the association if the member is ultimately held legally

 

 4  liable for the injuries or damages. Solely for the purpose of

 

 5  reporting claims, the member shall in all instances consider itself

 

 6  legally liable for the injuries or damages. The member shall also

 

 7  advise the association of subsequent developments likely to

 

 8  materially affect the interest of the association in the claim.

 

 9        (c) Maintain relevant loss and expense data relative relating

 

10  to all liabilities of the association and require each member to

 

11  furnish statistics, in connection with liabilities of the

 

12  association, at the times and in the form and detail as may be

 

13  required by the plan of operation.

 

14        (d) In a manner provided for in the plan of operation,

 

15  calculate and charge to members of the association a total premium

 

16  sufficient to cover the expected losses and expenses of the

 

17  association that the association will likely incur during the

 

18  period for which the premium is applicable. The total premium shall

 

19  must include an amount to cover incurred but not reported losses

 

20  for the period and may must be adjusted for any excess or deficient

 

21  premiums from previous periods. Excesses or deficiencies from

 

22  previous periods may must either be fully adjusted in a single

 

23  period or may be adjusted over several periods in a manner provided

 

24  for in the plan of operation. Each member shall must be charged an

 

25  amount equal to that member's total written car years of insurance

 

26  providing the security required by section 3101(1) or 3103(1), or

 

27  both, written in this state during the period to which the premium

 1  applies, with the total written car years of insurance multiplied

 

 2  by the applicable average premium per car. The average premium per

 

 3  car shall be is the total premium, calculated as adjusted for any

 

 4  excesses or deficiencies, divided by the total written car years of

 

 5  insurance providing the security required by section 3101(1) or

 

 6  3103(1), or both, written in this state of all members during the

 

 7  period to which the premium applies, excluding cars insured under a

 

 8  policy with a coverage limit under section 3107c(1)(a), (b), or

 

 9  (c), cars as to which an election to not maintain personal

 

10  protection insurance benefits has been made under section 3107d, or

 

11  as to which an exclusion under section 3109a(2) applies, except for

 

12  any portion of total premium that is an adjustment for a deficiency

 

13  in a previous period. A member may not be charged a premium for a

 

14  car insured under a policy with a coverage limit under section

 

15  3107c(1)(a), (b), or (c), as to which an election to not maintain

 

16  personal protection insurance benefits has been made under section

 

17  3107d, or as to which an exclusion under section 3109a(2) applies,

 

18  other than for the portion of the total premium attributable to an

 

19  adjustment for a deficiency in a previous period. A member shall

 

20  must be charged a premium for a historic vehicle that is insured

 

21  with the member of 20% of the premium charged for a car insured

 

22  with the member. As used in this subdivision:

 

23        (i) "Car" includes a motorcycle but does not include a

 

24  historic vehicle.

 

25        (ii) "Historic vehicle" means a vehicle that is a registered

 

26  historic vehicle under section 803a or 803p of the Michigan vehicle

 

27  code, 1949 PA 300, MCL 257.803a and 257.803p.

 1        (e) Require and accept the payment of premiums from members of

 

 2  the association as provided for in the plan of operation. The

 

 3  association shall do either of the following:

 

 4        (i) Require payment of the premium in full within 45 days

 

 5  after the premium charge.

 

 6        (ii) Require payment of the premiums to be made periodically

 

 7  to cover the actual cash obligations of the association.

 

 8        (f) Receive and distribute all sums money required by the

 

 9  operation of the association.

 

10        (g) Establish procedures for reviewing claims procedures and

 

11  practices of members of the association. If the claims procedures

 

12  or practices of a member are considered inadequate to properly

 

13  service the liabilities of the association, the association may

 

14  undertake or may contract with another person, including another

 

15  member, to adjust or assist in the adjustment of claims for the

 

16  member on claims that create a potential liability to the

 

17  association and may charge the cost of the adjustment to the

 

18  member.

 

19        (h) Provide any records necessary or requested by the director

 

20  for the actuarial examination under subsection (21).

 

21        (i) Subject to subsection (23), obey an order of the director

 

22  for a refund under subsection (22).

 

23        (8) In addition to other powers granted to it by this section,

 

24  the association may do all of the following:

 

25        (a) Sue and be sued in the name of the association. A judgment

 

26  against the association shall does not create any direct liability

 

27  against the individual members of the association. The association

 1  may provide for the indemnification of its members, members of the

 

 2  board of directors of the association, and officers, employees, and

 

 3  other persons lawfully acting on behalf of the association.

 

 4        (b) Reinsure all or any portion of its potential liability

 

 5  with reinsurers licensed to transact insurance in this state or

 

 6  approved by the commissioner.director.

 

 7        (c) Provide for appropriate housing, equipment, and personnel

 

 8  as may be necessary to assure the efficient operation of the

 

 9  association.

 

10        (d) Pursuant to the plan of operation, adopt reasonable rules

 

11  for the administration of the association, enforce those rules, and

 

12  delegate authority, as the board considers necessary to assure the

 

13  proper administration and operation of the association consistent

 

14  with the plan of operation.

 

15        (e) Contract for goods and services, including independent

 

16  claims management, actuarial, investment, and legal services, from

 

17  others within in or without outside of this state to assure the

 

18  efficient operation of the association.

 

19        (f) Hear and determine complaints of a company or other

 

20  interested party concerning the operation of the association.

 

21        (g) Perform other acts not specifically enumerated in this

 

22  section that are necessary or proper to accomplish the purposes of

 

23  the association and that are not inconsistent with this section or

 

24  the plan of operation.

 

25        (9) A board of directors is created , hereinafter referred to

 

26  as the board, which shall be responsible for the operation of and

 

27  shall operate the association consistent with the plan of operation

 1  and this section.

 

 2        (10) The plan of operation shall must provide for all of the

 

 3  following:

 

 4        (a) The establishment of necessary facilities.

 

 5        (b) The management and operation of the association.

 

 6        (c) Procedures to be utilized in charging premiums, including

 

 7  adjustments from excess or deficient premiums from prior periods.

 

 8  The plan must require that any deficiency from a prior period be

 

 9  amortized over not fewer than 15 years.

 

10        (d) Procedures for a refund to members of the association, for

 

11  distribution to insureds as provided in subsection (24), as ordered

 

12  by the director under subsection (22). The procedures must provide

 

13  for a distribution of a refund attributable to a historic vehicle

 

14  equal to 20% of the refund for a car that is not a historic

 

15  vehicle.

 

16        (e) (d) Procedures governing the actual payment of premiums to

 

17  the association.

 

18        (f) (e) Reimbursement of each member of the board by the

 

19  association for actual and necessary expenses incurred on

 

20  association business.

 

21        (g) (f) The investment policy of the association.

 

22        (h) (g) Any other matters required by or necessary to

 

23  effectively implement this section.

 

24        (11) Each The board shall must include members that would

 

25  contribute a total of not less than 40% of the total premium

 

26  calculated pursuant to under subsection (7)(d). Each director shall

 

27  be board member is entitled to 1 vote. The initial term of office

 1  of a director shall be board member is 2 years.

 

 2        (12) As part of the plan of operation, the board shall adopt

 

 3  rules providing for the composition and term of successor boards to

 

 4  the initial board and the terms of board members, consistent with

 

 5  the membership composition requirements in subsections (11) and

 

 6  (13). Terms of the directors shall board members must be staggered

 

 7  so that the terms of all the directors board members do not expire

 

 8  at the same time and so that a director board member does not serve

 

 9  a term of more than 4 years.

 

10        (13) The board shall must consist of 5 directors, board

 

11  members and the commissioner director, who shall be serve as an ex

 

12  officio member of the board without vote.

 

13        (14) Each director The director shall be appointed by the

 

14  commissioner and appoint the board members. A board member shall

 

15  serve until that member's his or her successor is selected and

 

16  qualified. The board shall elect the chairperson of the board.

 

17  shall be elected by the board. A The director shall fill any

 

18  vacancy on the board shall be filled by the commissioner consistent

 

19  with as provided in the plan of operation.

 

20        (15) After the board is appointed, the The board shall meet as

 

21  often as the chairperson, the commissioner, director, or the plan

 

22  of operation shall require, requires, or at the request of any 3

 

23  members of the board. board members. The chairperson shall retain

 

24  the right to may vote on all issues. Four members of the board

 

25  board members constitute a quorum.

 

26        (16) An The board shall furnish to each member of the

 

27  association an annual report of the operations of the association

 1  in a form and detail as may be determined by the board. shall be

 

 2  furnished to each member.

 

 3        (17) Not more than 60 days after the initial organizational

 

 4  meeting of the board, the board shall submit to the commissioner

 

 5  for approval a proposed plan of operation consistent with the

 

 6  objectives and provisions of this section, which shall provide for

 

 7  the economical, fair, and nondiscriminatory administration of the

 

 8  association and for the prompt and efficient provision of

 

 9  indemnity. If a plan is not submitted within this 60-day period,

 

10  then the commissioner, after consultation with the board, shall

 

11  formulate and place into effect a plan consistent with this

 

12  section.

 

13        (18) The plan of operation, unless approved sooner in writing,

 

14  shall be considered to meet the requirements of this section if it

 

15  is not disapproved by written order of the commissioner within 30

 

16  days after the date of its submission. Before disapproval of all or

 

17  any part of the proposed plan of operation, the commissioner shall

 

18  notify the board in what respect the plan of operation fails to

 

19  meet the requirements and objectives of this section. If the board

 

20  fails to submit a revised plan of operation that meets the

 

21  requirements and objectives of this section within the 30-day

 

22  period, the commissioner shall enter an order accordingly and shall

 

23  immediately formulate and place into effect a plan consistent with

 

24  the requirements and objectives of this section.

 

25        (17) (19) The proposed plan of operation or Any amendments to

 

26  the plan of operation are subject to majority approval by the

 

27  board, ratified ratification by a majority of the membership of the

 1  association having a vote, with voting rights being apportioned

 

 2  according to the premiums charged in subsection (7)(d), and are

 

 3  subject to approval by the commissioner.director.

 

 4        (18) (20) Upon approval by the commissioner and ratification

 

 5  by the members of the plan submitted, or upon the promulgation of a

 

 6  plan by the commissioner, each An insurer authorized to write

 

 7  insurance providing the security required by section 3101(1) in

 

 8  this state, as provided in this section, is bound by and shall

 

 9  formally subscribe to and participate in the plan approved of

 

10  operation as a condition of maintaining its authority to transact

 

11  insurance in this state.

 

12        (19) (21) The association is subject to all the reporting,

 

13  loss reserve, and investment requirements of the commissioner

 

14  director to the same extent as would is a member of the

 

15  association.

 

16        (20) (22) Premiums charged members by the association shall

 

17  must be recognized in the rate-making procedures for insurance

 

18  rates in the same manner that expenses and premium taxes are

 

19  recognized. If a member of the association passes on any portion of

 

20  the premium payable under this section to an insured, the amount

 

21  passed on must equal the portion of the premium payable by the

 

22  member under this section attributable to the car or historic

 

23  vehicle insured, including any adjustments for excesses or

 

24  deficiencies from a previous period.

 

25        (21) (23) The commissioner director or an authorized

 

26  representative of the commissioner director may visit the

 

27  association at any time and examine any and all of the

Senate Bill No. 1 as amended May 24, 2019

 1  association's affairs. Beginning July 1, 2022, and every third year

 

 2  after [2022], the director shall engage 1 or more independent

 

 3  actuaries to examine the affairs and records of the association for

 

 4  the previous 3 years. The actuarial examination must be conducted

 

 5  using sound actuarial principles consistent with the applicable

 

 6  statements of principles and the code of professional conduct

 

 7  adopted by the Casualty Actuarial Society. By September 1, [2022] and

 

 8  by September 1 of every third year after [2022], the director shall

 

 9  provide a report to the legislature on the results of the audit

 

10  conducted under this subsection.

 

11        (22) If the actuarial examination under subsection (21) shows

 

12  that the assets of the association exceed 120% of its liabilities,

 

13  including incurred but not reported liabilities, and if the refund

 

14  will not threaten the association's ongoing ability to provide

 

15  reimbursements for personal protection insurance benefits based on

 

16  sound actuarial principles consistent with the applicable

 

17  statements of principles and the code of professional conduct

 

18  adopted by the Casualty Actuarial Society, the director shall order

 

19  the association to refund an amount equal to the difference between

 

20  the total excess and 120% of the liabilities of the association,

 

21  including incurred but not reported liabilities, under subsection

 

22  (10)(d) and order the members of the association to distribute the

 

23  refunds under subsection (24).

 

24        (23) Within 30 days after receiving an order from the director

 

25  under subsection (22), the association may request a hearing to

 

26  review the order by filing a written request with the director. The

 

27  department shall conduct the review as a contested case under the

 1  administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

 2  24.328.

 

 3        (24) A member of the association shall distribute any refund

 

 4  it receives under subsection (10)(d) to the persons that it insures

 

 5  under policies that provide the security required under section

 

 6  3101(1) or 3103(1), or both, and that are subject to a premium

 

 7  under this section on a uniform basis per car and historic vehicle

 

 8  in a manner and on the date or dates provided by the director in

 

 9  accordance with an order issued by the director. A refund

 

10  attributable to a historic vehicle must be equal to 20% of the

 

11  refund for a car that is not a historic vehicle.

 

12        (25) By September 1 of each year, the association shall

 

13  prepare, submit to the committees of the senate and house of

 

14  representatives with jurisdiction over insurance matters, and post

 

15  on the association website an annual consumer statement, written in

 

16  a manner intended for the general public. The statement must

 

17  include all of the following:

 

18        (a) The number of claims opened during the preceding 12

 

19  months, the amount expended on the claims, and the future

 

20  anticipated costs of the claims.

 

21        (b) For each of the preceding 10 years, the total number of

 

22  open claims, the amount expended on the claims, and the anticipated

 

23  future costs of the claims.

 

24        (c) For each of the preceding 10 years, the total number of

 

25  claims closed and the amount expended on the claims.

 

26        (d) For each of the preceding 10 years, the ratio of claims

 

27  opened to claims closed.

 1        (e) For each of the preceding 10 years, the average length of

 

 2  open claims.

 

 3        (f) A statement of the current financial condition of the

 

 4  association and the reasons for any deficit or surplus in collected

 

 5  assessments compared to losses.

 

 6        (g) A statement of the assumptions, methodology, and data used

 

 7  to make revenue projections. As used in this subdivision, "revenue"

 

 8  means return on investments.

 

 9        (h) A statement of the assumptions, methodology, and data used

 

10  to make cost projections.

 

11        (i) A list of the association's assets, sorted by category or

 

12  type of asset, such as stocks, bonds, or mutual funds, and the

 

13  expected return on each asset.

 

14        (j) The total amount of the association's discounted and

 

15  undiscounted liabilities and a description and explanation of the

 

16  liabilities, including an explanation of the association's

 

17  definition of the terms discounted and undiscounted.

 

18        (k) Measures taken by the association to contain costs.

 

19        (l) A statement explaining what portion of the assessment to

 

20  insureds as recognized in rates under subsection (20) is

 

21  attributable to claims occurring in the previous 12 months,

 

22  administrative costs, and the amount, if any, to adjust for past

 

23  deficits.

 

24        (m) A statement explaining any qualifications identified by

 

25  the independent auditors in the most recent audit report prepared

 

26  under subsection (21).

 

27        (n) A loss payment summary for each of the preceding years by

 1  category.

 

 2        (o) For each of the preceding 10 years, an injury type

 

 3  summary, categorizing the injuries suffered by claimants the

 

 4  payment of whose claims are being reimbursed by the association, by

 

 5  brain injuries, injuries resulting in quadriplegia, injuries

 

 6  resulting in paraplegia, burn injuries, and other injuries.

 

 7        (p) A summary of investment returns over the preceding 10

 

 8  years showing the investment balance, the investment gain, and the

 

 9  percentage return on the investment balance.

 

10        (q) A summary of the mortality assumptions used in making cost

 

11  projections.

 

12        (r) A summary of any financial practices that differ from

 

13  those found in the National Association of Insurance Commissioners

 

14  Accounting Practices and Procedures Manual.

 

15        (26) By September 1 of each year, the association shall

 

16  prepare and provide to the committees of the senate and house of

 

17  representatives with jurisdiction over insurance matters an annual

 

18  report of the association. The report must contain all of the

 

19  following:

 

20        (a) An executive summary.

 

21        (b) A discussion of the mortality assumptions used by the

 

22  association in making cost projections.

 

23        (c) An evaluation of the accuracy of the association's

 

24  actuarial assumptions over the preceding 5 years.

 

25        (d) The annual consumer statement prepared under subsection

 

26  (25).

 

27        (e) Anything else the association determines is necessary to

 1  advise the legislature about the operations of the association.

 

 2        (27) (24) The association does not have liability for losses

 

 3  occurring before July 1, 1978. After July 1, 2020, the association

 

 4  does not have liability for an ultimate loss under personal

 

 5  protection insurance coverage for a motor vehicle accident policy

 

 6  to which a limit under section 3107c(1)(a), (b), or (c) is

 

 7  applicable.

 

 8        (28) (25) As used in this section:

 

 9        (a) "Association" means the catastrophic claims association

 

10  created in subsection (1).

 

11        (b) "Board" means the board of directors of the association

 

12  created in subsection (9).

 

13        (c) "Car" includes a motorcycle but does not include a

 

14  historic vehicle.

 

15        (d) (a) "Consumer price index" Price Index" means the

 

16  percentage of change in the consumer price index Consumer Price

 

17  Index for all urban consumers in the United States city average for

 

18  all items for the 24 months prior to before October 1 of the year

 

19  prior to before the July 1 effective date of the biennial

 

20  adjustment under subsection (2)(k) (2)(o) as reported by the United

 

21  States department of labor, bureau of labor statistics, Department

 

22  of Labor, Bureau of Labor Statistics, and as certified by the

 

23  commissioner.director.

 

24        (e) "Historic vehicle" means a vehicle that is a registered

 

25  historic vehicle under section 803a or 803p of the Michigan vehicle

 

26  code, 1949 PA 300, MCL 257.803a and 257.803p.

 

27        (f) (b) "Motor vehicle accident policy" means a policy

 1  providing the coverages required under section 3101(1).

 

 2        (g) (c) "Ultimate loss" means the actual loss amounts that a

 

 3  member is obligated to pay and that are paid or payable by the

 

 4  member, and do not include claim expenses. An ultimate loss is

 

 5  incurred by the association on the date that the loss occurs.

 

 6        Sec. 3107. (1) Except as provided in subsection (2), Subject

 

 7  to the exceptions and limitations in this chapter, and subject to

 

 8  chapter 31A, personal protection insurance benefits are payable for

 

 9  the following:

 

10        (a) Allowable expenses consisting of all reasonable charges

 

11  incurred for reasonably necessary products, services and

 

12  accommodations for an injured person's care, recovery, or

 

13  rehabilitation. Allowable expenses within personal protection

 

14  insurance coverage shall do not include either of the following:

 

15        (i) Charges for a hospital room in excess of a reasonable and

 

16  customary charge for semiprivate accommodations, except if unless

 

17  the injured person requires special or intensive care.

 

18        (ii) Funeral and burial expenses in excess of the amount set

 

19  forth in the policy, which shall must not be less than $1,750.00 or

 

20  more than $5,000.00.

 

21        (b) Work loss consisting of loss of income from work an

 

22  injured person would have performed during the first 3 years after

 

23  the date of the accident if he or she had not been injured. Work

 

24  loss does not include any loss after the date on which the injured

 

25  person dies. Because the benefits received from personal protection

 

26  insurance for loss of income are not taxable income, the benefits

 

27  payable for such the loss of income shall must be reduced 15%