January 18, 2018, Introduced by Reps. Theis, Leutheuser, Bizon, Webber, Love, Kelly, Alexander, Vaupel, Calley and Kahle and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 527, 1511, 1613, 1625, and 2248 (MCL 500.527,
500.1511, 500.1613, 500.1625, and 500.2248), section 527 as added
by 2001 PA 24, sections 1613 and 1625 as added by 2002 PA 655, and
section 2248 as amended by 2012 PA 454, and by adding section 2266.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 527. (1) A licensee shall provide any notice required
under this chapter so that each consumer can reasonably be expected
to receive actual notice in writing or, if the consumer agrees,
electronically. A licensee may reasonably expect that a consumer
will receive actual notice if the licensee does any of the
following:
(a) Hand delivers a printed copy of the notice to the
consumer.
(b) Mails a printed copy of the notice to the last known
address of the consumer separately, or in a policy, billing, or
other written communication.
(c)
For Subject to section
2266, for a consumer who conducts
transactions electronically, posts the notice on the electronic
site and requires the consumer to acknowledge receipt of the notice
as a necessary step to obtaining a particular insurance product or
service.
(d) For an isolated transaction with a consumer, such as the
licensee providing an insurance quote or selling the consumer
travel insurance, posts the notice and requires the consumer to
acknowledge receipt of the notice as a necessary step to obtaining
the particular insurance product or service.
(2) The following do not provide a reasonable expectation that
a consumer will receive actual notice of a licensee's privacy
policies and practices under subsection (1):
(a) The licensee only posts a sign in its office or generally
publishes advertisements of its privacy policies and practices.
(b) The licensee sends the notice via electronic mail to a
consumer who does not obtain an insurance product or service from
the licensee electronically.
(3)
A Subject to section 2266,
a licensee may reasonably
expect that a customer will receive actual notice of the licensee's
annual
notice in either of the following cases:circumstances:
(a) The customer uses the licensee's website to access
insurance products and services electronically and agrees to
receive notices at the website and the licensee posts its current
privacy notice continuously in a clear and conspicuous manner on
the website.
(b) The customer has requested that the licensee refrain from
sending any information regarding the customer relationship, and
the licensee's current privacy notice remains available to the
customer
upon on request.
(4) A licensee shall not provide any notice required by this
chapter solely by orally explaining the notice, either in person or
over the telephone.
(5) For customers only, a licensee shall provide the initial,
annual, and revised notices so that the customer can retain them or
obtain them later in writing or, subject to section 2266, if the
customer agrees, electronically. A licensee provides an initial,
annual, or revised notice to the customer so that the customer can
retain it or obtain it later if the licensee does any of the
following:
(a) Hand delivers a printed copy of the notice to the
customer.
(b) Mails a printed copy of the notice to the last known
address of the customer.
(c)
Makes Subject to section
2266, makes the current initial,
annual, or revised notice available on a website or a link to
another website for the customer who obtains an insurance product
or service electronically and agrees to receive the notice at the
website.
(6) A licensee may provide a joint notice from the licensee
and 1 or more of its affiliates or other financial institutions, as
identified in the notice, if the notice is accurate with respect to
the licensee and the other institutions. A licensee may also
provide a notice on behalf of another financial institution, as
identified in the notice, if the notice is accurate with respect to
the licensee and the other institution.
(7) If 2 or more consumers jointly obtain an insurance product
or service from a licensee, the licensee may satisfy the initial,
annual, and revised notice requirements by providing 1 notice to
those consumers jointly.
Sec.
1511. (1) When If a premium finance agreement empowers
the
premium finance company to cancel any an insurance contract or
contracts
listed in the agreement, the premium finance company
shall
not cancel the insurance contract or
contracts shall not be
canceled
by the premium finance company unless
such the
cancellation is effectuated in accordance with this section.
(2)
Not less than 10 days' written notice shall must be
mailed
to the insured of the intent of the premium finance company to
cancel the insurance contract unless the default is cured within
the 10-day period.
(3) After expiration of the 10-day period under subsection
(2), the premium finance company may request cancellation of the
insurance contract by mailing to the insurer a notice of
cancellation, and the insurer shall cancel the insurance contract
shall
be cancelled by the insurer without
requiring the return of
the
insurance contract. The Subject
to section 2266, the premium
finance company shall also mail a notice of cancellation to the
insured at his or her last known address at the same time the
premium finance company requests cancellation of the insurance
contract.
(4) All statutory, regulatory and contractual restrictions
providing that the insurance contract may not be canceled unless
notice is given to a governmental agency, mortgagee, or other third
party
shall apply where if
the cancellation is effected under the
provisions
of this section. The insurer shall
give the prescribed
notice
in on behalf of itself or the insured to any governmental
agency, mortgagee, or other third party on or before the second
business day after the day it receives the notice of cancellation
from the premium finance company and shall determine the effective
date of cancellation taking into consideration the number of days'
notice required to complete the cancellation.
(5)
Whenever If a financed contract is canceled, the insurer
shall
return whatever the gross unearned premiums are due under the
insurance contract to the premium finance company for the account
of the insured.
(6) If the crediting of return premiums to the account of the
insured results in a surplus over the amount due from the insured,
the premium finance company shall refund the excess to the insured.
,
but However, no refund shall be is required
if it amounts to the
excess is less than $1.00.
Sec.
1613. Creditor-placed insurance shall must be set forth
in
an individual policy or certificate of insurance. A Except as
otherwise provided in section 2266, a copy of the individual
policy, certificate of insurance coverage, or other evidence of
insurance
coverage shall must be mailed, first-class mail, or
delivered in person to the last known address of the debtor.
Sec. 1625. (1) A creditor shall not impose charges, including
premium costs and related interest and finance charges, on a debtor
for creditor-placed insurance coverage unless adequate disclosure
of the requirement to maintain insurance has been made to the
debtor. Adequate disclosure is accomplished if all of the following
occur:
(a) The credit agreement sets forth the requirement that the
debtor
must maintain insurance on the collateral as provided for in
section 1621.
(b) The creditor makes reasonable efforts to notify the debtor
of the requirement to maintain insurance and allows a reasonable
time for compliance with this requirement.
(c) A final notice as required by this chapter is sent to the
debtor.
(d) If creditor-placed insurance coverage is issued, a copy of
the
policy or certificate is sent to the debtor as provided for in
section 1613.
(2) After adequate disclosure of the request to maintain
insurance
has been made to the debtor as required by under this
section, a creditor may proceed to impose charges for creditor-
placed insurance if the debtor fails to provide evidence of
insurance. A creditor may impose charges no earlier than 10 days
after sending the final notice.
(3) Reasonable efforts to notify the debtor under subsection
(1)(b) are accomplished if the creditor does all of the following:
(a)
Mails Except as otherwise
provided in section 2266, mails
a notice by first-class mail to the debtor's last known address as
contained in the creditor's records, stating that the creditor
intends to charge the debtor for creditor-placed insurance coverage
on the collateral if the debtor fails to provide evidence of the
property insurance to the creditor.
(b) Allows the debtor at least 20 days to respond to the
notice and provide evidence of acceptable insurance coverage before
sending a final notice.
(c)
Sends Except as otherwise
provided in section 2266, sends
a final notice in compliance with this section by first-class mail
to the debtor's last known address as contained in the creditor's
records at least 10 days before the cost of insurance is charged to
the debtor by the creditor. Proof of the mailing of the final
notice
shall must be retained for at least 3 years following the
expiration or termination of the coverage or as otherwise required
by law.
(4)
The initial notice under this section shall must be
in a
form determined by the creditor to remind the debtor of the
requirement to maintain insurance on the collateral. The final
notice
under this section shall must
be as complete as the
following notice, printed in not less than 12-point type, and
modified where necessary to fit the nature of the credit
transaction:
FINAL NOTICE
Your credit agreement with us requires you to have property
insurance on the collateral until you pay off your loan. You have
not given us proof you have insurance on the property. You can ask
your insurance company or agent to give us proof of insurance or
you can send us proof you have property insurance within 10
calendar days after the date this letter was postmarked. If you do
not, we will buy the insurance and charge the cost to you.
You must pay for the property insurance we buy. It may cost
more than insurance you can buy on your own. The cost of the
insurance we buy may be added to your loan balance and we may
charge you interest on it. If we do, you will pay interest at the
same rate you pay on your loan.
The insurance we buy will pay claims to us (the creditor) for
physical damage to your property. It will not pay any claims made
against you [and it may not pay you for any claims you make (delete
if limited dual interest coverage)]. The insurance we buy will not
give you any liability insurance coverage and will not meet the
requirements of a state's financial responsibility law.
We may receive compensation for placing this insurance, which
is included in the cost of coverage charged to you.
The property coverage we buy will start on the date shown in
the policy or certificate, which may go back to the date of the
loan or the date your prior coverage stopped. We will cancel the
insurance we bought for you and give you a refund or credit of
unearned charges if you give us proof you have bought property
insurance somewhere else or if you have paid off the loan.
(5)
All creditor-placed insurance shall must be set forth in
an
individual policy or certificate of insurance. Not Subject to
section
2266, not earlier than the sending of
the final notice nor
or 25 days after a charge is made to the debtor for creditor-placed
insurance coverage, the creditor shall cause a copy of the
individual policy, certificate, or other evidence of insurance
coverage evidencing the creditor-placed insurance coverage to be
sent, first-class mail, to the debtor's last known address.
(6) A creditor's compliance with or failure to comply with
this
chapter shall does not be construed to require the creditor to
purchase insurance coverage on the collateral, and the creditor is
not
liable to the debtor or a third party as a result because of
its failure to purchase the insurance.
Sec. 2248. (1) A policy of insurance against fire, theft,
property
damage, collision, or liability in connection with
automobile
coverage shall must not be issued unless the policy, or
an exact copy of the policy, is delivered to the insured.
(2)
For purposes of this section, a personal automobile
insurance policy and endorsements that do not contain personally
identifiable information may be delivered by mailing, delivery, or
posting on the insurer's internet website. If the insurer elects to
post an insurance policy and endorsements on its internet website
in
lieu instead of mailing or delivering them to the named insured,
the insurer shall comply with all of the following conditions:
(a) The policy and endorsements are easily accessible and
remain
easily accessible for as long as while the policy is in
force.
(b) After the expiration of the policy, the insurer archives
the policy and endorsements and makes them available on request at
no charge or for a reasonable charge.
(c) The policy and endorsements are posted in a manner that
enables the insured to print and save the policy and endorsements
using programs or applications that are widely available on the
internet and free to use.
(d) The insurer provides notice to the named insured with each
declarations page of a method by which an insured may obtain, on
request and without charge, a paper or electronic copy of the
policy or endorsements.
(e)
On each declarations page issued to an the insured, the
insurer clearly identifies the exact policy and endorsement forms
purchased by the insured.
(f) The insurer provides notice, in the manner by which it
customarily communicates with a named insured, of any of the
changes
to the forms or endorsements and the an insured's right to
obtain, on request and without charge, a paper copy of the forms or
endorsements.
Sec. 2266. (1) Subject to the requirements of this section, a
notice to a party or any other document that is required in an
insurance transaction or that is to serve as evidence of insurance
coverage may be delivered, stored, and presented by electronic
means if it meets the requirements of the uniform electronic
transactions act, 2000 PA 305, MCL 450.831 to 450.849.
(2) Electronic delivery of a notice or document as provided in
this section is equivalent to any delivery method otherwise
required by law, including delivery by first-class mail, first-
class mail postage prepaid, certified mail, or certificate of
mailing.
(3) If an insurer has reason to believe that a party is not
receiving notices or documents that the insurer attempts to deliver
by electronic means, including if the insurer attempts delivery by
electronic means and receives a notice that the delivery by
electronic means has failed, the insurer shall deliver the notices
or documents by first-class mail or by any other delivery method
required for the notices or documents.
(4) An insurer may use electronic delivery of a notice or a
document to a party under this section if the insurer meets the
requirements of subsection (5) and if all of the following
requirements are met:
(a) The party has affirmatively consented to the electronic
delivery method and has not withdrawn consent.
(b) Before giving consent, the insurer provides the party with
a clear and conspicuous statement informing the party of all of the
following:
(i) The right of the party at any time to have the notice or
the document provided or made available in paper form or by another
nonelectronic form.
(ii) The right of the party at any time to withdraw consent to
have a notice or document delivered by electronic means and any
conditions or consequences imposed if consent is withdrawn.
(iii) The specific notice or document or categories of notices
or documents that may be delivered by electronic means during the
course of the relationship between the insurer and the party.
(iv) The means, after consent is given, by which the party may
obtain a paper copy of a notice or document delivered by electronic
means.
(v) The procedures for the party to follow to update
information needed to contact the party electronically and to
withdraw consent to have a notice or a document delivered by
electronic means.
(c) Before giving consent, the insurer provides the party with
a statement of the hardware and software requirements for access to
and retention of a notice or document delivered by electronic
means. The party shall provide electronic consent to the hardware
and software requirements or confirm consent electronically in a
manner that reasonably demonstrates that the party can access
information in the electronic form that will be used for notices or
documents delivered by electronic means.
(5) After the party consents as provided in subsection (4), if
a change occurs in hardware or software needed to access or retain
a notice or document delivered by electronic means that creates a
material risk that the party will not be able to access or retain a
notice or document to which consent applies, the insurer shall
provide the party with a statement that includes all of the
following:
(a) Information regarding the revised hardware or software
requirements for access to and retention of a notice or document
delivered by electronic means.
(b) A description of the right of the party to withdraw
consent without the imposition of any condition or consequence that
was not disclosed under subsection (4)(b)(ii).
(6) Withdrawal of consent to electronic delivery does not
affect the legal effectiveness, validity, or enforceability of a
notice or a document that is delivered by electronic means to a
party before the withdrawal of consent is effective.
(7) Except as otherwise provided in this subsection,
withdrawal of consent by a party becomes effective 15 days after
the insurer receives notice of the withdrawal. A withdrawal becomes
effective immediately if the insurer learns that the electronic
delivery method currently used is no longer an effective delivery
mechanism.
(8) Failure by an insurer to comply with subsection (5) may be
treated, at the election of the party, as a withdrawal of consent.
(9) This section must not be construed to modify, limit, or
supersede the federal electronic signatures in global national
commerce act, 15 USC 7001 to 7031.
(10) As used in this section:
(a) "Delivered by electronic means", "delivery by electronic
means", or "electronic delivery" mean delivery by either of the
following methods:
(i) Delivery to an electronic mail address at which a party
has consented to receive notices or documents.
(ii) Both of the following:
(A) Posting on an electronic network or site accessible by the
internet through use of a mobile application, computer, mobile
device, tablet, or any other electronic device.
(B) Sending separate notice of the posting described in sub-
subparagraph (A) to the electronic mail address at which the party
consented to receive notice of the posting or using any other
delivery method to which the party has consented.
(b) "Party" means a recipient of a notice or document required
as part of an insurance transaction and includes an applicant,
insured, policy holder, or annuity contract holder.