SENATE BILL NO. 793

This bill proposes to make changes to the insurance code of 1956 in the state of Michigan. The proposed amendments would affect sections 134 and 3104 of the code. The purpose of these amendments is to update and clarify certain provisions related to insurance associations and facilities in the state.

Section 134 of the code deals with the validity of certificates of authority or licenses issued prior to January 1, 1957. The proposed amendment states that any certificate of authority or license that was valid before this date will remain valid until its original expiration date, unless it is terminated in accordance with the insurance code.

The amendment also validates any plan of operation adopted by an association or facility, as well as any premiums or assessments levied against insurer members of that association or facility. These plans, premiums, and assessments will be retroactively validated to their original adoption or levy date. The amendment specifies that they will continue to be in force and effect according to the terms of the plan of operation until changed by the commissioner or the board of directors of the association or facility.

Additionally, the amendment clarifies that an association or facility, as well as its board of directors, is not considered a state agency and the money of the association or facility is not considered state money.

Furthermore, the amendment exempts the records of an association or facility from disclosure under the freedom of information act, unless otherwise provided in section 3104.

The amendment also specifies that any premiums or assessments levied by an association or facility, or by a similar association or facility formed under a law in a different state, will not be considered a burden or special burden for purposes of a calculation under section 476a. Additionally, any premium or assessment paid to an association or facility will not be included in determining the aggregate amount a foreign insurer pays to the department of treasury.

The amendment defines "association or facility" as an association of insurers created under the insurance code, as well as any other association or facility formed under the code as a nonprofit organization of insurer members. It provides a list of specific associations and facilities included in this definition, such as the Michigan worker's compensation placement facility and the Michigan basic property insurance association.

Section 3104 of the code establishes the catastrophic claims association as an unincorporated, nonprofit association. The proposed amendment states that every insurer engaged in writing insurance coverages that provide the required security in the state of Michigan must be a member of the association and is bound by its plan of operation. Insurers writing insurance coverages meeting the security requirements are considered members of the association, but only for the purpose of premiums.

The amendment also sets forth the amounts of indemnification provided by the association for motor vehicle accident policies based on the policy year. It specifies the maximum amount of ultimate loss sustained under personal protection insurance coverages for each policy year.

Furthermore, the amendment outlines the procedures for withdrawal from the association, the obligations of withdrawing members, the assumption of unsatisfied net liability, and the liability of merged or consolidated insurers.

The amendment grants the association various powers and responsibilities, including assuming liability, establishing procedures, collecting premiums, providing records, cooperating with the department of treasury, and providing annual reports.

Additionally, the amendment establishes the board of directors of the association, consisting of voting board members appointed by the director. The board is responsible for conducting the association's business and providing annual reports.

The amendment requires the association to prepare an annual consumer statement and an annual report, which must be submitted to the appropriate committees of the senate and house of representatives and made available to the public. The annual consumer statement must include information about claims, liabilities, expenses, financial condition, and other relevant details. The annual report must provide an executive summary, discussions of actuarial assumptions and accuracy, the annual consumer statement, and any other necessary information for the legislature to understand the operations of the association.

Furthermore, the amendment requires the association to disclose all data used in computing premiums and expected losses and expenses on its website within 15 days after charging members the total premium.

The amendment also includes provisions regarding liability, public meetings and disclosure of records, and specific definitions of terms used in the section.

This bill is contingent upon the enactment of Senate Bill No. 794 of the 102nd Legislature.

Insurance: No-fault