Bill Text: MI HB4211 | 2019-2020 | 100th Legislature | Introduced

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Bill Title: Insurance: no-fault; personal protection insurance coverage choices; provide for. Amends secs. 3104, 3107 & 3109a of 1956 PA 218 (MCL 500.3104 et seq.).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2019-02-19 - Bill Electronically Reproduced 02/19/2019 [HB4211 Detail]

Download: Michigan-2019-HB4211-Introduced.html

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HOUSE BILL No. 4211

 

 

February 19, 2019, Introduced by Rep. Yaroch and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 3104, 3107, and 3109a (MCL 500.3104, 500.3107,

 

and 500.3109a), section 3104 as amended by 2002 PA 662, section

 

3107 as amended by 2012 PA 542, and section 3109a as amended by

 

2012 PA 454.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

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

 

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

 

the catastrophic claims association, hereinafter referred to as the

 

association, is created. Each insurer engaged in writing insurance

 

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

 

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

 

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

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

 

An insurer engaged in writing insurance coverages that provide the

 

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

 

condition of its authority to transact insurance in this state,

 

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

 

for purposes of premiums under subsection (7)(d). (8)(d). Except as

 

expressly provided in this section, the association is not subject

 

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

 

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

 

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

 

organized and subsisting under chapter 50.

 

     (2) The Subject to subsection (3), the association shall

 

provide and each member shall accept indemnification for 100% of

 

the amount of ultimate loss sustained under personal protection

 

insurance coverages in excess of the following amounts in each loss

 

occurrence:

 

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

 

before July 1, 2002, $250,000.00.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

during the period July 1, 2006 to June 30, 2007, $400,000.00.

 

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

 

during the period July 1, 2007 to June 30, 2008, $420,000.00.

 

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

 

during the period July 1, 2008 to June 30, 2009, $440,000.00.

 

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

 

during the period July 1, 2009 to June 30, 2010, $460,000.00.

 

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

 

during the period July 1, 2010 to June 30, 2011, $480,000.00.

 

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

 

during the period July 1, 2011 to June 30, 2013, $500,000.00.

 

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

 

during the period July 1, 2013 to June 30, 2015, $530,000.00.

 

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

 

during the period July 1, 2015 to June 30 2017, $545,000.00.

 

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

 

during the period July 1, 2017 to June 30, 2019, $555,000.00.

 

Beginning July 1, 2013, 2019, this $500,000.00 $555,000.00 amount

 

shall must be increased biennially on July 1 of each odd-numbered

 

year, for policies issued or renewed before July 1 of the following

 

odd-numbered year, by the lesser of 6% or the consumer price index,

 

Consumer Price Index, and rounded to the nearest $5,000.00. This

 

The association shall calculate this biennial adjustment shall be

 

calculated by the association by January 1 of the year of its July

 

1 effective date.

 

     (3) The association does not have liability for any amount of

 

ultimate loss that exceeds the maximum limit under section

3109a(2)(a), if that limit is applicable.

 

     (4) (3) An insurer may withdraw from the association only upon

 

on ceasing to write insurance that provides the security required

 

by section 3101(1) in this state.

 

     (5) (4) An insurer whose membership in the association has

 

been terminated by withdrawal shall continue continues to be bound

 

by the plan of operation, and upon on withdrawal, all unpaid

 

premiums that have been charged to the withdrawing member are

 

payable as of the effective date of the withdrawal.

 

     (6) (5) An unsatisfied net liability to the association of an

 

insolvent member shall must be assumed by and apportioned among the

 

remaining members of the association as provided in the plan of

 

operation. The association has all rights allowed by law on behalf

 

of the remaining members against the estate or funds of the

 

insolvent member for sums money due the association.

 

     (7) (6) If a member has been merged or consolidated into

 

another insurer or another insurer has reinsured a member's entire

 

business that provides the security required by section 3101(1) in

 

this state, the member and successors in interest of the member

 

remain liable for the member's obligations.

 

     (8) (7) The association shall do all of the following on

 

behalf of the members of the association:

 

     (a) Assume 100% of all liability as provided in subsection

 

(2).

 

     (b) Establish procedures by which members shall must promptly

 

report to the association each claim that, on the basis of the

 

injuries or damages sustained, may reasonably be anticipated to

involve the association if the member is ultimately held legally

 

liable for the injuries or damages. Solely for the purpose of

 

reporting claims, the member shall in all instances consider itself

 

legally liable for the injuries or damages. The member shall also

 

advise the association of subsequent developments likely to

 

materially affect the interest of the association in the claim.

 

     (c) Maintain relevant loss and expense data relative to all

 

liabilities of the association and require each member to furnish

 

statistics, in connection with liabilities of the association, at

 

the times and in the form and detail as may be required by the plan

 

of operation.

 

     (d) In a manner provided for in the plan of operation,

 

calculate and charge to members of the association a total premium

 

sufficient to cover the expected losses and expenses of the

 

association that the association will likely incur during the

 

period for which the premium is applicable. The total premium shall

 

must include an amount to cover incurred but not reported losses

 

for the period and may be adjusted for any excess or deficient

 

premiums from previous periods. Excesses or deficiencies from

 

previous periods may be fully adjusted in a single period or may be

 

adjusted over several periods in a manner provided for in the plan

 

of operation. Each member shall must be charged an amount equal to

 

that member's total written car years of insurance providing the

 

security required by section 3101(1) or 3103(1), or both, written

 

in this state during the period to which the premium applies, with

 

the total car years of insurance multiplied by the applicable

 

average premium per car. The average premium per car shall be is

the total premium calculated divided by the total written car years

 

of insurance providing the security required by section 3101(1) or

 

3103(1) written in this state of all members during the period to

 

which the premium applies. The premium charged to a member, the

 

total car years of insurance, and the applicable average premium

 

per car must be adjusted to provide for policies issued to which

 

the maximum limit under section 3109a(2)(a) applies. A member shall

 

must be charged a premium for a historic vehicle that is insured

 

with the member of 20% of the premium charged for a car insured

 

with the member. As used in this subdivision:

 

     (i) "Car" includes a motorcycle but does not include a

 

historic vehicle.

 

     (ii) "Historic vehicle" means a vehicle that is a registered

 

historic vehicle under section 803a or 803p of the Michigan vehicle

 

code, 1949 PA 300, MCL 257.803a and 257.803p.

 

     (e) Require and accept the payment of premiums from members of

 

the association as provided for in the plan of operation. The

 

association shall do either of the following:

 

     (i) Require payment of the premium in full within 45 days

 

after the premium charge.

 

     (ii) Require payment of the premiums to be made periodically

 

to cover the actual cash obligations of the association.

 

     (f) Receive and distribute all sums money required by the

 

operation of the association.

 

     (g) Establish procedures for reviewing claims procedures and

 

practices of members of the association. If the claims procedures

 

or practices of a member are considered inadequate to properly

service the liabilities of the association, the association may

 

undertake or may contract with another person, including another

 

member, to adjust or assist in the adjustment of claims for the

 

member on claims that create a potential liability to the

 

association and may charge the cost of the adjustment to the

 

member.

 

     (9) (8) In addition to other powers granted to it by this

 

section, the association may do all of the following:

 

     (a) Sue and be sued in the name of the association. A judgment

 

against the association shall does not create any direct liability

 

against the individual members of the association. The association

 

may provide for the indemnification of its members, members of the

 

board of directors of the association, and officers, employees, and

 

other persons lawfully acting on behalf of the association.

 

     (b) Reinsure all or any portion of its potential liability

 

with reinsurers licensed to transact insurance in this state or

 

approved by the commissioner.director of the department.

 

     (c) Provide for appropriate housing, equipment, and personnel

 

as may be necessary to assure the efficient operation of the

 

association.

 

     (d) Pursuant to the plan of operation, adopt reasonable rules

 

for the administration of the association, enforce those rules, and

 

delegate authority, as the board considers necessary to assure the

 

proper administration and operation of the association consistent

 

with the plan of operation.

 

     (e) Contract for goods and services, including independent

 

claims management, actuarial, investment, and legal services, from

others within in or without outside of this state to assure the

 

efficient operation of the association.

 

     (f) Hear and determine complaints of a company or other

 

interested party concerning the operation of the association.

 

     (g) Perform other acts not specifically enumerated in this

 

section that are necessary or proper to accomplish the purposes of

 

the association and that are not inconsistent with this section or

 

the plan of operation.

 

     (10) (9) A board of directors is created , hereinafter

 

referred to as the board, which shall be responsible for the

 

operation of and shall operate the association consistent with the

 

plan of operation and this section.

 

     (11) (10) The plan of operation shall must provide for all of

 

the following:

 

     (a) The establishment of necessary facilities.

 

     (b) The management and operation of the association.

 

     (c) Procedures to be utilized in charging premiums, including

 

adjustments from excess or deficient premiums from prior periods.

 

     (d) Procedures governing the actual payment of premiums to the

 

association.

 

     (e) Reimbursement of each member of the board by the

 

association for actual and necessary expenses incurred on

 

association business.

 

     (f) The investment policy of the association.

 

     (g) Any other matters required by or necessary to effectively

 

implement this section.

 

     (12) (11) Each The board shall must include members that would

contribute a total of not less than 40% of the total premium

 

calculated pursuant to subsection (7)(d). (8)(d). Each director

 

shall be is entitled to 1 vote. The initial term of office of a

 

director shall be is 2 years.

 

     (13) (12) As part of the plan of operation, the board shall

 

adopt rules providing for the composition and term of successor

 

boards to the initial board and the terms of board members,

 

consistent with the membership composition requirements in

 

subsections (11) and (13). (12) and (14). Terms of the directors

 

shall must be staggered so that the terms of all the directors do

 

not expire at the same time and so that a director does not serve a

 

term of more than 4 years.

 

     (14) (13) The board shall must consist of 5 directors , and

 

the commissioner director of the department, who shall be serve as

 

an ex officio member of the board without vote.

 

     (15) (14) Each director The director of the department shall

 

be appointed by the commissioner and appoint the directors. A

 

director shall serve until that member's his or her successor is

 

selected and qualified. The board shall elect the chairperson of

 

the board. shall be elected by the board. A The director of the

 

department shall fill any vacancy on the board shall be filled by

 

the commissioner consistent with as provided in the plan of

 

operation.

 

     (16) (15) After the board is appointed, the The board shall

 

meet as often as the chairperson, the commissioner, director of the

 

department, or the plan of operation shall require, requires, or at

 

the request of any 3 members of the board. The chairperson shall

retain the right to may vote on all issues. Four members of the

 

board constitute a quorum.

 

     (17) (16) An The board shall furnish to each member an annual

 

report of the operations of the association in a form and detail as

 

may be determined by the board. shall be furnished to each member.

 

     (17) Not more than 60 days after the initial organizational

 

meeting of the board, the board shall submit to the commissioner

 

for approval a proposed plan of operation consistent with the

 

objectives and provisions of this section, which shall provide for

 

the economical, fair, and nondiscriminatory administration of the

 

association and for the prompt and efficient provision of

 

indemnity. If a plan is not submitted within this 60-day period,

 

then the commissioner, after consultation with the board, shall

 

formulate and place into effect a plan consistent with this

 

section.

 

     (18) The plan of operation, unless approved sooner in writing,

 

shall be considered to meet the requirements of this section if it

 

is not disapproved by written order of the commissioner within 30

 

days after the date of its submission. Before disapproval of all or

 

any part of the proposed plan of operation, the commissioner shall

 

notify the board in what respect the plan of operation fails to

 

meet the requirements and objectives of this section. If the board

 

fails to submit a revised plan of operation that meets the

 

requirements and objectives of this section within the 30-day

 

period, the commissioner shall enter an order accordingly and shall

 

immediately formulate and place into effect a plan consistent with

 

the requirements and objectives of this section.

     (18) (19) The proposed plan of operation or Any amendments to

 

the plan of operation of the association are subject to majority

 

approval by the board, ratified ratification by a majority of the

 

membership having a vote, with voting rights being apportioned

 

according to the premiums charged in subsection (7)(d) (8)(d), and

 

are subject to approval by the commissioner.director of the

 

department.

 

     (19) (20) Upon approval by the commissioner and ratification

 

by the members of the plan submitted, or upon the promulgation of a

 

plan by the commissioner, each An insurer authorized to write

 

insurance providing the security required by section 3101(1) in

 

this state, as provided in this section, is bound by and shall

 

formally subscribe to and participate in the plan approved of

 

operation as a condition of maintaining its authority to transact

 

insurance in this state.

 

     (20) (21) The association is subject to all the reporting,

 

loss reserve, and investment requirements of the commissioner

 

director of the department to the same extent as would a member are

 

the members of the association.

 

     (21) (22) Premiums charged members by the association shall

 

must be recognized in the rate-making procedures for insurance

 

rates in the same manner that expenses and premium taxes are

 

recognized. However, for a policy to which the maximum limit under

 

section 3109a(2)(a) applies, the rates must not result in a charge

 

for the association other than a charge for a deficiency from a

 

previous period as described in subsection (8)(d).

 

     (22) (23) The commissioner director of the department or an

authorized representative of the commissioner director of the

 

department may visit the association at any time and examine any

 

and all of the association's affairs.

 

     (23) (24) The association does not have liability for losses

 

occurring before July 1, 1978.

 

     (24) (25) As used in this section:

 

     (a) "Association" means the catastrophic claims association

 

created in subsection (1).

 

     (b) "Board" means the board of directors of the association

 

created in subsection (10).

 

     (c) (a) "Consumer price index" Price Index" means the

 

percentage of change in the consumer price index Consumer Price

 

Index for all urban consumers in the United States city average for

 

all items for the 24 months prior to before October 1 of the year

 

prior to before the July 1 effective date of the biennial

 

adjustment under subsection (2)(k) (2)(n) as reported by the United

 

States department of labor, bureau of labor statistics, Department

 

of Labor, Bureau of Labor Statistics, and as certified by the

 

commissioner.director of the department.

 

     (d) (b) "Motor vehicle accident policy" means a policy

 

providing the coverages required under section 3101(1).

 

     (e) (c) "Ultimate loss" means the actual loss amounts that a

 

member is obligated to pay and that are paid or payable by the

 

member, and do not include claim expenses. An ultimate loss is

 

incurred by the association on the date that the loss occurs.

 

     Sec. 3107. (1) Except as otherwise provided in subsection (2),

 

this section, personal protection insurance benefits are payable

for the following:

 

     (a) Allowable expenses consisting of all reasonable charges

 

incurred, up to the maximum limit selected under section

 

3109a(2)(a), if applicable, for reasonably necessary products,

 

services, and accommodations for an injured person's care,

 

recovery, or rehabilitation. Allowable expenses within personal

 

protection insurance coverage shall do not include either of the

 

following:

 

     (i) Charges for a hospital room in excess of a reasonable and

 

customary charge for semiprivate accommodations except if unless

 

the injured person requires special or intensive care.

 

     (ii) Funeral and burial expenses in excess of the amount set

 

forth in the policy, which shall not be less than $1,750.00 or more

 

than $5,000.00.

 

     (b) Work loss consisting of loss of income from work an

 

injured person would have performed during the first 3 years after

 

the date of the accident if he or she had not been injured. Work

 

loss does not include any loss after the date on which the injured

 

person dies. Because the benefits received from personal protection

 

insurance for loss of income are not taxable income, the benefits

 

payable for such loss of income shall must be reduced 15% unless

 

the claimant presents to the insurer in support of his or her claim

 

reasonable proof of a lower value of the income tax advantage in

 

his or her case, in which case the lower value shall apply. must be

 

applied. For the period beginning October 1, 2012 through September

 

30, 2013, the benefits payable for work loss sustained in a single

 

30-day period and the income earned by an injured person for work

during the same period together shall must not exceed $5,189.00,

 

which maximum shall apply must be applied pro rata to any lesser

 

period of work loss. Beginning October 1, 2013, the maximum shall

 

must be adjusted annually to reflect changes in the cost of living

 

under rules prescribed by the commissioner director but any change

 

in the maximum shall apply applies only to benefits arising out of

 

accidents occurring subsequent to that occur after the date of

 

change in the maximum.

 

     (c) Expenses not exceeding $20.00 per day, reasonably incurred

 

in obtaining ordinary and necessary services in lieu place of those

 

that, if he or she had not been injured, an injured person would

 

have performed during the first 3 years after the date of the

 

accident, not for income but for the benefit of himself or herself

 

or of his or her dependent.

 

     (2) Both All of the following apply to personal protection

 

insurance benefits payable under subsection (1):

 

     (a) A person who is 60 years of age or older and in the event

 

of an accidental bodily injury would not be eligible to receive

 

work loss benefits under subsection (1)(b) may waive coverage for

 

work loss benefits by signing a waiver on a form provided by the

 

insurer. An insurer shall offer a reduced premium rate to a person

 

who waives coverage under this subsection subdivision for work loss

 

benefits. Waiver of coverage for work loss benefits applies only to

 

work loss benefits payable to the person or persons who have signed

 

the waiver form.

 

     (b) An insurer shall is not be required to provide coverage

 

for the medical use of marihuana or for expenses related to the

medical use of marihuana.

 

     Sec. 3109a. (1) An insurer providing personal protection

 

insurance benefits under this chapter may offer, at appropriately

 

reduced premium rates, deductibles and exclusions reasonably

 

related to other health and accident coverage on the insured. Any

 

deductibles and exclusions offered under this section are subject

 

to prior approval by the commissioner director and shall must apply

 

only to benefits payable to the person individual named in the

 

policy, the spouse of the insured individual, and any relative of

 

either domiciled in the same household.

 

     (2) When an individual applies for or renews an insurance

 

policy that provides benefits under this chapter, the individual

 

shall select 1 of the following levels of maximum personal

 

protection insurance benefits:

 

     (a) A limit equal to the amount applicable to the policy under

 

section 3104(2).

 

     (b) No maximum limit.

 

     (3) A maximum limit selected under subsection (2)(a) applies

 

to allowable expenses as described under section 3107(1)(a). The

 

maximum limit selected applies only to benefits payable because of

 

an accidental bodily injury to the insured named in the policy, the

 

insured's spouse, and any relative of either domiciled in the same

 

household. The maximum limit available because of accidental bodily

 

injury to 1 person arising from 1 motor vehicle accident is

 

determined without regard to the number of policies applicable to

 

the accident.