Bill Text: MI HB5928 | 2019-2020 | 100th Legislature | Introduced
Bill Title: Insurance: other; business interruption coverage for COVID-19 losses; require. Amends sec. 2236 of 1956 PA 218 (MCL 500.2236) & adds sec. 2245.
Spectrum: Partisan Bill (Democrat 34-0)
Status: (Introduced - Dead) 2020-07-21 - Bill Electronically Reproduced 06/25/2020 [HB5928 Detail]
Download: Michigan-2019-HB5928-Introduced.html
HOUSE BILL NO. 5928
June 25, 2020, Introduced by Reps. Wittenberg,
Koleszar, Greig, Cynthia Johnson, Sabo, Pohutsky, Lasinski, Brixie, Witwer,
Garza, Brenda Carter, Kennedy, Gay-Dagnogo, Hope, Chirkun, Elder, Sowerby,
Stone, Warren, Guerra, Yancey, Hood, Manoogian, Cynthia Neeley, Garrett,
Kuppa, Clemente, Shannon, Hammoud, Hoadley, Tyrone Carter, Anthony, Jones
and Coleman and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 2236 (MCL 500.2236), as amended by 2016 PA 276, and by adding section 2245.
the people of the state of michigan enact:
Sec. 2236. (1) Except as otherwise provided in this
section, an insurer shall not deliver or issue for delivery in this state a
basic insurance policy form or annuity contract form; a printed rider or
indorsement form or form of renewal certificate; or a group certificate in
connection with the policy or contract unless a copy of the form is filed with
the department and approved by the director as conforming with the requirements
of this act and not inconsistent with the law. A Except as
otherwise provided in section 2245, a form is considered approved
if the director fails to act within 30 days after its submittal under this
section. Except for disability insurance as described in section 3400, an
insurer shall plainly print the form with a type size of not less than 8-point
unless the director determines that portions of the form that are printed with
type less than 8-point are not deceptive or misleading.
(2) An insurer may
satisfy its obligations to make form filings by becoming a member of, or a
subscriber to, a rating organization licensed under section 2436 or 2630 that
makes the filings that are required under this section. An insurer described in
this subsection shall file with the director a copy of its authorization of the
rating organization to make the filings on its behalf. Except as otherwise
provided in this subsection, an insurer that is a member of or subscriber to a
rating organization shall adhere to the form filings made on its behalf by the
organization. An insurer may file with the director a substitute form and if a
subsequent form filing by the rating organization after the filling of a
substitute form affects the use of the substitute form, the insurer shall
review its use and notify the director whether to withdraw its substitute form.
(3) The director shall
not approve a form filed under this section that provides for or relates to an
insurance policy or an annuity contract for personal, family, or household
purposes if the form fails to obtain the following readability score or meet the
other requirements of this subsection, as applicable:
(a) The readability score
must not be less than 45, as determined by the method provided in subdivisions
(b) and (c).
(b) The readability score
is determined as follows:
(i) For a form containing not more than 10,000 words, the
entire form must be analyzed. For a form containing more than 10,000 words, not
fewer than two 200-word samples per page must be analyzed instead of the entire
form. The samples must be separated by at least 20 printed lines.
(ii) Count the number
of words and sentences in the form or samples and divide the total number of
words by the total number of sentences. Multiply this quotient by a factor of
1.015.
(iii) Count the total
number of syllables in the form or samples and divide the total number of
syllables by the total number of words. Multiply this quotient by a factor of
84.6. As used in this subparagraph, "syllable" means a unit of spoken
language consisting of 1 or more letters of a word as indicated by an accepted
dictionary. If the dictionary shows 2 or more equally acceptable pronunciations
of a word, the pronunciation containing fewer syllables may be used.
(iv) Add the figures
obtained in subparagraphs (ii) and (iii) and subtract this sum from 206.835. The figure obtained
equals the readability score for the form.
(c) For the purposes of subdivision (b)(ii) and (iii), the following
procedures must be used:
(i) A contraction,
hyphenated word, or numbers and letters when separated by spaces are counted as
1 word.
(ii) A unit of words
ending with a period, semicolon, or colon, but excluding headings and captions,
is counted as 1 sentence.
(d) In determining the readability score, all of the
following apply to the method provided in subdivisions (b) and (c):
(i) It must be
applied to an insurance policy form or an annuity contract together with a
rider or indorsement form usually associated with the insurance policy form or
annuity contract. It may be applied to a group of policy, contract, rider, or
indorsement forms that have substantially the same language resulting in a
single readability score for those forms.
(ii) It must not be
applied to a word or phrase that is defined in an insurance policy form or an
annuity contract or a rider, indorsement, or group certificate associated with
the insurance policy form or annuity contract.
(iii) It must not be
applied to language specifically agreed upon through collective bargaining or
required by a collective bargaining agreement.
(iv) It must not be
applied to language that is prescribed by or based on state or federal statute
or any related rules, regulations, or orders.
(v) It must not be
applied to medical terms that are included in the form for coverage purposes.
(e) The form must contain both of the following:
(i) Topical captions.
(ii) An identification
of exclusions.
(f) Except as otherwise provided in this subdivision, an
insurance policy or annuity contract that has more than 3,000 words printed on
not more than 3 pages of text or that has more than 3 pages of text regardless
of the number of words must contain a table of contents. This subdivision does
not apply to riders or indorsements.
(g) Each rider or indorsement form that changes coverage must
do all of the following:
(i) Contain a
properly descriptive title.
(ii) Reproduce either
the entire paragraph or the provision as changed.
(iii) At the time of
filing, be accompanied by an explanation of the change.
(h) If a computer system approved by the director calculates
the readability score of a form as being in compliance with this subsection,
the form is considered in compliance with the readability score requirements of
this subsection.
(i) A variable life product or variable annuity product
approved by the United States Securities and Exchange Commission for sale in
this state is considered in compliance with this section.
(4) An insurer shall submit for approval under subsection (3)
a change or addition to a policy or annuity contract form for personal, family,
or household purposes, whether by indorsement, rider, or otherwise, or a change
or addition to a rider or indorsement form associated with the policy form or
annuity contract form, if the form has not been previously approved under
subsection (3).
(5) Upon written notice to the insurer, the director may, on
a case-by-case review, disapprove, withdraw approval, or prohibit the issuance,
advertising, or delivery of a form to any person in this state if the form
violates this act, contains inconsistent, ambiguous, or misleading clauses, or
contains exceptions and conditions that unreasonably or deceptively affect the
risk purported to be assumed in the general coverage of the policy. The
director shall specify in the notice the objectionable provisions or conditions
and state the reasons for the decision. If the form is legally in use by the
insurer in this state, the director shall give the effective date of the
disapproval in the notice, which must not be less than 30 days after the
mailing or delivery of the notice to the insurer. If the form is not legally in
use, the disapproval is effective immediately.
(6) If a form is disapproved or approval is withdrawn under
this act, the insurer is entitled on demand to a hearing before the director or
a deputy director within 30 days after the notice of disapproval or of
withdrawal of approval. After the hearing, the director shall make findings of
fact and law and affirm, modify, or withdraw his or her original order or
decision. An insurer shall not issue the form after a final determination of
disapproval or withdrawal of approval.
(7) Any issuance, use, or delivery by an insurer of a form
without the prior approval of the director as required under subsection (1) or
after withdrawal of approval under subsection (5) is a separate violation for
which the director may order the imposition of a civil penalty of $25.00 for
each offense, not to exceed a maximum penalty of $500.00 for any 1 series of
offenses relating to any 1 basic policy form. The attorney general may act to
recover the penalty under this subsection as provided in section 230.
(8) The filing requirements of this section do not apply to
any of the following:
(a) Insurance against loss of or damage to any of the
following:
(i) Imports, exports,
or domestic shipments.
(ii) Bridges, tunnels,
or other instrumentalities of transportation and communication.
(iii) Aircraft and
attached equipment.
(iv) Vessels and
watercraft that are under construction, are owned by or used in a business, or
have a straight-line hull length of more than 24 feet.
(b) Insurance against loss resulting from liability, other
than worker's disability compensation or employers' liability arising out of
the ownership, maintenance, or use of any of the following:
(i) Imports, exports,
or domestic shipments.
(ii) Aircraft and
attached equipment.
(iii) Vessels and
watercraft that are under construction, are owned by or used in a business, or
have a straight-line hull length of more than 24 feet.
(c) Surety bonds other than fidelity bonds.
(d) Policies, riders, indorsements, or forms of unique character
designed for and used with relation to insurance on a particular subject, or
that relate to the manner of distribution of benefits or to the reservation of
rights and benefits under life or disability insurance policies and are used at
the request of the individual policyholder, contract holder, or certificate
holder. By order, the director may exempt from the filing requirements of this
section and sections 3401a and 4430 for as long as he or she considers proper
any insurance document or form, except that portion of the document or form
that establishes a relationship between group disability insurance and personal
protection insurance benefits subject to exclusions or deductibles under
section 3109a, as specified in the order to which this section is not
practicably applied, or the filing and approval of which are considered
unnecessary for the protection of the public. Insurance documents or forms
providing medical payments or income replacement benefits, except that portion
of the document or form that establishes a relationship between group
disability insurance and personal protection insurance benefits subject to
exclusions or deductibles under section 3109a, exempt by order of the director
from the filing requirements of this section and section 3401a are considered
approved by the director for purposes of section 3430.
(e) An insurance policy to which both of the following apply:
(i) The insurance is
sold to an exempt commercial policyholder.
(ii) The insurance
policy contains a prominent disclaimer that states "This policy is exempt
from the filing requirements of section 2236 of the insurance code of 1956,
1956 PA 218, MCL 500.2236." or words that are substantially similar.
(9) Notwithstanding any provision of this act to the
contrary, a health insurer may satisfy a requirement for the delivery of an
insurance form or notice required by this act to a subscriber, insured,
enrollee, or contract holder by doing all of the following:
(a) Taking appropriate and necessary measures reasonably
calculated to ensure that the system for furnishing a form or notice meets all
of the following requirements:
(i) It results in the
actual receipt of a delivered form or notice.
(ii) It protects the
confidentiality of a subscriber's, insured's, enrollee's, or contract holder's
personal information.
(b) Ensuring that an electronically delivered form or notice
is prepared and furnished in a manner consistent with the style, format, and
content requirements applicable to the particular form or notice.
(c) On request, delivering to the subscriber, insured,
enrollee, or contract holder a paper version of an electronically delivered
form or notice.
(10) Subject to the requirements of this section, an insurer
may file health insurance policies, certificates, and riders quarterly. This
subsection does not limit or restrict an insurer's ability to file large group
health insurance policies, certificates, or riders at any time during the year.
(11) As used in this section and sections 2401 and 2601,
"exempt commercial policyholder" means an insured that purchases the
insurance for other than personal, family, or household purposes.
(12) As used in this section, "insurer" includes a
nonprofit dental care corporation operating under 1963 PA 125, MCL 550.351 to
550.373.
(13) An order made by the director under this section is
subject to court review as provided in section 244.
Sec. 2245. (1) Notwithstanding
anything in this act to the contrary, and subject to subsection (2), each
qualified insurance policy that is delivered, issued for delivery, or renewed
in this state must be construed to include among the perils under the policy
coverage for loss of use and occupancy, loss of income, or other business
interruption losses directly or indirectly related to any of the following:
(a)
The global pandemic known as COVID-19, including any mutated form of the
COVID-19 virus.
(b) Any executive order issued by the governor related to COVID-19.
(c) Any order issued by a civil authority related to COVID-19.
(2) Subsection (1) applies to a qualified insurance policy regardless of the terms and conditions of the qualified insurance policy.
(3) The coverage required under this section for a qualified insurance policy is subject to any monetary limits in the qualified insurance policy.
(4) An insurer
that delivers, issues for delivery, or renews in this state a qualified
insurance policy shall not deny a claim for either of the following reasons:
(a) There is no
physical damage to the property of the insured for which the coverage is
provided under the qualified insurance policy, or to any other property
relevant to a consideration of coverage.
(b) The loss is a result of the COVID-19 virus regardless of whether the qualified insurance policy excludes coverage for a loss resulting from a virus.
(5) Subsection (1) to (4) apply to a qualified insurance policy that was in effect on January 1, 2020 or that was delivered, issued for delivery, or renewed in this state after December 31, 2019.
(6) Each qualified insurance policy delivered, issued for delivery, or renewed in this state that expires after December 31, 2019 but before 6 months after the expiration of the state of emergency declared under Executive Order No. 2020-4 or any extension of that order must be automatically renewed at the same premium charged for the coverage under the expiring qualified insurance policy.
(7) An insurer shall not deliver or issue for delivery in this state a qualified insurance form that differs from a qualified insurance form used by the insurer before January 1,2020 unless a copy of the form is filed with the department and expressly approved by the director as conforming with the requirements of this act and not inconsistent with the law.
(8) As used in this section, "qualified insurance policy" means an insurance policy that insures against loss or damage to property and includes coverage for any of the following:
(a) Loss of use and occupancy of property.
(b) Loss of income.
(c) Any other business interruption loss.
