Bill Text: MI SB0825 | 2009-2010 | 95th Legislature | Engrossed
Bill Title: Insurance; insurers; cap on risk or hazard loss; increase. Amends sec. 640 of 1956 PA 218 (MCL 500.640).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2010-12-29 - Assigned Pa 0338'10 With Immediate Effect [SB0825 Detail]
Download: Michigan-2009-SB0825-Engrossed.html
SB-0825, As Passed House, December 15, 2010
SUBSTITUTE FOR
SENATE BILL NO. 825
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 640 (MCL 500.640), as amended by 1992 PA 182.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
640. (1) An Except
as otherwise provided in subsections
(2) to (5), an insurer transacting business in this state shall not
expose itself to any loss on any 1 risk or hazard in an amount
exceeding 10% of its paid-up capital and surplus. However, no
portion
of a risk or hazard that has been reinsured in by an
insurer licensed to do insurance business in this state shall be
included in determining the limitation of risk prescribed in this
section
subsection.
(2) An insurer transacting business in this state that has
obtained a certificate of authority authorizing the transaction of
Senate Bill No. 825 (S-2) as amended December 15, 2010
title insurance in this state before the effective date of the
amendatory act that added this subsection shall not expose itself
to any loss on any 1 [title insurance] risk or hazard in an amount
exceeding 50% of
its paid-up capital and surplus. However, no portion of a [title
insurance] risk or
hazard that has been reinsured by an insurer licensed to do title
insurance business in this state shall be included in determining
the limitation of risk prescribed in this subsection.
(3) An insurer transacting business in this state that obtains
a certificate of authority authorizing the transaction of title
insurance in this state on or after the effective date of the
amendatory act that added this subsection shall not expose itself
to any loss on any 1 [title insurance] risk or hazard in an amount
exceeding 10% of
its paid-up capital and surplus unless the title insurer meets all
of the following:
(a) Has a most recent a.m. best financial rating of at least
an A- or has a comparable rating as assigned by a nationally
recognized statistical rating organization approved by the
commissioner.
(b) Has been licensed and operating in this or another state
for at least 5 years and has reported a net income for at least 3
of the last 5 years.
(c) Has capital that exceeds 2 times the minimum paid-up
capital and surplus requirements in Michigan.
(4) No portion of a [title insurance] risk or hazard that has been
reinsured by
an insurer licensed to do title insurance business in this state
shall be included in determining the 10% limitation of risk
prescribed in subsection (3). [an insurer described in subsection (3)(a)
to (c) shall not expose itself to any loss on any 1 title insurance risk or hazard in an amount exceeding 50% of its paid-up capital and surplus.]
(5) Upon application by a title insurer, the commissioner may
waive the 10% limitation of risk prescribed in subsection (3) for a
particular risk or hazard for good cause shown and so long as the
net retained liability for that particular risk or hazard does not
exceed 50% of the insurer's paid-up capital and surplus.
(6) As used in this section, "title insurance" and "title
insurer" mean those terms as defined in section 7301.
