SB-0787, As Passed Senate, June 7, 2018
SUBSTITUTE FOR
SENATE BILL NO. 787
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 3104, 3107, 3114, and 3115 (MCL 500.3104,
500.3107, 500.3114, and 500.3115), section 3104 as amended by 2002
PA 662, section 3107 as amended by 2012 PA 542, and section 3114 as
amended by 2016 PA 347, and by adding sections 1245 and 3109b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1245. An insurance producer or an employee or agent of an
insurance producer is not liable for damages caused by the conduct
of the producer, employee, or agent related to obtaining or
providing information, or the choice of personal protection
insurance benefits by an insured, under section 3109b.
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). 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 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)
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.
(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.
(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.
(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.
(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 3109b(1)(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.
(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.
(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.
(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.
(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). Each director shall be is
entitled
to 1 vote. The initial term of office of a director shall
be
is 2 years.
(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).
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.
(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.
(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.
(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.
(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.
(17) (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) and are
subject
to approval by the commissioner.director of the department.
(18) (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.
(19) (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.
(20) (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, except for a charge reflecting a deficiency
from a previous period under subsection (7)(d), the rates must not
result in a charge for the association for a policy to which the
maximum limit under section 3109b(1)(a) applies.
(21) (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.
(22) (24)
The association does not have
liability for losses
occurring before July 1, 1978.
(23) The association does not have any liability for a loss to
which the maximum limit under section 3109b(1)(a) applies.
(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 (9).
(c) (a)
"Consumer price index" "Consumer
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
3109b(1)(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 not include Payment to
providers for those products, services, and accommodations are
subject to the limits in section 3107c. However, personal
protection insurance benefits are not payable for 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 must 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 an
accident that occurs 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 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. 3109b. (1) After the effective date of this section, when
an individual who is 65 years of age or older 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 $50,000.00 limit.
(b) No maximum limit.
(2) For insurance policies described in subsection (1), a
person who is 65 years of age or older shall complete a form,
approved by the director, to certify whether he or she is 65 years
of age or older. The form also must do all of the following:
(a) Disclose in a conspicuous manner that a person who is 65
years of age or older has the option of purchasing personal
protection insurance coverage for allowable expenses as described
in section 3107(1)(a) with a reduced limit as provided in
subsection (1).
(b) State, in a conspicuous manner, the benefits and risks
associated with each coverage option available to the person under
this section.
(c) Provide a line for the person to sign, acknowledging that
he or she has read the form and understands the options available
to him or her.
(d) Provide the person the option to elect personal protection
Senate Bill No. 787 as amended June 7, 2018
insurance benefits under subsection (1)(a) or (b).
(3) If a person who is 65 years of age or older does not
complete a form under subsection (2) or does not make an election
under subsection (2)(d), the person is considered to have elected
benefits under subsection <<(1)(B).
>>
(4) A maximum limit selected under subsection (1)(a) applies
to allowable expenses as described under section 3107(1)(a). A
maximum limit selected under subsection (1)(a) applies only to
benefits payable because of an accidental bodily injury to the
insured named in the policy and the insured's spouse. If the
maximum limit under subsection (1)(a) applies, an injured person
other than the insured and the insured's spouse is entitled to
claim benefits under another policy as provided in this chapter or,
if no such policy is available, under the assigned claims plan
maintained under section 3171.
Sec.
3114. (1) Except as provided in subsections (2), (3), and
(5), and (6), a personal protection insurance policy described in
section 3101(1) applies to accidental bodily injury to the person
named in the policy, the person's spouse, and a relative of either
domiciled in the same household, if the injury arises from a motor
vehicle accident. A personal injury insurance policy described in
section 3103(2) applies to accidental bodily injury to the person
named in the policy, the person's spouse, and a relative of either
domiciled in the same household, if the injury arises from a
motorcycle accident. If personal protection insurance benefits or
personal injury benefits described in section 3103(2) are payable
to or for the benefit of an injured person under his or her own
policy and would also be payable under the policy of his or her
spouse, relative, or relative's spouse, the injured person's
insurer shall pay all of the benefits and is not entitled to
recoupment from the other insurer.
(2) A person suffering accidental bodily injury while an
operator or a passenger of a motor vehicle operated in the business
of transporting passengers shall receive the personal protection
insurance benefits to which the person is entitled from the insurer
of the motor vehicle. This subsection does not apply to a passenger
in any of the following, unless the passenger is not entitled to
personal protection insurance benefits under any other policy:
(a) A school bus, as defined by the department of education,
providing transportation not prohibited by law.
(b) A bus operated by a common carrier of passengers certified
by the department of transportation.
(c) A bus operating under a government sponsored
transportation program.
(d) A bus operated by or providing service to a nonprofit
organization.
(e) A taxicab insured as prescribed in section 3101 or 3102.
(f) A bus operated by a canoe or other watercraft, bicycle, or
horse livery used only to transport passengers to or from a
destination point.
(g) A transportation network company vehicle.
(3) An employee, his or her spouse, or a relative of either
domiciled in the same household, who suffers accidental bodily
injury while an occupant of a motor vehicle owned or registered by
the employer, shall receive personal protection insurance benefits
to which the employee is entitled from the insurer of the furnished
vehicle.
(4)
Except as provided in subsections (1) to (2) and (3), a
person
suffering who suffers accidental bodily injury arising from
a motor vehicle accident while an occupant of a motor vehicle who
is not covered under a personal protection insurance policy as
provided in subsection (1) shall claim personal protection
insurance
benefits from insurers in the following order of
priority:
(a)
The insurer of the owner or registrant of the vehicle
occupied.
(b)
The insurer of the operator of the vehicle occupied.under
the assigned claims plan under sections 3171 to 3175.
(5)
A Except as provided in
subsection (6), a person suffering
who suffers accidental bodily injury arising from a motor vehicle
accident that shows evidence of the involvement of a motor vehicle
while an operator or passenger of a motorcycle shall claim personal
protection insurance benefits from insurers in the following order
of priority:
(a) The insurer of the owner or registrant of the motor
vehicle involved in the accident.
(b) The insurer of the operator of the motor vehicle involved
in the accident.
(c) The motor vehicle insurer of the operator of the
motorcycle involved in the accident.
(d) The motor vehicle insurer of the owner or registrant of
the motorcycle involved in the accident.
(6) For a personal protection insurance policy as to which the
insured has elected the maximum benefit level under section
3109b(1)(a), all of the following apply:
(a) An injured person who is a relative of either the person
named in the policy or the person's spouse, who is domiciled in the
same household as the person named in the policy or the person's
spouse, and who would, but for the election of reduced benefits, be
entitled to claim benefits under the policy under subsection (1),
is not entitled to claim benefits under the policy, but is entitled
to claim benefits under the assigned claims plan maintained under
section 3171.
(b) A person who, while an operator or passenger of a
motorcycle, suffers accidental bodily injury arising from a motor
vehicle accident that shows evidence of the involvement of a motor
vehicle insured under the policy is entitled to claim benefits as
provided under subsection (5)(c) or (d), if applicable, or under
the assigned claims plan maintained under section 3171.
(7) (6)
If 2 or more insurers are in the
same order of
priority to provide personal protection insurance benefits under
subsection
(5), an insurer paying that
pays benefits due is
entitled to partial recoupment from the other insurers in the same
order of priority, and a reasonable amount of partial recoupment of
the expense of processing the claim, in order to accomplish
equitable distribution of the loss among all of the insurers.
(8) (7)
As used in this section:
(a)
"Personal vehicle", "prearranged ride", and
"transportation network company digital network", and
"transportation company prearranged ride" mean those terms as
defined in section 2 of the limousine, taxicab, and transportation
network company act, 2016 PA 345, MCL 257.2102.
(b) "Transportation network company vehicle" means a personal
vehicle while the driver is logged on to the transportation network
company digital network or while the driver is engaged in a
transportation network company prearranged ride.
Sec.
3115. (1) Except as provided in subsection (1) of section
3114,
3114(1), a person suffering who suffers accidental bodily
injury while not an occupant of a motor vehicle shall claim
personal
protection insurance benefits from insurers in the
following
order of priority:
(a)
Insurers of owners or registrants of motor vehicles
involved
in the accident.
(b)
Insurers of operators of motor vehicles involved in the
accident.under the assigned claims plan under sections
3171 to
3175.
(2)
When If 2 or more insurers are in the same order of
priority to provide personal protection insurance benefits, an
insurer
paying that pays benefits due is entitled to partial
recoupment from the other insurers in the same order of priority,
together
with and a reasonable amount of partial recoupment of the
expense of processing the claim, in order to accomplish equitable
distribution
of the loss among such the
insurers.
(3)
A limit upon on the amount of personal protection
insurance benefits available because of accidental bodily injury to
1
person arising from 1 motor vehicle accident shall must be
determined without regard to the number of policies applicable to
the accident.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No. 1014 of the 99th Legislature is enacted into
law.