Bill Text: MI HB5782 | 2011-2012 | 96th Legislature | Introduced

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Bill Title: Insurance; property and casualty; insurance renaissance zones; allow certain cities to create. Amends secs. 2106, 2111 & 3104 of 1956 PA 218 (MCL 500.2106 et seq.) & adds ch. 25A.

Spectrum: Partisan Bill (Democrat 21-1)

Status: (Introduced - Dead) 2012-08-15 - Printed Bill Filed 07/19/2012 [HB5782 Detail]

Download: Michigan-2011-HB5782-Introduced.html

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HOUSE BILL No. 5782

 

July 18, 2012, Introduced by Reps. Howze, Durhal, Talabi, Liss, Rutledge, Santana, Jackson, Nathan, Stanley, Callton, Stallworth, Ananich, Cavanagh, Greimel, Hovey-Wright, Hobbs, Geiss, Hammel, Tlaib, Meadows and Oakes and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 2106, 2111, and 3104 (MCL 500.2106, 500.2111,

 

and 500.3104), section 2111 as amended by 2002 PA 492 and section

 

3104 as amended by 2002 PA 662, and by adding chapter 25A.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2106. Except as specifically provided in this chapter,

 

the provisions of chapter chapters 24 and chapter 26 shall do not

 

apply to automobile insurance and home insurance. An insurer may

 

use rates for automobile insurance or home insurance as soon as

 

those rates are filed. To With the exception of chapter 25A, to the

 

extent that other provisions of this code act are inconsistent with

 

the provisions of this chapter, this chapter shall govern governs

 

with respect to automobile insurance and home insurance.

 

     Sec. 2111. (1) Notwithstanding With the exception of chapter

 

25A, notwithstanding any provision of this act and or this chapter

 

to the contrary, classifications and territorial base rates used by

 

any an insurer in this state with respect to automobile insurance

 

or home insurance shall conform to the applicable requirements of

 

this section.

 

     (2) Classifications established pursuant to under this section

 

for automobile insurance shall be based only upon on 1 or more of

 

the following factors, which shall be applied by an insurer on a

 

uniform basis throughout the this state:

 

     (a) With respect to all automobile insurance coverages:

 

     (i) Either the age of the driver; the length of driving

 

experience; or the number of years licensed to operate a motor

 

vehicle.

 

     (ii) Driver primacy, based upon on the proportionate use of

 

each vehicle insured under the policy by individual drivers insured

 

or to be insured under the policy.

 

     (iii) Average miles driven weekly, annually, or both.

 

     (iv) Type of use, such as business, farm, or pleasure use.

 

     (v) Vehicle characteristics, features, and options, such as

 

engine displacement, ability of the vehicle and its equipment to

 

protect passengers from injury and other similar items, including

 

vehicle make and model.

 

     (vi) Daily or weekly commuting mileage.

 

     (vii) Number of cars insured by the insurer or number of

 

licensed operators in the household. However, number of licensed

 

operators shall not be used as an indirect measure of marital

 

status.

 

     (viii) Amount of insurance.

 

     (b) In addition to the factors prescribed in subdivision (a),

 

with respect to personal protection insurance coverage:

 

     (i) Earned income.

 

     (ii) Number of dependents of income earners insured under the

 

policy.

 

     (iii) Coordination of benefits.

 

     (iv) Use of a safety belt.

 

     (c) In addition to the factors prescribed in subdivision (a),

 

with respect to collision and comprehensive coverages:

 

     (i) The anticipated cost of vehicle repairs or replacement,

 

which may be measured by age, price, cost new, or value of the

 

insured automobile, and other factors directly relating to that

 

anticipated cost.

 

     (ii) Vehicle make and model.

 

     (iii) Vehicle design characteristics related to vehicle

 

damageability.

 

     (iv) Vehicle characteristics relating to automobile theft

 

prevention devices.

 

     (d) With respect to all automobile insurance coverage other

 

than comprehensive, successful completion by the individual driver

 

or drivers insured under the policy of an accident prevention

 

education course that meets the following criteria:

 

     (i) The course shall include a minimum of 8 hours of classroom

 

instruction.

 

     (ii) The course shall include, but not be limited to, a review

 

of all of the following:

 

     (A) The effects of aging on driving behavior.

 

     (B) The shapes, colors, and types of road signs.

 

     (C) The effects of alcohol and medication on driving.

 

     (D) The laws relating to the proper use of a motor vehicle.

 

     (E) Accident prevention measures.

 

     (F) The benefits of safety belts and child restraints.

 

     (G) Major driving hazards.

 

     (H) Interaction with other highway users such as

 

motorcyclists, bicyclists, and pedestrians.

 

     (3) Each insurer shall establish a secondary or merit rating

 

plan for automobile insurance, other than comprehensive coverage. A

 

secondary or merit rating plan required under this subsection shall

 

provide for premium surcharges for any or all coverages for

 

automobile insurance, other than comprehensive coverage, based upon

 

any or all of the following, when that information becomes

 

available to the insurer:

 

     (a) Substantially at-fault accidents.

 

     (b) Convictions for, determinations of responsibility for

 

civil infractions for, or findings of responsibility in probate

 

court for civil infractions for, violations under chapter VI of the

 

Michigan vehicle code, 1949 PA 300, MCL 257.601 to 257.750.

 

However, beginning 90 days after the effective date of this

 

sentence, an insured shall not be merit rated for a civil

 

infraction under chapter VI of the Michigan vehicle code, 1949 PA

 

300, MCL 257.601 to 257.750, for a period of time longer than that

 

which the secretary of state's office carries points for that

 

infraction on the insured's motor vehicle record.

 

     (4) An insurer shall not establish or maintain rates or rating

 

classifications for automobile insurance based upon on sex or

 

marital status.

 

     (5) Notwithstanding other provisions of this chapter,

 

automobile insurance risks may be grouped by territory.

 

     (6) This section shall does not be construed as limiting limit

 

insurers or rating organizations from establishing and maintaining

 

statistical reporting territories. This section shall does not be

 

construed to prohibit an insurer from establishing or maintaining,

 

for automobile insurance, a premium discount plan for senior

 

citizens in this state who are 65 years of age or older, if the

 

plan is uniformly applied by the insurer throughout this state. If

 

an insurer has not established and maintained a premium discount

 

plan for senior citizens, the insurer shall offer reduced premium

 

rates to senior citizens in this state who are 65 years of age or

 

older and who drive less than 3,000 miles per year, regardless of

 

statistical data.

 

     (7) Classifications established pursuant to under this section

 

for home insurance other than inland marine insurance provided by

 

policy floaters or endorsements shall be based only upon on 1 or

 

more of the following factors:

 

     (a) Amount and types of coverage.

 

     (b) Security and safety devices, including locks, smoke

 

detectors, and similar, related devices.

 

     (c) Repairable structural defects reasonably related to risk.

 

     (d) Fire protection class.

 

     (e) Construction of structure, based on structure size,

 

building material components, and number of units.

 

     (f) Loss experience of the insured, based upon on prior claims

 

attributable to factors under the control of the insured that have

 

been paid by an insurer. An insured's failure, after written notice

 

from the insurer, to correct a physical condition that presents a

 

risk of repeated loss shall be considered a factor under the

 

control of the insured for purposes of this subdivision.

 

     (g) Use of smoking materials within the structure.

 

     (h) Distance of the structure from a fire hydrant.

 

     (i) Availability of law enforcement or crime prevention

 

services.

 

     (8) Notwithstanding other provisions of this chapter, home

 

insurance risks may be grouped by territory.

 

     (9) An insurer may utilize use factors in addition to those

 

specified in this section, if the commissioner finds, after a

 

hearing held pursuant to under the administrative procedures act of

 

1969, 1969 PA 306, MCL 24.201 to 24.328, that the factors would

 

encourage innovation, would encourage insureds to minimize the

 

risks of loss from hazards insured against, and would be consistent

 

with the purposes of this chapter.

 

CHAPTER 25A

 

SILVER LINING INSURANCE RENAISSANCE ZONES

 

     Sec. 2511. As used in this chapter:

 

     (a) "Automobile insurance" means that term as defined in

 

section 2102.

 

     (b) "Fund" means the silver lining insurance fund created in

 

section 2517.

 

     (c) "Home insurance" means that term as defined in section

 

2103.

 

     (d) "Insurance renaissance zone" means a geographic area

 

designated under section 2513.

 

     (e) "Local unit of government" means a township, city, or

 

village.

 

     (f) "Qualified city" means a city whose population as

 

determined by the latest federal decennial census decreased 10% or

 

more from the population as determined by the previous federal

 

decennial census.

 

     (g) "Qualified resident" means an individual whose principal

 

residence is in the insurance renaissance zone and who has

 

maintained home insurance on the residence for the 5 years

 

preceding the claim and, if the claim is made under an automobile

 

insurance policy, on the automobile for the part of the 5-year

 

period during which the individual owned the automobile.

 

     Sec. 2512. The legislature of this state finds and declares

 

that there is a continuing need for programs to assist certain

 

cities in this state in encouraging density of population, the

 

retention of residents, and repopulation. To achieve these

 

purposes, it is necessary to create insurance renaissance zones as

 

provided in this chapter.

 

     Sec. 2513. (1) The city council of a qualified city may

 

declare 1 or more distinct geographic areas within the city to be

 

insurance renaissance zones.

 

     (2) After an area is designated as an insurance renaissance

 

zone under subsection (1), if a qualified resident submits a claim

 

under the qualified resident's home insurance or automobile

 

insurance policy and the claim is the first claim of that type made

 

by the qualified resident, the insurer shall not increase the

 

premium charged for the policy because of the claim or the loss on

 

which the claim is based.

 

     Sec. 2515. (1) The commissioner shall monitor the home

 

insurance and automobile insurance premiums and rates and the

 

claims submitted in each insurance renaissance zone.

 

     (2) The commissioner shall compare the premiums charged for

 

home insurance and automobile insurance in each insurance

 

renaissance zone with premiums charged for home insurance and

 

automobile insurance in each surrounding local unit of government

 

whose closest boundary is 20 miles or more from the boundary of the

 

city in which the insurance renaissance zone is located. A local

 

unit of government shall not be compared under this subsection if

 

there is another local unit of government that qualifies to be

 

included for comparison that is located between the local unit of

 

government and the city.

 

     (3) Within 30 days after each anniversary date of the

 

establishment of an insurance renaissance zone, the commissioner

 

shall determine whether there is a disparity of 50% or more between

 

the average insurance premium charged in the renaissance zone and

 

the average insurance premium charged for the same type of

 

insurance in the local units of government to which the premiums

 

for the insurance renaissance zone is compared under subsection

 

(2). The commissioner shall publish the determination made under

 

this subsection and include a summary of the data on which the

 

determination is based.

 

     (4) If the commissioner makes a determination under subsection

 

(3) that there is a disparity of 50% or more and the determination

 

is the first such determination for the insurance renaissance zone,

 

an insurer that issues home insurance or automobile insurance

 

policies to residents of the insurance renaissance zone shall

 

reduce the first renewal premium charged for a home insurance or

 

automobile insurance policy in the insurance renaissance zone

 

during the 12 months following the determination by 20% from the

 

most recent premium charged for the policy.

 

     (5) If the commissioner makes a determination under subsection

 

(3) that there is a disparity of 50% or more, the determination is

 

not the first such determination for the insurance renaissance

 

zone, and an insurer that issues home insurance or automobile

 

insurance policies to residents of the insurance renaissance zone

 

cannot demonstrate to the commissioner that it would be entitled to

 

reimbursement under section 2517(6) if reductions under this

 

subsection are required, the insurer shall reduce its first renewal

 

premium charged for a home insurance or automobile insurance policy

 

in the insurance renaissance zone during the 12 months following

 

the determination by 20% from the most recent premium charged for

 

the policy.

 

     Sec. 2517. (1) The silver lining insurance fund is created

 

within the state treasury.

 

     (2) The state treasurer may receive money from the

 

catastrophic claims association as provided in section 3104 and

 

money or other assets from any other source for deposit into the

 

fund. The state treasurer shall direct the investment of the fund.

 

The state treasurer shall credit to the fund interest and earnings

 

from fund investments.

 

     (3) Money in the fund at the close of the fiscal year shall

 

remain in the fund and shall not lapse to the general fund.

 

     (4) The office of financial and insurance regulation shall be

 

the administrator of the fund for auditing purposes.

 

     (5) The office of financial and insurance regulation shall

 

expend money from the fund, upon appropriation, only to reimburse

 

insurers as provided in subsection (6).

 

     (6) To the extent that money is available in the fund, an

 

insurer is entitled to reimbursement from the fund for money lost

 

because of reductions in premiums under section 2515(4). An insurer

 

is entitled to reimbursement under this section and is not required

 

to reduce premiums under section 2515(5) if the insurer

 

demonstrates to the satisfaction of the commissioner that, for the

 

year preceding the 12-month period for which the reductions were or

 

would be made, there was an increase in the number of claims made

 

and the aggregate amount of claims paid under home insurance and

 

automobile insurance policies issued by the insurer to residents of

 

the insurance renaissance zone.

 

     Sec. 2519. (1) An insurer that issues home insurance or

 

automobile insurance policies to individuals who reside in an

 

insurance renaissance zone shall provide to the commissioner all

 

information in its possession that is necessary to allow the

 

commissioner to perform his or her duties under sections 2515 and

 

2517.

 

     (2) Within 5 years after the effective date of the amendatory

 

act that added this chapter, the commissioner shall report to the

 

members of the standing committees of the house of representatives

 

and senate with primary jurisdiction over insurance matters on the

 

progress and developments of the insurance renaissance program

 

under this chapter. The report shall include, but not be limited

 

to, information received and comparisons made under this section.

 

     Sec. 3104. (1) 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 bound by the plan of operation of the

 

association. Each insurer engaged in writing insurance coverages

 

that provide the security required by section 3103(1) within this

 

state, as a condition of its authority to transact insurance in

 

this state, shall be considered 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.

 

Beginning July 1, 2013, this $500,000.00 amount shall 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, and rounded to the

 

nearest $5,000.00. 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

 

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 to be bound by the plan of

 

operation, and upon 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 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 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 premium shall

 

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 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,

 

multiplied by the average premium per car. The average premium per

 

car shall be 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. A member shall 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.

 

     (h) From money received by the association, pay $50,000,000.00

 

per year into the silver lining insurance fund created under

 

section 2517.

 

     (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 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.

 

     (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 or without 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 is responsible for the operation of

 

the association consistent with the plan of operation and this

 

section.

 

     (10) The plan of operation shall 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 board shall 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 entitled to 1 vote.

 

The initial term of office of a director shall be 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, consistent with the membership composition

 

requirements in subsections (11) and (13). Terms of the directors

 

shall 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 consist of 5 directors, and the

 

commissioner shall be an ex officio member of the board without

 

vote.

 

     (14) Each director shall be appointed by the commissioner and

 

shall serve until that member's successor is selected and

 

qualified. The chairperson of the board shall be elected by the

 

board. A vacancy on the board shall be filled by the commissioner

 

consistent with the plan of operation.

 

     (15) After the board is appointed, the The board shall meet as

 

often as the chairperson, the commissioner, 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 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 and 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.

 

     (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 Each 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 to

 

the same extent as would a member are the members of the

 

association.

 

     (20) (22) Premiums charged members by the association shall be

 

recognized in the rate-making procedures for insurance rates in the

 

same manner that expenses and premium taxes are recognized.

 

     (21) (23) The commissioner or an authorized representative of

 

the commissioner 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) (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" means the percentage of change

 

in the consumer price index for all urban consumers in the United

 

States city average for all items for the 24 months prior to

 

October 1 of the year prior to before the July 1 effective date of

 

the biennial adjustment under subsection (2)(k) as reported by the

 

United States department of labor, bureau of labor statistics, and

 

as certified by the commissioner.

 

     (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.