Bill Text: MI SB0296 | 2011-2012 | 96th Legislature | Introduced

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Bill Title: Insurance; no-fault; theft prevention authority; expand to include insurance fraud and house within automobile insurance placement facility. Amends title, heading of ch. 61 & secs. 3301, 3330, 4501, 6101, 6105, 6107 & 6110 of 1956 PA 218 (MCL 500.3301 et seq.); adds secs. 6104, 6104a, 6104b & 6108 & repeals secs. 6103 & 6111 of 1956 PA 218 (MCL 500.6103 & 500.6111).

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2011-03-24 - Referred To Committee On Insurance [SB0296 Detail]

Download: Michigan-2011-SB0296-Introduced.html

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SENATE BILL No. 296

 

 

March 24, 2011, Introduced by Senators SMITH and HUNE and referred to the Committee on Insurance.

 

 

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending the title, the heading of chapter 61, and sections

 

3301, 3330, 4501, 6101, 6105, 6107, and 6110 (MCL 500.3301,

 

500.3330, 500.4501, 500.6101, 500.6105, 500.6107, and 500.6110),

 

the title as amended by 2002 PA 304, section 4501 as added by 1995

 

PA 276, and sections 6101, 6105, 6107, and 6110 as added by 1992 PA

 

174, and by adding sections 6104, 6104a, 6104b, and 6108; and to

 

repeal acts and parts of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

TITLE

 

     An act to revise, consolidate, and classify the laws relating

 

to the insurance and surety business; to regulate the incorporation

 

or formation of domestic insurance and surety companies and

 

associations and the admission of foreign and alien companies and

 

associations; to provide their rights, powers, and immunities and

 

to prescribe the conditions on which companies and associations

 

organized, existing, or authorized under this act may exercise

 

their powers; to provide the rights, powers, and immunities and to

 

prescribe the conditions on which other persons, firms,

 

corporations, associations, risk retention groups, and purchasing

 

groups engaged in an insurance or surety business may exercise

 

their powers; to provide for the imposition of a privilege fee on

 

domestic insurance companies and associations and the state

 

accident fund; to provide for the imposition of a tax on the

 

business of foreign and alien companies and associations; to

 

provide for the imposition of a tax on risk retention groups and

 

purchasing groups; to provide for the imposition of a tax on the

 

business of surplus line agents; to provide for the imposition of

 

regulatory fees on certain insurers; to provide for assessment fees

 

on certain health maintenance organizations; to modify tort

 

liability arising out of certain accidents; to provide for limited

 

actions with respect to that modified tort liability and to

 

prescribe certain procedures for maintaining those actions; to

 

require security for losses arising out of certain accidents; to

 

provide for the continued availability and affordability of

 

automobile insurance and homeowners insurance in this state and to

 

facilitate the purchase of that insurance by all residents of this

 

state at fair and reasonable rates; to provide for certain

 

reporting with respect to insurance and with respect to certain

 

claims against uninsured or self-insured persons; to prescribe

 

duties for certain state departments and officers with respect to

 

that reporting; to provide for certain assessments; to establish

 

and continue certain state insurance funds; to modify and clarify

 

the status, rights, powers, duties, and operations of the nonprofit

 

malpractice insurance fund; to provide for the departmental

 

supervision and regulation of the insurance and surety business

 

within this state; to provide for regulation over worker's

 

compensation self-insurers; to provide for the conservation,

 

rehabilitation, or liquidation of unsound or insolvent insurers; to

 

provide for the protection of policyholders, claimants, and

 

creditors of unsound or insolvent insurers; to provide for

 

associations of insurers to protect policyholders and claimants in

 

the event of insurer insolvencies; to prescribe educational

 

requirements for insurance agents and solicitors; to provide for

 

the regulation of multiple employer welfare arrangements; to create

 

an automobile insurance fraud and theft prevention authority to

 

reduce the number of automobile thefts in this state; to prescribe

 

the powers and duties of the automobile insurance fraud and theft

 

prevention authority; to provide certain powers and duties upon

 

certain officials, departments, and authorities of this state; to

 

provide for an appropriation; to repeal acts and parts of acts; and

 

to provide penalties for the violation of this act.

 

     Sec. 3301. (1) Every insurer authorized to write automobile

 

insurance in this state shall participate in an organization for

 

the purpose of doing all of the following:

 

     (a) Providing the guarantee that automobile insurance coverage

 

will be available to any person who is unable to procure that

 

insurance through ordinary methods.

 

     (b) Preserving to the public the benefits of price competition

 

by encouraging maximum use of the normal private insurance system.

 

     (c) Providing funding for the Michigan automobile insurance

 

fraud and theft prevention authority.

 

     (2) The organization created under this chapter shall be

 

called the "Michigan automobile insurance placement facility".

 

     Sec. 3330. (1) The board of governors shall have all power to

 

direct the operation of the facility, including, at a minimum, all

 

of the following:

 

     (a) To sue and be sued in the name of the facility. A judgment

 

against the facility shall not create any liabilities in the

 

individual participating members of the facility.

 

     (b) To delegate ministerial duties, to hire a manager, to hire

 

legal counsel, and to contract for goods and services from others.

 

     (c) To assess participating members on the basis of

 

participation ratios pursuant to section 3303 to cover anticipated

 

costs of operation and administration of the facility, to provide

 

for equitable servicing fees, and to share losses, profits, and

 

expenses pursuant to the plan of operation.

 

     (d) To impose limitations on cancellation or nonrenewal by

 

participating members of facility-placed business, in addition to

 

the limitations imposed by chapters 21 and 32.

 

     (e) To provide for a limited number of participating members

 

to receive equitable distribution of applicants; or to provide for

 

a limited number of participating members to service applicants in

 

a plan of sharing of losses in accordance with the subsection

 

section 3320(1)(c) and the plan operation.

 

     (f) To provide for standards of performance of service for the

 

participating members designated pursuant to subdivision (e).

 

     (g) To adopt a plan of operation and any amendments to the

 

plan, not inconsistent with this chapter, necessary to assure the

 

fair, reasonable, equitable, and nondiscriminatory manner of

 

administering the facility, including compliance with chapter 21,

 

and to provide for such other matters as are necessary or advisable

 

to implement this chapter, including matters necessary to comply

 

with the requirements of chapter 21.

 

     (2) The board of governors shall institute or cause to be

 

instituted by the facility or on its behalf an automatic data

 

processing system for recording and compiling data relative to

 

individuals insured through the facility. An automatic data

 

processing system established under this subsection shall, to the

 

greatest extent possible, be made compatible with the automatic

 

data processing system maintained by the secretary of state, to

 

provide for the identification and review of individuals insured

 

through the facility.

 

     (3) On or before January 1, 2012, the board of governors shall

 

amend the plan of operation to establish appropriate procedures

 

necessary to make assessments for and to carry out the

 

administrative duties and functions of the Michigan automobile

 

insurance fraud and theft prevention authority as provided in

 

chapter 61.

 

     Sec. 4501. As used in this chapter:

 

     (a) "Authorized agency" means the department of state police;

 

a city, village, or township police department; a county sheriff's

 

department; a United States criminal investigative department or

 

agency; the prosecuting authority of a city, village, township,

 

county, or state or of the United States; the insurance bureau

 

office of financial and insurance regulation; the Michigan

 

automobile insurance fraud and theft prevention authority; or the

 

department of state.

 

     (b) "Financial loss" includes, but is not limited to, loss of

 

earnings, out-of-pocket and other expenses, repair and replacement

 

costs, investigative costs, and claims payments.

 

     (c) "Insurance policy" or "policy" means an insurance policy,

 

health maintenance organization contract, nonprofit dental care

 

corporation certificate, or health care corporation certificate.

 

     (d) "Insurer" means a property-casualty insurer, life insurer,

 

third party administrator, self-funded plan, health insurer, health

 

maintenance organization, nonprofit dental care corporation, health

 

care corporation, reinsurer, or any other entity regulated by the

 

insurance laws of this state and providing any form of insurance.

 

     (e) "Michigan automobile insurance fraud and theft prevention

 

authority" means the Michigan automobile insurance fraud and theft

 

prevention authority created under section 6104.

 

     (f) (e) "Organization" means an organization or internal

 

department of an insurer established to detect and prevent

 

insurance fraud.

 

     (g) (f) "Person" includes an individual, insurer, company,

 

association, organization, Lloyds, society, reciprocal or inter-

 

insurance exchange, partnership, syndicate, business trust,

 

corporation, and any other legal entity.

 

     (h) (g) "Practitioner" means a licensee of this state

 

authorized to practice medicine and surgery, psychology,

 

chiropractic, or law, or any other licensee of the state whose

 

services are compensated, directly or indirectly, by insurance

 

proceeds, or a licensee similarly licensed in other states and

 

nations, or the practitioner of any nonmedical treatment rendered

 

in accordance with a recognized religious method of healing.

 

     (i) (h) "Statement" includes, but is not limited to, any

 

notice statement, proof of loss, bill of lading, receipt for

 

payment, invoice, account, estimate of property damages, bill for

 

services, claim form, diagnosis, prescription, hospital or doctor

 

record, X-rays, test result, or other evidence of loss, injury, or

 

expense.

 

CHAPTER 61

 

AUTOMOBILE INSURANCE FRAUD AND THEFT PREVENTION AUTHORITY

 

     Sec. 6101. As used in this chapter:

 

     (a) "Authority" means the automobile theft prevention

 

authority Michigan automobile insurance fraud and theft prevention

 

authority.

 

     (b) "Automobile insurance fraud" means a fraudulent insurance

 

act as described in section 4503, which act is committed in

 

connection with an application for or a policy of automobile

 

insurance.

 

     (c) (b) "Board" means the board of directors of the Michigan

 

automobile insurance fraud and theft prevention authority.

 

     (c) "Economic automobile theft" means automobile theft

 

perpetrated for financial gain.

 

     (d) "Car years" means net direct private passenger and

 

commercial nonfleet vehicle years of insurance providing the

 

security required by section 3101(1) written in this state for the

 

calendar year ending the December 31 of the second prior year as

 

reported to the statistical agent of each insurer.

 

     (e) "Facility" means the Michigan automobile insurance

 

placement facility created under chapter 33.

 

     Sec. 6104. (1) Beginning January 1, 2012, the Michigan

 

automobile insurance fraud and theft prevention authority is

 

created within the facility. The facility shall provide staff for

 

the authority and shall carry out the administrative duties and

 

functions as directed by the board of directors.

 

     (2) The Michigan automobile insurance fraud and theft

 

prevention authority is not a state agency, and the money of the

 

authority is not state money. A record of the authority is exempt

 

from disclosure under section 13 of the freedom of information act,

 

1976 PA 442, MCL 15.243.

 

     (3) The Michigan automobile insurance fraud and theft

 

prevention authority shall do all of the following:

 

     (a) Provide financial support to state or local law

 

enforcement agencies for programs designed to reduce the incidence

 

of automobile insurance fraud and theft.

 

     (b) Provide financial support to state or local prosecutorial

 

agencies for programs designed to reduce the incidence of

 

automobile insurance fraud and theft.

 

     (4) The Michigan automobile insurance fraud and theft

 

prevention authority may provide financial support to law

 

enforcement, prosecutorial, insurance, education, or training

 

associations for programs designed to reduce the incidence of

 

automobile insurance fraud and theft.

 

     (5) The purposes, powers, and duties of the Michigan

 

automobile insurance fraud and theft prevention authority shall be

 

vested in and exercised by a board of directors. The board of

 

directors shall consist of 13 members as follows:

 

     (a) Seven members who represent automobile insurers in this

 

state subject to the following:

 

     (i) At least 2 members who represent insurer groups with

 

350,000 or more car years.

 

     (ii) At least 2 members who represent insurer groups with less

 

than 350,000 but 100,000 or more car years.

 

     (iii) At least 1 member who represents insurer groups with less

 

than 100,000 car years.

 

     (b) The commissioner or his or her designee.

 

     (c) The attorney general or his or her designee.

 

     (d) Two members who represent law enforcement agencies in this

 

state.

 

     (e) One member who represents prosecuting attorneys in this

 

state.

 

     (f) One member who represents the general public.

 

     (6) The insurer members on the board under subsection (5)

 

shall be elected by automobile insurers doing business in this

 

state from a list of nominees proposed by the board of governors of

 

the facility. In preparing the list of nominees for the insurer

 

members, the board of governors of the facility shall solicit

 

nominations from automobile insurers doing business in this state.

 

     (7) The law enforcement members on the board under subsection

 

(5) shall be appointed by the governor with the advice and consent

 

of the senate. In appointing the law enforcement members, the

 

governor shall comply with all of the following:

 

     (a) He or she shall solicit input from various law enforcement

 

associations in this state.

 

     (b) He or she shall not appoint a member who represents the

 

same type of law enforcement agency as the other member who

 

represents law enforcement agencies on the board.

 

     (c) He or she shall not appoint a member representing the same

 

law enforcement agency to the board for more than 2 consecutive

 

terms.

 

     (8) The prosecuting attorney member on the board under

 

subsection (5) shall be appointed by the governor with the advice

 

and consent of the senate. In appointing the prosecuting attorney

 

member, the governor shall solicit input from various prosecuting

 

attorney associations in this state.

 

     (9) The public member on the board under subsection (5) shall

 

be appointed by the governor with the advice and consent of the

 

senate. The public member shall be a resident of this state and

 

shall not be employed by or under contract with any state or local

 

unit of government or any insurer.

 

     (10) Except as otherwise provided in this subsection, members

 

of the board shall serve for a term of 4 years and until their

 

successors are appointed and qualified. For the members first

 

elected or appointed under this section, 2 insurer members and 1

 

law enforcement member shall serve for a term of 2 years; 3 insurer

 

members, the prosecuting attorney member, and the general public

 

member shall serve for a term of 3 years; and 2 insurer members and

 

1 law enforcement member shall serve for a term of 4 years.

 

     Sec. 6104a. (1) Members of the board shall serve without

 

compensation for their membership on the board, except that members

 

of the board shall receive reasonable reimbursement for necessary

 

travel and expenses.

 

     (2) A majority of the members of the board shall constitute a

 

quorum for the transaction of business at a meeting, or the

 

exercise of a power or function of the authority, notwithstanding

 

the existence of 1 or more vacancies. Notwithstanding any other

 

provision of law, action may be taken by the board at a meeting

 

upon a vote of the majority of its members present in person or

 

through the use of amplified telephonic equipment, if authorized by

 

the bylaws or plan of operation of the board. The board shall meet

 

at the call of the chair or as may be provided in the bylaws of the

 

board. Meetings of the board may be held anywhere within the state

 

of Michigan.

 

     (3) The board shall adopt a plan of operation by a majority

 

vote of the board. Vacancies on the board shall be filled in

 

accordance with the plan of operation.

 

     Sec. 6104b. On or before January 1, 2012, the department of

 

state police shall transfer all assets of the automobile theft

 

prevention authority to the facility for the benefit of the

 

Michigan automobile insurance fraud and theft prevention authority.

 

     Sec. 6105. The authority board shall have the powers necessary

 

or convenient to carry out and effectuate the purposes and

 

provisions of this chapter and the purposes of the authority and

 

the powers delegated by other laws its duties under this act,

 

including, but not limited to, the power to do the following:

 

     (a) Sue and be sued ; to have a seal and alter the same at

 

pleasure; to have perpetual succession; to make, execute, and

 

deliver contracts, conveyances, and other instruments necessary or

 

convenient to the exercise of its powers; and to make and amend

 

bylaws in the name of the authority.

 

     (b) Solicit and accept gifts, grants, loans, funds collected

 

and placed in the automobile theft prevention fund, and other aids

 

from any person or the federal, state, or a local government or any

 

agency thereof.

 

     (c) Make grants and investments.

 

     (d) Procure insurance against any loss in connection with its

 

property, assets, or activities.

 

     (e) Invest any money held in reserve or sinking funds, or any

 

money not required for immediate use or disbursement, at its

 

discretion and to name and use depositories for its money.

 

     (f) Contract for goods and services and engage personnel as is

 

necessary. , including the services of private consultants,

 

managers, counsel, auditors, and others for rendering professional,

 

management, and technical assistance and advice, payable out of any

 

money of the fund legally available for this purpose.

 

     (g) Indemnify and procure insurance indemnifying any member of

 

the board from personal loss or accountability from liability

 

resulting from a member's action or inaction as a member of the

 

board.

 

     (h) Do all other things necessary or convenient to achieve the

 

objectives and purposes of the authority, this chapter, or other

 

laws Perform other acts not specifically enumerated in this section

 

that are necessary or proper to accomplish the purposes of the

 

authority and that are not inconsistent with this section or the

 

plan of operation.

 

     Sec. 6107. (1) Prior to April 1 of each year, each insurer

 

engaged in writing insurance coverages which 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 pay to the authority facility, for deposit into the account

 

of the authority, an assessment equal to $1.00 $2.00 multiplied by

 

the insurer's total earned car years of insurance. providing the

 

security required by section 3101(1) written in this state during

 

the immediately preceding calendar year.

 

     (2) Money received pursuant to subsection (1), and all other

 

money received by the authority, shall be segregated and placed in

 

a fund to be known as the automobile theft prevention fund. The

 

automobile theft prevention fund shall be administered by the

 

authority from other funds of the facility, if applicable, and

 

shall only be expended as directed by the board.

 

     (3) Money in the automobile theft prevention fund shall be

 

expended in the following order of priority:

 

     (a) To pay the costs of administration of the authority.

 

     (b) To achieve the purposes and objectives of this chapter,

 

which may include, but not be limited to, the following:

 

     (i) Provide financial support to the department of state police

 

and local law enforcement agencies for economic automobile theft

 

enforcement teams.

 

     (ii) Provide financial support to state or local law

 

enforcement agencies for programs designed to reduce the incidence

 

of economic automobile theft.

 

     (iii) Provide financial support to local prosecutors for

 

programs designed to reduce the incidence of economic automobile

 

theft.

 

     (iv) Provide financial support to judicial agencies for

 

programs designed to reduce the incidence of economic automobile

 

theft.

 

     (v) Provide financial support for neighborhood or community

 

organizations or business organizations for programs designed to

 

reduce the incidence of automobile theft.

 

     (vi) Conduct educational programs designed to inform automobile

 

owners of methods of preventing automobile theft and to provide

 

equipment, for experimental purposes, to enable automobile owners

 

to prevent automobile theft.

 

     (4) Money in the automobile theft prevention fund shall only

 

be used for automobile theft prevention efforts and shall be

 

distributed based on need and efficacy as determined by the

 

authority.

 

     (5) Money in the automobile theft prevention fund shall not be

 

considered state money.

 

     (3) From the funds received annually under subsection (1), the

 

board shall not reduce the amount of money available to provide

 

financial support for programs designed to reduce the incidence of

 

automobile theft below $6,000,000.00.

 

     Sec. 6108. (1) Each insurer authorized to transact automobile

 

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

 

transact insurance in this state, shall report automobile insurance

 

fraud data to the authority using the format and procedures set

 

forth by the board.

 

     (2) The department of state police shall cooperate with the

 

authority and shall provide available motor vehicle fraud and theft

 

statistics to the authority upon request.

 

     Sec. 6110. (1) The authority shall develop and implement a

 

plan of operation.

 

     (2) The plan of operation shall include an assessment of the

 

scope of the problem of automobile theft, including particular

 

areas of the state where the problem is greatest; an analysis of

 

various methods of combating the problem of automobile theft and

 

economic automobile theft; a plan for providing financial support

 

to combat automobile theft and economic automobile theft; and an

 

estimate of the funds required to implement the plan.

 

     (3) The authority shall report annually on or before February

 

April 1 to the governor commissioner and the legislature on its

 

activities in the preceding year.

 

     Enacting section 1. Sections 6103 and 6111 of the insurance

 

code of 1956, 1956 PA 218, MCL 500.6103 and 500.6111, are repealed

 

effective January 1, 2012.

 

     Enacting section 2. The title and sections 4501, 6101, 6105,

 

6107, and 6110 of the insurance code of 1956, 1956 PA 218, MCL

 

500.4501, 500.6101, 500.6105, 500.6107, and 500.6110, as amended by

 

this amendatory act, and sections 6104a and 6108 of the insurance

 

code of 1956, 1956 PA 218, as added by this amendatory act, take

 

effect January 1, 2012.