Bill Text: MI SB0297 | 2011-2012 | 96th Legislature | Introduced

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Bill Title: Insurance; no-fault; duties of the assigned claims facility; transfer to Michigan automobile placement facility. Amends secs. 3171, 3172, 3173a, 3174, 3175, 3320 & 3330 of 1956 PA 218 (MCL 500.3171 et seq.).

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2011-03-24 - Referred To Committee On Insurance [SB0297 Detail]

Download: Michigan-2011-SB0297-Introduced.html

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SENATE BILL No. 297

 

 

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 sections 3171, 3172, 3173a, 3174, 3175, 3320, and 3330

 

(MCL 500.3171, 500.3172, 500.3173a, 500.3174, 500.3175, 500.3320,

 

and 500.3330), sections 3172 and 3175 as amended and section 3173a

 

as added by 1984 PA 426 and section 3320 as amended by 1980 PA 461.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3171. (1) The Until an assigned claims plan is approved

 

under subsection (3) and filed with the secretary of state, the

 

secretary of state shall organize and maintain an assigned claims

 

facility and plan. A self-insurer and insurer writing insurance as

 

provided by this chapter in this state shall participate in the

 

assigned claims plan. Costs incurred in the operation of the

 

facility and the plan shall be allocated fairly among insurers and

 

self-insurers. The secretary of state shall promulgate rules to

 

implement the facility and plan in accordance with and subject to

 

Act No. 306 of the Public Acts of 1969, as amended, being sections

 

24.201 to 24.315 of the Compiled Laws of 1948 the administrative

 

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

 

     (2) The Michigan automobile insurance placement facility shall

 

adopt and maintain an assigned claims plan. A self-insurer and

 

insurer writing insurance as provided by this chapter in this state

 

shall participate in the assigned claims plan. Costs incurred in

 

the administration of the assigned claims plan shall be allocated

 

fairly among insurers and self-insurers. Upon approval and filing

 

with the secretary of state under subsection (3), the Michigan

 

automobile insurance placement facility shall implement the

 

assigned claims plan.

 

     (3) The Michigan automobile insurance placement facility board

 

of governors shall adopt an assigned claims plan by majority vote

 

and shall submit it to the commissioner for his or her approval. If

 

the commissioner finds that the plan meets the requirements of this

 

chapter, he or she shall approve it. If the commissioner finds that

 

the plan fails to meet the requirements of this chapter, he or she

 

shall state in what respects the plan is deficient and shall afford

 

the Michigan automobile insurance placement facility board of

 

governors 10 days within which to correct the deficiency. If the

 

commissioner and the Michigan automobile insurance placement

 

facility board of governors fail to agree that the provisions of

 

the plan so submitted meet the requirements of this chapter, either

 

party to the controversy may submit the issue to the circuit court

 

for Ingham county for a determination. If the commissioner fails to

 

render a written decision on the assigned claims plan within 30

 

days after receipt of the plan, the plan shall be considered

 

approved. The Michigan automobile insurance placement facility

 

shall file a plan approved under this subsection with the secretary

 

of state. The plan takes effect upon being filed with the secretary

 

of state.

 

     (4) Amendments to the assigned claims plan are subject to

 

majority approval by the board of governors and are subject to the

 

commissioner's approval as provided in subsection (3).

 

     (5) As used in this section:

 

     (a) "Michigan automobile insurance placement facility" means

 

the Michigan automobile insurance placement facility created under

 

chapter 33.

 

     (b) "Michigan automobile insurance placement facility board of

 

governors" means the board of governors created pursuant to section

 

3310.

 

     Sec. 3172. (1) A person entitled to claim because of

 

accidental bodily injury arising out of the ownership, operation,

 

maintenance, or use of a motor vehicle as a motor vehicle in this

 

state may obtain personal protection insurance benefits through an

 

assigned claims plan if no personal protection insurance is

 

applicable to the injury, no personal protection insurance

 

applicable to the injury can be identified, the personal protection

 

insurance applicable to the injury cannot be ascertained because of

 

a dispute between 2 or more automobile insurers concerning their

 

obligation to provide coverage or the equitable distribution of the

 

loss, or the only identifiable personal protection insurance

 

applicable to the injury is, because of financial inability of 1 or

 

more insurers to fulfill their obligations, inadequate to provide

 

benefits up to the maximum prescribed. In such case unpaid benefits

 

due or coming due are subject to being collected under the assigned

 

claims plan, and the insurer to which the claim is assigned , or

 

the assigned claims facility if the claim is assigned to it, is

 

entitled to reimbursement from the defaulting insurers to the

 

extent of their financial responsibility.

 

     (2) Except as otherwise provided in this subsection, personal

 

protection insurance benefits, including benefits arising from

 

accidents occurring before the effective date of this subsection,

 

payable through an the assigned claims plan shall be reduced to the

 

extent that benefits covering the same loss are available from

 

other sources, regardless of the nature or number of benefit

 

sources available and regardless of the nature or form of the

 

benefits, to a person claiming personal protection insurance

 

benefits through the assigned claims plan. This subsection shall

 

only apply when the personal protection insurance benefits are

 

payable through the assigned claims plan because no personal

 

protection insurance is applicable to the injury, no personal

 

protection insurance applicable to the injury can be identified, or

 

the only identifiable personal protection insurance applicable to

 

the injury is, because of financial inability of 1 or more insurers

 

to fulfill their obligations, inadequate to provide benefits up to

 

the maximum prescribed. As used in this subsection, "sources" and

 

"benefit sources" do not include the program for medical assistance

 

for the medically indigent under the social welfare act, Act No.

 

280 of the Public Acts of 1939, being sections 400.1 to 400.121 of

 

the Michigan Compiled Laws 1939 PA 280, MCL 400.1 to 400.119b, or

 

insurance under the health insurance for the aged act, title XVIII

 

of the social security amendments of 1965 act, 42 USC 1395 to

 

1395iii.

 

     (3) If the obligation to provide personal protection insurance

 

benefits cannot be ascertained because of a dispute between 2 or

 

more automobile insurers concerning their obligation to provide

 

coverage or the equitable distribution of the loss, and if a method

 

of voluntary payment of benefits cannot be agreed upon among or

 

between the disputing insurers, all of the following shall apply:

 

     (a) The insurers who are parties to the dispute shall, or the

 

claimant may, immediately notify the assigned claims Michigan

 

automobile insurance placement facility of their inability to

 

determine their statutory obligations.

 

     (b) The claim shall be assigned by the assigned claims

 

Michigan automobile insurance placement facility to an insurer

 

which shall immediately provide personal protection insurance

 

benefits to the claimant or claimants entitled to benefits.

 

     (c) An action shall be immediately commenced on behalf of the

 

assigned claims Michigan automobile insurance placement facility by

 

the insurer to whom the claim is assigned in circuit court for the

 

purpose of declaring the rights and duties of any interested party.

 

     (d) The insurer to whom the claim is assigned shall join as

 

parties defendant each insurer disputing either the obligation to

 

provide personal protection insurance benefits or the equitable

 

distribution of the loss among the insurers.

 

     (e) The circuit court shall declare the rights and duties of

 

any interested party whether or not other relief is sought or could

 

be granted.

 

     (f) After hearing the action, the circuit court shall

 

determine the insurer or insurers, if any, obligated to provide the

 

applicable personal protection insurance benefits and the equitable

 

distribution, if any, among the insurers obligated therefor, and

 

shall order reimbursement to the assigned claims Michigan

 

automobile insurance placement facility from the insurer or

 

insurers to the extent of the responsibility as determined by the

 

court. The reimbursement ordered under this subdivision shall

 

include all benefits and costs paid or incurred by the assigned

 

claims Michigan automobile insurance placement facility and all

 

benefits and costs paid or incurred by insurers determined not to

 

be obligated to provide applicable personal protection insurance

 

benefits, including reasonable attorney fees and interest at the

 

rate prescribed in section 3175 as of December 31 of the year

 

preceding the determination of the circuit court.

 

     Sec. 3173a. The assigned claims Michigan automobile insurance

 

placement facility shall make an initial determination of the

 

claimant's eligibility for benefits under the assigned claims plan

 

and shall deny an obviously ineligible claim. The claimant shall be

 

notified promptly in writing of the denial and the reasons for the

 

denial.

 

     Sec. 3174. A person claiming through an the assigned claims

 

plan shall notify the Michigan automobile insurance placement

 

facility of his or her claim within the time that would have been

 

allowed for filing an action for personal protection insurance

 

benefits if identifiable coverage applicable to the claim had been

 

in effect. The Michigan automobile insurance placement facility

 

shall promptly assign the claim in accordance with the plan and

 

notify the claimant of the identity and address of the insurer to

 

which the claim is assigned, or of the Michigan automobile

 

insurance placement facility if the claim is assigned to it. An

 

action by the claimant shall not be commenced more than 30 days

 

after receipt of notice of the assignment or the last date on which

 

the action could have been commenced against an insurer of

 

identifiable coverage applicable to the claim, whichever is later.

 

     Sec. 3175. (1) The assignment of claims shall be made

 

according to rules procedures established in the assigned claims

 

plan that assure fair allocation of the burden of assigned claims

 

among insurers doing business in this state on a basis reasonably

 

related to the volume of automobile liability and personal

 

protection insurance they write on motor vehicles or of the number

 

of self-insured motor vehicles. An insurer to whom claims have been

 

assigned shall make prompt payment of loss in accordance with this

 

act and is thereupon entitled to reimbursement by the assigned

 

claims Michigan automobile insurance placement facility for the

 

payments and the established loss adjustment cost, together with an

 

amount determined by use of the average annual 90-day United States

 

treasury bill yield rate, as reported by the council of economic

 

advisers as of December 31 of the year for which reimbursement is

 

sought, as follows:

 

     (a) For the calendar year in which claims are paid by the

 

insurer, the amount shall be determined by applying the specified

 

annual yield rate specified in this subsection to 1/2 of the total

 

claims payments and loss adjustment costs.

 

     (b) For the period from the end of the calendar year in which

 

claims are paid by the insurer to the date payments for the

 

operation of the assigned claims facility and the assigned claims

 

plan are due, the amount will be determined by applying the annual

 

yield rate specified in this subsection to the total claims

 

payments and loss adjustment costs multiplied by a fraction the

 

denominator of which is 365 and the numerator of which is equal to

 

the number of days that have elapsed between the end of the

 

calendar year and the date payments for the operation of the

 

assigned claims facility and the assigned claims plan are due.

 

     (2) The insurer to whom claims have been assigned shall

 

preserve and enforce rights to indemnity or reimbursement against

 

third parties and account to the assigned claims Michigan

 

automobile insurance placement facility therefor and shall assign

 

such rights to the assigned claims Michigan automobile insurance

 

placement facility upon reimbursement by the assigned claims

 

Michigan automobile insurance placement facility. This section

 

shall not preclude an insurer from entering into reasonable

 

compromises and settlements with third parties against whom rights

 

to indemnity or reimbursement exist. The insurer shall account to

 

the assigned claims Michigan automobile insurance placement

 

facility for such compromises and settlements. The rules

 

promulgated under section 3171 shall include a rule establishing

 

procedures established under the assigned claims plan shall

 

establish reasonable standards for enforcing rights to indemnity or

 

reimbursement against third parties, including a standard

 

establishing a value for such rights below which actions to

 

preserve and enforce the rights need not be pursued.

 

     (3) An action to enforce rights to indemnity or reimbursement

 

against a third party shall not be commenced after the later of 2

 

years after the assignment of the claim to the insurer or 1 year

 

after the date of the last payment to the claimant.

 

     (4) Payments for the operation of the assigned claims facility

 

and plan not paid by the due date shall bear interest at the rate

 

of 20% per annum.

 

     (5) The secretary of state through the Michigan automobile

 

insurance placement facility may enter into a written agreement

 

with the debtor permitting the payment of the judgment or

 

acknowledgment of debt in installments payable to the Michigan

 

automobile insurance placement facility.

 

     Sec. 3320. (1) The facility, with respect to private passenger

 

nonfleet automobiles, shall provide for all of the following:

 

     (a) The equitable distribution of applicants to designated

 

participating members in accordance with the plan of operation.

 

     (b) Issuance of policies of automobile insurance to qualified

 

applicants as provided in the plan of operation.

 

     (c) The appointment of a number of participating members

 

appointed by the facility to act on behalf of the facility for the

 

distribution of risks or for the servicing of insureds, as provided

 

in the plan of operation and consistent with this section. The

 

facility shall do all of the following:

 

     (i) Appoint those members having the 5 highest participation

 

ratios, as defined in section 3303(e)(i) to act on behalf of the

 

facility.

 

     (ii) Appoint other members to act on behalf of the facility who

 

volunteer to so act and who meet reasonable servicing standards

 

established in the plan of operation, up to a maximum of 5 in

 

addition to those appointed pursuant to subparagraph (i) (i).

 

     (iii) Appoint additional members to act on behalf of the

 

facility as necessary to do all of the following:

 

     (A) Assure convenient access to the facility for all citizens

 

of this state.

 

     (B) Assure a reasonable quality of service for persons insured

 

through the facility.

 

     (C) Assure a reasonable representation of the various

 

insurance marketing systems.

 

     (D) Assure reasonable claims handling.

 

     (E) Assure a reasonable range of choice of insurers for

 

persons insured through the facility.

 

     (d) Standards and monitoring procedures to assure that

 

participating members acting on behalf of the facility do all of

 

the following:

 

     (i) Provide service to persons insured through the facility

 

equivalent to the service provided to persons insured by the

 

insurer voluntarily.

 

     (ii) Handle claims in an efficient and reasonable manner.

 

     (iii) Provide internal review procedures for persons insured

 

through the facility identical to those established pursuant to

 

chapter 21 for persons insured voluntarily.

 

     (e) Establish The establishment of procedures and guidelines

 

for the issuance of binders by agents upon receipt of the

 

application for coverage.

 

     (f) Provide for the issuance Issuance of policies of

 

automobile insurance to qualified applicants whose licenses to

 

operate a vehicle have been suspended pursuant to section 310,

 

310b, 310d, 315, 321a, 324, 328, 512, 515, 625, 625b, 625f, 748,

 

801c, or 907 of Act No. 300 of the Public Acts of 1949, as amended,

 

being sections the Michigan vehicle code, 1949 PA 300, MCL 257.310,

 

257.310b, 257.310d, 257.315, 257.321a, 257.324, 257.328, 257.512,

 

257.515, 257.625, 257.625b, 257.625f, 257.748, 257.801c, and

 

257.907, of the Michigan Compiled Laws, as provided in the plan of

 

operation. These policies may be canceled after a period of not

 

less than 30 days if the insured fails to produce proof that the

 

suspended license has been reinstated.

 

     (g) Administration of the assigned claims plan as required

 

under chapter 31.

 

     (2) Automobile insurance made available under this section

 

shall be equivalent to the automobile insurance normally available

 

in the voluntary competitive market in forms as approved by the

 

commissioner with such changes, additions, and amendments as are

 

adopted by the board of governors and approved by the commissioner.

 

     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.

 

     (h) To assess self-insurers and insurers consistent with

 

chapter 31 and the assigned claims plan adopted under section 3171.

 

     (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) The secretary of state shall provide to the board of

 

governors information necessary for the board of governors to

 

assess self-insurers pursuant to subsection (1)(h).

 

     Enacting section 1. Sections 3172, 3173a, 3174, and 3175 of

 

the insurance code of 1956, 1956 PA 218, MCL 500.3172, 500.3173a,

 

500.3174, and 500.3175, as amended by this amendatory act, take

 

effect on the date the assigned claims plan is filed with the

 

secretary of state under section 3171(3) of the insurance code of

 

1956, 1956 PA 218, MCL 500.3171.