Bill Text: MI SB0298 | 2011-2012 | 96th Legislature | Engrossed
Bill Title: Insurance; other; practitioners who employ, use, or act as a runner, capper, or steerer to falsely or fraudulently obtain benefits; prohibit as fraudulent act and revise procedures for calculation of Michigan basic property insurance association rates. Amends secs. 2930a, 4501 & 4503 of 1956 PA 218 (MCL 500.2930a et seq.).
Spectrum: Bipartisan Bill
Status: (Passed) 2012-03-08 - Assigned Pa 0039'12 With Immediate Effect [SB0298 Detail]
Download: Michigan-2011-SB0298-Engrossed.html
SB-0298, As Passed Senate, November 30, 2011
SUBSTITUTE FOR
SENATE BILL NO. 298
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 2930a, 4501, and 4503 (MCL 500.2930a,
500.4501, and 500.4503), section 2930a as amended by 2002 PA 492
and sections 4501 and 4503 as added by 1995 PA 276.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2930a. (1) Except as otherwise provided in subsection
(4)(c)
(5)(c), rates charged in each territory by the pool for
home
insurance
shall be equal to the weighted average of the 10
voluntary
market insurer groups with the largest premium volume in
this
state. Rating territories for home insurance established by
the
pool shall be the same as those utilized by the largest number
of
insurers by premium volume writing home insurance in this state.
Any
change in the rates for an HO-2 form replacement cost policy by
those
insurers that would produce a change in excess of 5% in the
HO-2
pool rates for any territory shall be reflected as soon as
reasonably
practicable in the HO-2 pool rates. HO-2 pool rates
shall
be reviewed at least annually, but shall not be revised more
often
than quarterly.actuarially
determined and calculated to
generate a total premium sufficient to cover the expected losses
and expenses that the pool will likely incur during the projected
period for which the rates will be effective, subject to the
following:
(a) If the pool's actuarially indicated overall rate change is
greater than 5% but less than or equal to 20%, the pool shall take
1/2 of the actuarially indicated rate change amount.
(b) If the pool's actuarially indicated overall rate change is
greater than 20%, the pool shall take the full amount that exceeds
20%, plus 10%.
(c) If the pool's actuarially indicated overall rate change is
less than 5%, the pool shall take the entire indicated rate change
amount.
(2) Rates developed under this section are subject to the
following:
(a) The rates shall not be revised more than annually.
(b) The rates shall be filed with the commissioner for prior
approval. A filing is considered to be approved unless it is
disapproved by the commissioner within 30 days after it is
received.
(c) If the commissioner disapproves a filing within 30 days
after it is received, he or she shall send written notice of
disapproval to the pool specifying in what respects the filing
fails to meet the requirements of this act and stating that the
filing shall not become effective.
(d) If at any time after the 30-day period specified in
subdivision (b) the commissioner finds that a filing does not meet
the requirements of this act, the commissioner shall, after a
hearing held on not less than 10 days' written notice specifying
the matters to be considered at the hearing, issue an order
specifying in what respects the commissioner finds that the filing
fails to meet the requirements of this act and stating when, within
a reasonable period after the date of the order, the filing shall
be considered no longer effective.
(3) (2)
In addition to the provisions requirements of
subsection
subsections (1)
and (2), the premium established for
the
repair cost policy offered by the pool shall not exceed the premium
for an amount of insurance equal to 80% of the replacement cost of
the property under the replacement cost policy of the pool
equivalent to the HO-2 form replacement cost policy filed and in
effect in this state for a licensed rating organization. Premiums
for dwellings with identical replacement costs shall vary on a
schedule determined by the pool in accordance with the insured
value of the dwelling.
(4) (3)
The pool or any other association
or organization
designated by the pool shall develop its own actuarially justified
statistical
plans, rating rules, classifications, territory rating
plans
territories, and manuals of classification rating calculation
steps for home insurance issued on behalf of the pool consistent
with this section.
(5) (4)
The pool shall offer at least the
following home
insurance policy forms:
(a) An HO-2 form replacement cost policy equivalent to the HO-
2 form replacement cost policy filed and in effect in this state
for a licensed rating organization.
(b) A repair cost policy providing the deductibles, terms and
conditions, perils insured against, and types and amounts of
coverage equivalent to those provided by the HO-2 replacement cost
policy filed and in effect for a licensed rating organization.
(c) An HO-3 form replacement cost policy equivalent to the HO-
3 form replacement cost policy filed and in effect in this state
for a licensed rating organization. The rates established by the
pool for the HO-3 form replacement cost policy offered pursuant to
this subdivision shall be actuarially determined and calculated to
generate a total premium sufficient to cover the expected losses
and expenses of the pool related to the HO-3 replacement cost
policy that the pool will likely incur during the projected period
for
which the premium is applicable rates
will be effective. The
premium
shall include an amount to cover incurred but not reported
losses
for the period and shall be
adjusted fully in a single
period or over several periods in a manner provided for in the plan
of operation for any excess or deficient premiums from previous
periods.
Excesses or deficiencies from previous periods shall be
fully
adjusted in a single period or over several periods in a
manner
provided for in the plan of operation. Rates established by
the pool under this subdivision shall not be based upon the
weighted
average methodology provided for in
subsection (1).
(6) (5)
Rates and policy Policy forms shall be filed in
accordance
with such provisions of this chapter as with the
commissioner
designates.for prior
approval.
(6)
The commissioner shall report in writing to the senate and
house
of representatives standing committees on insurance issues by
July
1, 2005 on the effect in chapter 29 that the amendatory act
that
added this subsection has had on home insurance premiums in
this
state.
(7) As used in this section:
(a) "Actuarially indicated overall rate change" means rate
change calculated within the framework and principles of the
casualty actuarial society that uses a permissible combined ratio
of 100%.
(b) "Combined ratio" means the sum of the loss ratio and the
expense ratio where the loss ratio is the ratio of incurred loss
and loss adjustment expenses to earned premium and the expense
ratio is the ratio of underwriting expenses to earned premium.
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; or the department of
state.
(b) "Financial loss" includes, but is not limited to, loss of
Senate Bill No. 298 as amended November 29, 2011
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,
<<benefit contract of a self-funded plan,>>
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) "Organization" means an organization or internal
department of an insurer established to detect and prevent
insurance fraud.
(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.
(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<<, or an
unlicensed health
care provider>> 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.
(h) "Runner", "capper", or "steerer" means a person who
receives a pecuniary <<OR OTHER>> benefit from a practitioner,
whether directly
or indirectly, for procuring or attempting to procure a client,
patient, or customer at the direction or request of, or in
cooperation with, a practitioner whose intent is to obtain benefits
under a contract of insurance or to assert a claim against an
insured or an insurer for providing services to the client,
patient, or customer. Runner, capper, or steerer does not include a
practitioner who procures clients, patients, or customers through
the use of public media.
(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.
Sec. 4503. A fraudulent insurance act includes, but is not
limited to, acts or omissions committed by any person who
knowingly, and with an intent to injure, defraud, or deceive:
(a) Presents, causes to be presented, or prepares with
knowledge or belief that it will be presented to or by an insurer
or any agent of an insurer, or any agent of an insurer, reinsurer,
or broker any oral or written statement knowing that the statement
contains any false information concerning any fact material to an
application for the issuance of an insurance policy.
(b) Prepares or assists, abets, solicits, or conspires with
another to prepare or make an oral or written statement that is
intended to be presented to or by any insurer in connection with,
or in support of, any application for the issuance of an insurance
policy, knowing that the statement contains any false information
concerning any fact or thing material to the application.
(c) Presents or causes to be presented to or by any insurer,
any oral or written statement including computer-generated
information as part of, or in support of, a claim for payment or
other benefit pursuant to an insurance policy, knowing that the
statement contains false information concerning any fact or thing
material to the claim.
(d) Assists, abets, solicits, or conspires with another to
prepare or make any oral or written statement including computer-
generated documents that is intended to be presented to or by any
insurer in connection with, or in support of, any claim for payment
or other benefit pursuant to an insurance policy, knowing that the
statement contains any false information concerning any fact or
thing material to the claim.
(e) Solicits or accepts new or renewal insurance risks by or
for an insolvent insurer.
(f) Removes or attempts to remove the assets or records of
assets, transactions, and affairs, or a material part of the assets
or records, from the home office or other place of business of the
insurer or from the place of safekeeping of the insurer, or who
conceals or attempts to conceal the assets or record of assets,
transactions, and affairs, or a material part of the assets or
records, from the commissioner.
(g) Diverts, attempts to divert, or conspires to divert funds
of an insurer or of other persons in connection with any of the
following:
(i) The transaction of insurance or reinsurance.
(ii) The conduct of business activities by an insurer.
(iii) The formation, acquisition, or dissolution of an insurer.
(h) Employs, uses, or acts as a runner, capper, or steerer
with the intent to falsely or fraudulently obtain benefits under a
contract of insurance or to falsely or fraudulently assert a claim
against an insured or an insurer for providing services to the
client, patient, or customer.
(i) (h)
Knowingly and willfully assists, conspires with, or
urges any person to fraudulently violate this act, or any person
who due to that assistance, conspiracy, or urging knowingly and
willfully benefits from the proceeds derived from the fraud.
