January 24, 2006, Introduced by Reps. Wojno, Anderson, Condino, Alma Smith, Vagnozzi, Brown, Zelenko, Meisner, Espinoza, Lipsey, Williams, Donigan, Polidori, Tobocman, Farrah, Plakas, Mayes, Gleason, Kolb, Hood and Lemmons, III and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 150, 436, 438, 1239, 1243, 1246, 1371, 1952,
2006, 2039, 2055, 2057, 2062, 2069, 2077, 2080, 2082, 2086, 2236,
2912, 3861, 5208a, 5252, 5256, and 6842 (MCL 500.150, 500.436,
500.438, 500.1239, 500.1243, 500.1246, 500.1371, 500.1952,
500.2006, 500.2039, 500.2055, 500.2057, 500.2062, 500.2069,
500.2077, 500.2080, 500.2082, 500.2086, 500.2236, 500.2912,
500.3861, 500.5208a, 500.5252, 500.5256, and 500.6842), sections
150, 436, and 1371 as amended by 1992 PA 182, section 438 as
amended by 1994 PA 227, sections 1239 and 1246 as added and section
1243 as amended by 2001 PA 228, section 1952 as added by 1980 PA
341, section 2006 as amended by 2004 PA 28, section 2069 as amended
by 1989 PA 306, section 2080 as amended by 1986 PA 318, section
2236 as amended by 2002 PA 664, section 3861 as added by 1992 PA
84, section 5208a as amended by 1998 PA 26, section 5252 as amended
by 1984 PA 263, and section 5256 as amended by 1998 PA 121; and to
repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 150. (1) Any person who violates any provision of this
act for which a specific civil penalty is not provided under any
other provision of this act or of other laws applicable to the
violation shall be afforded an opportunity for a hearing before the
commissioner
pursuant to the administrative procedures act of 1969,
Act
No. 306 of the Public Acts of 1969, being sections 24.201 to
24.328
of the Michigan Compiled Laws 1969 PA 306, MCL 24.201 to
24.328. If the commissioner finds that a violation has occurred,
the commissioner shall reduce the findings and decision to writing
and
shall issue and cause to be served serve upon
the person
charged with the violation a copy of the findings and an order
requiring the person to cease and desist from the violation. In
addition, the commissioner may order any of the following:
(a)
Payment of a civil fine of not more than $500.00
$1,000.00 for each violation. However, if the person knew or
reasonably should have known that he or she was in violation of
this act, the commissioner may order the payment of a civil fine of
not
more than $2,500.00 $25,000.00 for each violation. With
respect to filings made under chapters 21, 22, 23, 24, and 26,
"violation" means a filing not in compliance with the provisions of
those chapters and does not include an action with respect to an
individual policy based upon a noncomplying filing. An order of the
commissioner under this subdivision shall not require the payment
of
civil fines exceeding $25,000.00 $100,000.00, unless the
person knew or reasonably should have known that he or she was in
violation of this act, in which case an order of the commissioner
under this subdivision shall not require the payment of civil fines
exceeding $250,000.00. A fine collected under this subdivision
shall
be turned over to deposited with the state
treasurer and
credited to the general fund.
(b) The suspension, limitation, or revocation of the person's
license or certificate of authority.
(c) A refund of any overcharges to affected policyholders.
(d) Restitution to the insured or other claimant to cover
incurred losses, damages, or other harm attributable to the acts of
the person found to be in violation of this chapter, including, but
not limited to, costs and attorney fees incurred by an insured or
other claimant in any hearing under the administrative procedures
act of 1969, 1969 PA 306, MCL 24.201 to 24.328, that establishes a
violation of this chapter.
(2) After notice and opportunity for hearing, the commissioner
may by order reopen and alter, modify, or set aside, in whole or in
part, an order issued under this section if, in the commissioner's
opinion, conditions of fact or law have changed to require that
action or the public interest requires that action.
(3) If a person knowingly violates a cease and desist order
under this section and has been given notice and an opportunity for
a
hearing held pursuant to Act No. 306 of the Public Acts of 1969
the administrative procedures act of 1969, 1969 PA 306, MCL 24.201
to
24.328, the commissioner may order a
civil fine of $10,000.00
$25,000.00 for each violation, or a suspension, limitation, or
revocation of a person's license, or both. A fine collected under
this subsection shall be turned over to the state treasurer and
credited to the general fund.
(4) Without prior hearing, the commissioner may order summary
suspension of a license if he or she finds that protection of the
public requires emergency action and incorporates this finding in
his or her order. The suspension shall be effective on the date
specified in the order or upon service of a certified copy of the
order on the licensee, whichever is later. If requested, the
commissioner shall conduct a hearing on the suspension within a
reasonable time but not later than 20 days after the effective date
of the summary suspension unless the person whose license is
suspended requests a later date. At the hearing, the commissioner
shall determine if the suspension should be continued or if the
suspension should be withdrawn, and, if proper notice is given, may
determine if the license should be revoked. The commissioner shall
announce his or her decision within 30 days after conclusion of the
hearing. The suspension shall continue until the decision is
announced.
(5) The commissioner, or his or her designated deputy, may
issue subpoenas to require the attendance and testimony of
witnesses and the production of documents necessary to the conduct
of the hearing and may designate an office of financial and
insurance services employee to make service. The subpoenas issued
by the commissioner, or his or her designated deputy, may be
enforced upon petition to the circuit court of Ingham county to
show cause why a contempt order should not be issued, as provided
by law.
(6) (4)
The commissioner may apply to the Ingham county
circuit court for an order of the court enjoining a violation of
this act.
(7) Beginning March 1, 2007, and by March 1 of every year
after 2007, the fines in this section shall be adjusted to reflect
the cumulative percentage change in the consumer price index over
the preceding calendar year. As used in this subsection, "consumer
price index" means the annual percentage change in the Detroit
consumer price index for all items for the prior 12-month period as
reported by the United States department of labor, bureau of labor
statistics, and as certified by the commissioner.
Sec. 436. The commissioner may suspend, revoke, or limit the
certificate of authority of an insurer if he or she determines that
any of the following conditions exist:
(a) The insurer no longer meets the requirements of this act
respecting capital, surplus, deposits, or assets.
(b) The insurer's condition is such that it is no longer safe,
reliable, or entitled to public confidence or is unsound, or the
insurer is using financial methods and practices in the conduct of
its business that render further transaction of insurance by the
insurer in this state hazardous to policyholders, creditors, or the
public.
(c) The insurer's certificate of authority to transact
business in its state of domicile, or in the case of an alien
insurer, in its state of entry, has been suspended or revoked.
(d) The insurer has failed, after written request by the
commissioner, to remove or discharge an officer or director whose
record of business conduct does not satisfy the requirements of
section 436a(1)(k) or 1315(1)(f) or who has been convicted of any
crime involving fraud, dishonesty, or like moral turpitude.
(e)
The insurer fails to promptly comply with sections 222 or
438.
(e) (f)
The insurer has failed for an unreasonable period to
pay any final judgment rendered against it in this state on any
policy, bond, recognizance, or undertaking issued or guaranteed by
it.
(f) (g)
The insurer has failed, within 30 days after notice
of delinquency from the commissioner, to cure its failure to pay
the taxes, fees, assessments, or expenses required by this act.
(g) (h)
The insurer has violated any other provision of this
act that provides for suspension or revocation of its certificate
of authority.
Sec. 438. (1) Each insurer, foreign, alien, U.S. branch, or
domestic, transacting business within this state, shall annually,
on or before March 1, prepare under oath and deposit with the
commissioner a statement concerning its affairs in a form and
manner as prescribed by the commissioner. The annual statement
shall be filed on or before March 1 of the year following that
covered by the statement. Upon request and for good cause shown,
the commissioner may grant to any company reasonable extensions of
the March 1 filing date for periods not to exceed 30 days. The
insurer shall pay the filing fee prescribed in section 240(1)(b).
(2) The commissioner shall prescribe the format and content of
statements that are suitable and adaptable to each kind of insurer
authorized by this act. The commissioner shall include requests for
information upon any and all important elements of an insurer's
business, including any matter, condition, or requirement regulated
by this act. An annual statement filed by an insurer under this
section shall be prepared in accordance with instructions provided
by, and accounting practices and procedures designated by, the
commissioner.
(3) The commissioner may address inquiries to any insurer, in
relation to the insurer's activities or conditions, or any matter
connected with the insurer's transactions. An insurer so addressed
shall promptly reply in writing to each inquiry by the
commissioner.
(4) Each report filed with the commissioner pursuant to this
section shall be made available to the public in compliance with
the
freedom of information act, Act No. 442 of the Public Acts of
1976,
being sections 15.231 to 15.246 of the Michigan Compiled Laws
1976 PA 442, MCL 15.231 to 15.246.
(5)
Each authorized insurer that fails to make or deposit the
annual
statement required by this section, or fails to reply within
30
days to an inquiry of the commissioner, is subject to a civil
penalty
of not less than $1,000.00 or more than $5,000.00, and an
additional
$50.00 for every day that the insurer fails to make and
deposit
the annual statement or reply to the inquiry. In addition,
each
insurer that fails to make and deposit an annual statement, or
fails
to make a satisfactory reply to an inquiry of the
commissioner,
concerning the insurer's affairs shall be subject to
proceedings
under section 436.
(5) (6)
The annual statement of an alien insurer shall
relate only to the insurer's assets, transactions, and affairs in
the United States unless the commissioner requires otherwise.
(6) (7)
As used in this section, "U.S.
branch" means that
term as defined in section 431.
Sec. 1239. (1) In addition to any other powers under this act,
the commissioner may place on probation, suspend, revoke, or refuse
to
issue an insurance producer's license
or may levy a civil fine
under
section 1244 or any combination of actions for any 1 or more
of the following causes:
(a) Providing incorrect, misleading, incomplete, or materially
untrue information in the license application.
(b) Violating any insurance laws or violating any regulation,
subpoena, or order of the commissioner or of another state's
insurance commissioner.
(c) Obtaining or attempting to obtain a license through
misrepresentation or fraud.
(d) Improperly withholding, misappropriating, or converting
any money or property received in the course of doing insurance
business.
(e) Intentionally misrepresenting the terms of an actual or
proposed insurance contract or application for insurance.
(f) Having been convicted of a felony.
(g) Having admitted or been found to have committed any
insurance unfair trade practice or fraud.
(h) Using fraudulent, coercive, or dishonest practices or
demonstrating incompetence, untrustworthiness, or financial
irresponsibility in the conduct of business in this state or
elsewhere.
(i) Having an insurance producer license or its equivalent
denied, suspended, or revoked in any other state, province,
district, or territory.
(j) Forging another's name to an application for insurance or
to any document related to an insurance transaction.
(k) Improperly using notes or any other reference material to
complete an examination for an insurance license.
(l) Knowingly accepting insurance business from an individual
who is not licensed.
(m) Failing to comply with an administrative or court order
imposing a child support obligation.
(n) Failing to pay single business tax or comply with any
administrative or court order directing payment of single business
tax.
(2) Before the commissioner denies an application for a
license, the commissioner shall notify in writing the applicant or
licensee of the denial and of the reason for the denial. Not later
than 30 days after this written denial, the applicant or licensee
may make written demand upon the commissioner for a hearing before
the commissioner to determine the reasonableness of the
commissioner's action. A hearing under this subsection shall be
held pursuant to the administrative procedures act of 1969, 1969 PA
306, MCL 24.201 to 24.328.
(3) The license of a business entity may be suspended,
revoked, or refused if the commissioner finds, after hearing, that
an individual licensee's violation was known or should have been
known by 1 or more of the partners, officers, or managers acting on
behalf of the partnership or corporation and the violation was
neither reported to the commissioner nor corrective action taken.
(4)
In addition to or in lieu of any applicable denial,
suspension,
or revocation of a license, a person may, after
hearing,
be subject to a civil fine under section 1244.
(4) (5)
In addition to the penalties under this section, the
commissioner may enforce the provisions of and impose any penalty
or remedy authorized by this act against any person who is under
investigation for or charged with a violation of this act even if
the person's license or registration has been surrendered or has
lapsed by operation of law.
Sec. 1243. (1) As used in this section:
(a) "Act" means the insurance code of 1956, 1956 PA 218, MCL
500.100 to 500.8302.
(b) "Affiliate" means a person that directly or indirectly or
through 1 or more intermediaries, controls or is controlled by
another or is under common control with another. An affiliate
includes a person who for any 12-month period makes a monthly
average of 10 or more referrals to lenders for the purpose of
procuring a loan and the person receives consideration for making
those referrals.
(c) "Agent" means an individual licensed as an insurance
producer, broker, solicitor, or insurance counselor under this act.
(d) "Agency" means an insurance agency licensed under this
act.
(e) "Control" means control as defined in section 115.
(f) "Insurance product" means any product or service
regulated, in whole or in part, by the commissioner.
(g) "Lender" means a person or entity who directly or
indirectly, in the ordinary course of business regularly makes,
arranges, offers to make, or purchases and services a loan as
defined by subdivision (h). A lender includes a mortgage broker. If
a person purchases an interest in but does not service a loan, that
person is not a lender under this section for the purposes of that
loan.
(h) "Loan" means an agreement to lend money or to finance
goods or services. Loan does not include any of the following:
(i) The financing of insurance premiums.
(ii) A loan from the cash value of an insurance policy.
(iii) A home improvement charge agreement or a home improvement
installment contract made under the home improvement finance act,
1965 PA 332, MCL 445.1101 to 445.1431.
(iv) A retail installment contract of $10,000.00 or less or a
retail charge agreement made under the retail installment sales
act, 1966 PA 224, MCL 445.851 to 445.873.
(i) "Loan representative" means an employee or representative
of a lender that deals directly with loan applicants in accepting
loan applications or approving or closing a loan.
(j) "Person" means an individual, corporation, partnership,
association, or any other legal entity.
(k) "Required insurance" means any insurance product that a
borrower is required to obtain as a condition of closing a loan.
(2) The commissioner shall issue an insurance agency license
to an affiliate of a lender or an agent license to an individual
who is an employee of the affiliate if the commissioner determines
that the affiliate or employee has met the prerequisites for
licensure under this act and that the affiliate and the lender will
conduct the sale of insurance in compliance with this section. If a
lender acquires ownership in or becomes affiliated with an agency
with an existing license under this act, an application for a new
license is not required. The commissioner may issue an insurance
agency or agent license directly to a lender or an employee of the
lender who is not an employee of an affiliated agency if the
commissioner determines that the lender or employee has met the
prerequisites for licensure and will conduct the sale of insurance
in substantial compliance with this section.
(3) This section applies to all of the following:
(a) A lender that has been affiliated with a licensed agency
or has employed a licensed agent before March 30, 1995 and that
affiliation or employment continues or is renewed on and after
March 30, 1995.
(b) A lender, affiliate, or employee of a lender that has been
licensed as an agency or agent before March 30, 1995 and maintains
that licensure on and after March 30, 1995, to the extent that the
provisions of this section apply.
(c) A person affiliated with a lender that receives an agency
license or an individual employed by the lender who receives an
agent license.
(d) A lender that is licensed as an agency, to the extent that
the provisions of this section apply.
(e) A lender that acquires ownership in an agency or otherwise
becomes affiliated with a licensed insurance agency.
(f) A lender that employs a licensed insurance agent.
(4) A lender, an agency affiliated with a lender, or an agent
employed by a lender may be licensed to sell any insurance product.
(5) A lender may own an insurance agency in whole or in part
and
shall provide notice to the commissioner and the commissioner
of
the financial institutions bureau of any acquisition, in whole
or in part, of an insurance agency.
(6) Applications for insurance agency or agent licenses under
this act shall be promptly reviewed by the commissioner. An
application shall be considered approved by the commissioner if the
commissioner has not denied the application for good cause within
60 days after the date the application is filed. The commissioner
shall issue the insurance agency or agent license within 10 days of
approval.
(7) Interrogatories propounded by the commissioner regarding
the proposed business conduct between a lender and an affiliated
insurance agency shall be limited to questions pertaining to
compliance with this section.
(8) There is no limit on the percentage of insurance business
sold to customers of a lender through an insurance agency
affiliated with the lender or agent employed by the lender if sold
in compliance with this act.
(9) A lender shall not do either of the following:
(a) Require a borrower to purchase any policy or contract of
insurance through a particular agency or agent or with a particular
insurer or fix or vary the terms or conditions of a loan as an
inducement to purchase insurance. This subdivision does not
prohibit a lender from requiring a borrower to purchase a required
insurance policy that conforms to the requirements, if any, of the
loan.
(b) Except as otherwise provided by law, require a person to
purchase any insurance product from the lender or an affiliate as a
condition of making a loan.
(10) The board of directors of an insurance agency affiliated
with a lender shall act separately from the board of directors of
the lender. A director of a lender may also serve as a director of
an affiliated agency, except that a majority of directors of the
affiliated agency shall not be directors of the lender. This
subsection does not apply to a lender that is also the licensed
agency.
(11) An officer or employee of a lender may be an officer or
employee of an affiliated agency. However, except as otherwise
provided by this section, for purposes of soliciting or selling
insurance products, such officer or employee shall not use or
disclose information that the lender may not disclose to the
affiliated agency.
(12) An officer or employee of a lender shall not directly or
indirectly delay or impede the completion of a loan transaction for
the purpose of influencing a consumer's selection or purchase of
insurance products from an agent, solicitor, agency, or insurer
that is not affiliated with the lender.
(13) A loan representative may not act as an agent or
solicitor for the sale or provision of required insurance related
to an application, approval, commitment, or closing of a loan if
the loan representative participated in the application, approval,
commitment, or closing of that loan.
(14) A lender or its employees shall not knowingly initiate a
discussion concerning the availability of insurance products from
the lender or an affiliated agency to or with a person in response
to an inquiry about credit made by the person or to a loan
applicant prior to the loan applicant being notified of the
disposition of a loan application. This subsection does not
prohibit a lender or its employees from discussing with the person
making the inquiry or loan applicant that certain required
insurance must be maintained as a condition of obtaining a loan.
(15) If asked about the availability of insurance products by
a person inquiring about a loan or a loan applicant, the lender may
indicate that insurance products are available from the lender or
an affiliated agency and may provide instruction about how to
obtain further information concerning the agency or agent and
available insurance products.
(16) If insurance is required as a condition of obtaining a
loan, and if the required insurance is available through the lender
or an affiliate of the lender, the lender shall disclose to the
applicant all of the following:
(a) That the lender will not require the borrower to purchase
any policy or contract of insurance through a particular agent,
agency, or with a particular insurer.
(b) Except as otherwise provided by law, that the lender will
not require the borrower to purchase any insurance product from the
lender or an affiliate as a condition of the loan.
(c) That the purchase of any insurance product from the lender
or its affiliated agency is optional and will not in any way affect
current or future credit decisions.
(17) The disclosure required by subsection (16) shall be made
to a loan applicant at the time the loan applicant inquires about
the availability of required insurance or at such time as the
lender advises the loan applicant that the required insurance is
available through the lender or an affiliate of the lender,
whichever is earlier. The disclosure shall be confirmed in writing,
dated, and signed by the applicant no later than the closing of the
loan.
(18) If insurance is required as a condition of obtaining a
loan, the credit and insurance transactions shall be completed
independently and through separate documents. A loan for premiums
on required insurance shall not be included in the primary credit
without the written consent of the customer.
(19) The offering of a loan by a lender and the sale or
provision of insurance products by the lender or an affiliated
agency shall be made in different areas that are clearly and
conspicuously signed and separated so as to preclude confusion on
the part of customers. However, in the limited situation where
physical or employee considerations prevent lending and the sale of
insurance products from being conducted in different areas, the
lender shall take appropriate measures to minimize customer
confusion. In unique circumstances to accommodate the needs of or
for the convenience of particular customers, this subsection does
not prohibit on an irregular basis, taking applications for loans,
extensions of loans, and the sale of insurance products at the same
location.
(20) Signs and other informational material concerning the
availability of insurance products from the lender or an affiliated
agency shall not be displayed in an area when loan applications are
being taken and when loans are being closed in that area.
(21) A lender, its employees, or its representatives may
advise the general public and its customers, through mailings or
otherwise, that insurance products are available from the lender or
affiliated agency and may advise the general public and its
customers how to obtain more information about those insurance
products, so long as:
(a) The information is not provided because of a submission of
any loan application until after the loan applicant has been
notified of the disposition of the application, or in response to
any inquiry about the availability, terms, and conditions of any
loan.
(b) The timing of the communications is not based on the
maturity or expiration date of a policy of required insurance or an
insurance policy in the lender's possession.
(c) No information concerning customers that is prohibited for
use in the solicitation or sale of insurance products under
subsections (23) and (25) is used to determine which customers
should receive the information.
(22) A lender may provide the names, addresses, telephone
numbers, and information related to account relationships with
customers to an affiliated agency or an agent employed by the
lender so long as the lender does not disclose account balances or
maturity dates of certificates of deposit and does not disclose
account relationships to an affiliated agency or an agent employed
by the lender in a manner that account balances or maturity dates
of certificates of deposit may be determined by the agency or
agent. This section does not prohibit disclosure of minimum
required balances, terms, or conditions of an account.
(23) A lender shall not directly or indirectly provide to an
affiliated agency or an agent employed by the lender the following
information if obtained from an insurance policy or preauthorized
payment agreement that is in the possession of the lender:
(a) The expiration date of the insurance policy.
(b) The name of the insurance company that issued the policy.
(c) The amount of the premium.
(d) Scheduled coverages and policy limits contained in the
policy.
(e) Any deductibles contained in the policy.
(f) Any information contained on the declaration sheet of the
policy.
(g) Cash or surrender values.
(24) A lender may disclose to an affiliated agency or an agent
employed by the lender information obtained from a policy of
required insurance that the borrower has failed to keep in force,
if the information is necessary to obtain the required insurance
through the affiliated agency, employee, or elsewhere. If a
customer has failed to keep required insurance in force, this
section does not prohibit a lender from obtaining the required
insurance in accordance with the terms of the loan or from
obtaining insurance limited to repayment of the outstanding balance
due in the event of loss or damage to property used as collateral
on the loan.
(25) A lender shall not directly or indirectly provide to an
affiliated agency or agent employed by the lender the following
customer documents or information:
(a) Loan applications, except that a lender may provide to an
affiliated agency or agent employed by the lender the name,
address, telephone number, and account relationship concerning a
loan applicant after the applicant has been notified of the
disposition of the application.
(b) Financial statements regarding assets, liabilities, net
worth, income, and expenses.
(c) Budgets or proposed budgets.
(d) Business plans.
(e) Contracts.
(f) Credit reports.
(g) Inventory records.
(h) Collateral offered as security for loans.
(i) Appraisals.
(j) Personal guarantees and related information.
(k) Insurance policy, certificate, or binder.
(26) This section does not require the lender to remove the
name, address, or other information concerning the customer from
the customer list if information concerning a customer of a lender
is on a customer list by reason of other account relationships with
the lender and the lender is otherwise authorized to disclose the
list to an affiliate agency or an agent employed by the lender.
(27) This section does not prohibit a lender from providing
information about the customers of the lender to an affiliated
agency or an agent employed by the lender if that information is
otherwise available from a public record.
(28) This section does not prohibit a lender from releasing
customer information in its possession to any person if the
customer authorizes the release of that information. The release
shall be in writing, dated, and signed by the customer. A lender
shall not knowingly ask a loan applicant to release such
information prior to the applicant being notified of the
disposition of the application unless the applicant has asked about
the availability of insurance products as provided under subsection
(15). A lender shall not require the release as a condition of
applying for the loan.
(29) The use or disclosure of information allowed under this
section is not a violation of the use or disclosure of information
under section 2077.
(30) Except as provided in subsection (31), an insurance
agency or agent shall not reward or remunerate an affiliated lender
for procuring or inducing insurance product business for the agency
or agent or for furnishing leads and prospects or acting in any
other manner as an agent. This subsection does not preclude an
affiliated agency from compensating its employees, who may also be
employees of the lender, or reimbursing its affiliated lender at
fair market value for any goods, services, or facilities that the
lender may provide to the agency or for expense incurred by the
lender in advising its customers and the general public of the
agency's services.
(31) An insurance agency may pay dividends and make other
distributions of assets to the agency's shareholders, including an
affiliated lender, as a return on the capital invested and risks
assumed by the shareholders or in conjunction with a merger,
liquidation, or other corporate transaction.
(32) This section does not prohibit a lender, or a
manufacturer or an affiliate of a manufacturer acting as a lender,
from soliciting or selling insurance products to a closed
dealership, designated family member, new motor vehicle dealer, or
proposed new motor vehicle dealer. This subsection shall not be
construed to include customers of motor vehicle dealers.
(33) As used in subsection (32):
(a) "Closed dealership" means a closed dealership as defined
in section 2 of 1981 PA 118, MCL 445.1562.
(b) "Designated family member" means a designated family
member as defined in section 2 of 1981 PA 118, MCL 445.1562.
(c) "Manufacturer" means a manufacturer as defined in section
4 of 1981 PA 118, MCL 445.1564.
(d) "New motor vehicle dealer" means a new motor vehicle
dealer as defined in section 5 of 1981 PA 118, MCL 445.1565.
(e) "Proposed new motor vehicle dealer" means a proposed new
motor vehicle dealer as defined in section 5 of 1981 PA 118, MCL
445.1565.
(34) This section does not apply to insurance products offered
under the credit insurance act, 1958 PA 173, MCL 550.601 to
550.624.
(35) This section does not apply to the offering of life
insurance by a lender under section 4418.
(36) Notwithstanding section 4418, payment by an insurer of
consideration to an agency or agent licensed under this act for an
individual policy of insurance on the life of the borrower issued
in connection with a loan on a dwelling or mobile home made or
serviced by an affiliated lender is not considered a monetary or
financial benefit to the lender as a result of the insurance.
(37)
If after an opportunity for a hearing pursuant to the
administrative
procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328,
the commissioner finds that a person has violated this
section,
the commissioner shall reduce the findings and decision to
writing
and serve upon the person charged with the violation a copy
of
the decision and an order requiring the person to cease and
desist
from the violation. In addition, the commissioner may order
any
of the following:
(a)
For all violations committed in a 6-month period, the
payment
of a civil fine of not more than $1,000.00 for each
violation
but not to exceed an aggregate civil penalty of
$30,000.00,
unless the person knew or reasonably should have known
the
person was in violation of this section, in which case the
civil
fine shall not be more than $5,000.00 for each violation and
shall
not exceed an aggregate civil fine of $150,000.00. A fine
collected
under this subdivision shall be turned over to the state
treasurer
and credited to the general fund of the state.
(b)
That restitution be made to the insured or any other
person,
including a customer claimant, to cover actual damages
directly
attributable to the acts that are found to be in violation
of
this section by a person that knew or reasonably should have
known
the acts were in violation of this section.
(c)
The suspension or revocation of the person's license under
this
act.
(38)
If a person knowingly violates a cease and desist order
under
this section and has been given notice and an opportunity for
a
hearing as provided by this section, the commissioner may order a
civil
fine of not more than $25,000.00 for each violation, or a
suspension
or revocation of the person's license under this act, or
both.
However, an order issued by the commissioner pursuant to this
subsection
shall not require the payment of civil fines exceeding
$250,000.00.
A fine collected under this subsection shall be turned
over
to the state treasurer and credited to the general fund of the
state.
(39)
The commissioner may apply to the circuit court of Ingham
county
for an order of the court enjoining a violation of this
section.
(40)
An action under this section shall not be brought more
than
5 years after the occurrence of the violation that is the
basis
of the action.
Sec. 1246. (1) Any documents, materials, or other information
in the control or possession of the office of financial and
insurance services that is furnished by an insurer, an insurance
producer, or an employee or representative acting on behalf of the
insurer or insurance producer, or obtained by the commissioner in
an investigation pursuant to this section is confidential by law
and privileged, is not subject to the freedom of information act,
1976 PA 442, MCL 15.231 to 15.246, is not subject to subpoena, and
is not subject to discovery or admissible in evidence in any
private civil action. However, the commissioner is authorized to
use the documents, materials, or other information in the
furtherance of any regulatory or legal action brought as a part of
the commissioner's duties.
(2) Neither the commissioner nor any person who received
documents, materials, or other information while acting under the
commissioner's authority is permitted or required to testify in any
private civil action concerning any confidential documents,
materials, or information under subsection (1).
(3) In order to assist in the performance of the
commissioner's duties under this chapter, the commissioner may do
any of the following:
(a) Share documents, materials, or other information,
including the confidential and privileged documents, materials, or
information subject to subsection (1), with other state, federal,
and international regulatory agencies, with the national
association of insurance commissioners, its affiliates or
subsidiaries, and with state, federal, and international law
enforcement authorities, provided that the recipient agrees to
maintain the confidentiality and privileged status of the document,
material, or other information.
(b) Receive documents, materials, or information, including
otherwise confidential and privileged documents, materials, or
information, from the national association of insurance
commissioners, its affiliates or subsidiaries, and from regulatory
and law enforcement officials of other foreign or domestic
jurisdictions, and shall maintain as confidential or privileged any
document, material, or information received with notice or the
understanding that it is confidential or privileged under the laws
of the jurisdiction that is the source of the document, material,
or information.
(c) Enter into agreements governing sharing and use of
information consistent with this subsection.
(4) No waiver of any applicable privilege or claim of
confidentiality in the documents, materials, or information shall
occur as a result of disclosure to the commissioner under section
1208b or this section, or as a result of sharing as authorized
under subsection (3).
(5) This chapter does not prohibit the commissioner from
releasing final, adjudicated actions including for cause
terminations that are open to public inspection pursuant to the
freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, to a
database or other clearinghouse service maintained by the national
association of insurance commissioners or its affiliates or
subsidiaries.
(6) An insurer, the authorized representative of the insurer,
or an insurance producer that fails to report as required under
section 1208b or this section or that is found to have reported
with actual malice by a court of competent jurisdiction may, after
notice and hearing, have its license or certificate of authority
suspended
or revoked and may be fined under section 1244 as
provided in this act.
Sec. 1371. (1) An insurer failing, without just cause, to file
a registration statement as required in this chapter shall be
required,
after notice and hearing, to pay a penalty of $1,000.00
$2,000.00 for each day's delay, up to a maximum of $50,000.00
$100,000.00, to be recovered by the commissioner and paid into the
general fund. The commissioner may reduce the penalty if the
insurer demonstrates to the commissioner that the imposition of the
penalty would constitute a financial hardship to the insurer.
(2) Every director or officer of an insurance holding company
system who knowingly violates, knowingly participates in or assents
to, or with actual knowledge permits any of the officers or agents
of the insurer to engage in material acts, omissions, or
transactions or make investments that have not been properly
reported or submitted pursuant to section 1324, 1341, or 1343,
that, with respect to material transactions, violate this chapter,
or that result in material false or misleading statements to the
commissioner with respect to the financial condition of the insurer
or any of its affiliates shall pay, in their individual capacity, a
civil
forfeiture of not more than $10,000.00 $20,000.00 per
violation, after notice and hearing before the commissioner. In
determining the amount of the civil forfeiture, the commissioner
shall take into account the appropriateness of the forfeiture with
respect to the gravity of the violation, the history of previous
violations, and other matters as justice requires. In addition, a
violation of this subsection shall constitute grounds for removal
of the director or officer from any position of trust or
responsibility in any insurer domiciled in this state in accordance
with the procedures established in section 250.
(3) If it appears to the commissioner that an insurer subject
to this chapter or any insurer's director, officer, employee, or
agent has engaged in any transaction or entered into a contract
that is subject to section 1341 or 1344 and that would not have
been approved had approval been requested, the commissioner may
order the insurer to cease and desist immediately any further
activity under that transaction or contract. After notice and
hearing, the commissioner may also order the insurer to void any
such contract, transaction, or distribution, and restore the status
quo if that action is in the best interest of the policyholders,
creditors, or the public.
(4) If it appears to the commissioner that an insurer or an
insurer's director, officer, employee, or agent has committed a
willful violation of this chapter, the commissioner may cause
criminal proceedings to be instituted in the circuit court for the
county in which the principal office of the insurer is located or
if the insurer has no such office in the state, then in the Ingham
county circuit court against the insurer or the insurer's
responsible director, officer, employee, or agent. An insurer
willfully
violating this chapter may be fined not more than
$50,000.00
$100,000.00. An individual
willfully violating this
chapter
may be fined not more than $10,000.00 $20,000.00 or, if
the willful violation involves the deliberate perpetration of a
fraud
upon the commissioner, imprisoned not more than 2 4
years,
or both.
(5) An officer, director, or employee of an insurance holding
company system who willfully and knowingly subscribes to or makes
or causes to be made any false statement, false report, or false
filing with the intent to deceive the commissioner in the
performance of his or her duties under this chapter, shall be
imprisoned
for not more than 2 4 years, or fined $10,000.00
$20,000.00, or both. Any fines imposed shall be paid by the
officer, director, or employee in his or her individual capacity.
Sec.
1952. A person who knowingly and wilfully willfully
violates or aids or abets directly or indirectly in a violation of
this
chapter is guilty of a misdemeanor , punishable by
imprisonment
for not more than 1 year, or a fine of not more than
$1,000.00
$2,000.00, or both.
Sec. 2006. (1) A person must pay on a timely basis to its
insured, an individual or entity directly entitled to benefits
under its insured's contract of insurance, or a third party tort
claimant the benefits provided under the terms of its policy, or,
in the alternative, the person must pay to its insured, an
individual or entity directly entitled to benefits under its
insured's contract of insurance, or a third party tort claimant 12%
interest, as provided in subsection (4), on claims not paid on a
timely basis. Failure to pay claims on a timely basis or to pay
interest on claims as provided in subsection (4) is an unfair trade
practice unless the claim is reasonably in dispute.
(2) A person shall not be found to have committed an unfair
trade practice under this section if the person is found liable for
a claim pursuant to a judgment rendered by a court of law, and the
person pays to its insured, individual or entity directly entitled
to benefits under its insured's contract of insurance, or third
party tort claimant interest as provided in subsection (4).
(3) An insurer shall specify in writing the materials that
constitute a satisfactory proof of loss not later than 30 days
after receipt of a claim unless the claim is settled within the 30
days. If proof of loss is not supplied as to the entire claim, the
amount supported by proof of loss shall be considered paid on a
timely basis if paid within 60 days after receipt of proof of loss
by the insurer. Any part of the remainder of the claim that is
later supported by proof of loss shall be considered paid on a
timely basis if paid within 60 days after receipt of the proof of
loss by the insurer. If the proof of loss provided by the claimant
contains facts that clearly indicate the need for additional
medical information by the insurer in order to determine its
liability under a policy of life insurance, the claim shall be
considered paid on a timely basis if paid within 60 days after
receipt of necessary medical information by the insurer. Payment of
a claim shall not be untimely during any period in which the
insurer is unable to pay the claim when there is no recipient who
is legally able to give a valid release for the payment, or where
the insurer is unable to determine who is entitled to receive the
payment, if the insurer has promptly notified the claimant of that
inability and has offered in good faith to promptly pay the claim
upon determination of who is entitled to receive the payment.
(4) If benefits are not paid on a timely basis the benefits
paid shall bear simple interest from a date 60 days after
satisfactory proof of loss was received by the insurer at the rate
of 12% per annum, if the claimant is the insured or an individual
or entity directly entitled to benefits under the insured's
contract of insurance. If the claimant is a third party tort
claimant, then the benefits paid shall bear interest from a date 60
days after satisfactory proof of loss was received by the insurer
at the rate of 12% per annum if the liability of the insurer for
the claim is not reasonably in dispute, the insurer has refused
payment in bad faith and the bad faith was determined by a court of
law. The interest shall be paid in addition to and at the time of
payment of the loss. If the loss exceeds the limits of insurance
coverage available, interest shall be payable based upon the limits
of insurance coverage rather than the amount of the loss. If
payment is offered by the insurer but is rejected by the claimant,
and the claimant does not subsequently recover an amount in excess
of the amount offered, interest is not due. Interest paid pursuant
to this section shall be offset by any award of interest that is
payable by the insurer pursuant to the award.
(5) If a person contracts to provide benefits and reinsures
all or a portion of the risk, the person contracting to provide
benefits is liable for interest due to an insured, an individual or
entity directly entitled to benefits under its insured's contract
of insurance, or a third party tort claimant under this section
where a reinsurer fails to pay benefits on a timely basis.
(6) If there is any specific inconsistency between this
section and sections 3101 to 3177 or the worker's disability
compensation act of 1969, 1969 PA 317, MCL 418.101 to 418.941, the
provisions of this section do not apply. Subsections (7) to (14) do
not apply to an entity regulated under the worker's disability
compensation act of 1969, 1969 PA 317, MCL 418.101 to 418.941.
Subsections (7) to (14) do not apply to the processing and paying
of medicaid claims that are covered under section 111i of the
social welfare act, 1939 PA 280, MCL 400.111i.
(7)
Subsections (1) to (6) do not apply and subsections (8) to
(14)
(13) do apply to health plans when paying claims to
health
professionals and health facilities that are not pharmacies and
that do not involve claims arising out of sections 3101 to 3177 or
the worker's disability compensation act of 1969, 1969 PA 317, MCL
418.101 to 418.941.
(8) Each health professional and health facility in billing
for services rendered and each health plan in processing and paying
claims for services rendered shall use the following timely
processing and payment procedures:
(a) A clean claim shall be paid within 45 days after receipt
of the claim by the health plan. A clean claim that is not paid
within 45 days shall bear simple interest at a rate of 12% per
annum.
(b) A health plan shall notify the health professional or
health facility within 30 days after receipt of the claim by the
health plan of all known reasons that prevent the claim from being
a clean claim.
(c) A health professional and a health facility have 45 days,
and any additional time the health plan permits, after receipt of a
notice under subdivision (b) to correct all known defects. The 45-
day time period in subdivision (a) is tolled from the date of
receipt of a notice to a health professional or health facility
under subdivision (b) to the date of the health plan's receipt of a
response from the health professional or health facility.
(d) If a health professional's or health facility's response
under subdivision (c) makes the claim a clean claim, the health
plan shall pay the health professional or health facility within
the 45-day time period under subdivision (a), excluding any time
period tolled under subdivision (c).
(e) If a health professional's or health facility's response
under subdivision (c) does not make the claim a clean claim, the
health plan shall notify the health professional or health facility
of an adverse claim determination and of the reasons for the
adverse claim determination within the 45-day time period under
subdivision (a), excluding any time period tolled under subdivision
(c).
(f) A health professional or health facility shall bill a
health plan within 1 year after the date of service or the date of
discharge from the health facility in order for a claim to be a
clean claim.
(g) A health professional or health facility shall not
resubmit the same claim to the health plan unless the time frame in
subdivision (a) has passed or as provided in subdivision (c).
(9) Notices required under subsection (8) shall be made in
writing or electronically.
(10) If a health plan determines that 1 or more services
listed on a claim are payable, the health plan shall pay for those
services and shall not deny the entire claim because 1 or more
other services listed on the claim are defective. This subsection
does not apply if a health plan and health professional or health
facility have an overriding contractual reimbursement arrangement.
(11) A health plan shall not terminate the affiliation status
or the participation of a health professional or health facility
with a health maintenance organization provider panel or otherwise
discriminate against a health professional or health facility
because the health professional or health facility claims that a
health plan has violated subsections (7) to (10).
(12) A health professional, health facility, or health plan
alleging that a timely processing or payment procedure under
subsections (7) to (11) has been violated may file a complaint with
the commissioner on a form approved by the commissioner and has a
right to a determination of the matter by the commissioner or his
or her designee. This subsection does not prohibit a health
professional, health facility, or health plan from seeking court
action.
A health plan described in subsection
(14)(c)(iv)
(13)(c)(iv) is subject only to the procedures and penalties provided
for in subsection (13) and section 402 of the nonprofit health care
corporation reform act, 1980 PA 350, MCL 550.1402, for a violation
of a timely processing or payment procedure under subsections (7)
to (11).
(13)
In addition to any other penalty provided for by law, the
commissioner
may impose a civil fine of not more than $1,000.00 for
each
violation of subsections (7) to (11) not to exceed $10,000.00
in
the aggregate for multiple violations.
(13) (14)
As used in subsections (7) to (13)
(12):
(a) "Clean claim" means a claim that does all of the
following:
(i) Identifies the health professional or health facility that
provided service sufficiently to verify, if necessary, affiliation
status and includes any identifying numbers.
(ii) Sufficiently identifies the patient and health plan
subscriber.
(iii) Lists the date and place of service.
(iv) Is a claim for covered services for an eligible
individual.
(v) If necessary, substantiates the medical necessity and
appropriateness of the service provided.
(vi) If prior authorization is required for certain patient
services, contains information sufficient to establish that prior
authorization was obtained.
(vii) Identifies the service rendered using a generally
accepted system of procedure or service coding.
(viii) Includes additional documentation based upon services
rendered as reasonably required by the health plan.
(b) "Health facility" means a health facility or agency
licensed under article 17 of the public health code, 1978 PA 368,
MCL 333.20101 to 333.22260.
(c) "Health plan" means all of the following:
(i) An insurer providing benefits under an expense-incurred
hospital, medical, surgical, vision, or dental policy or
certificate, including any policy or certificate that provides
coverage for specific diseases or accidents only, or any hospital
indemnity, medicare supplement, long-term care, or 1-time limited
duration policy or certificate, but not to payments made to an
administrative services only or cost-plus arrangement.
(ii) A MEWA regulated under chapter 70 that provides hospital,
medical, surgical, vision, dental, and sick care benefits.
(iii) A health maintenance organization licensed or issued a
certificate of authority in this state.
(iv) A health care corporation for benefits provided under a
certificate issued under the nonprofit health care corporation
reform act, 1980 PA 350, MCL 550.1101 to 550.1704, but not to
payments made pursuant to an administrative services only or cost-
plus arrangement.
(d) "Health professional" means a health professional licensed
or registered under article 15 of the public health code, 1978 PA
368, MCL 333.16101 to 333.18838.
Sec. 2039. An order issued by the commissioner pursuant to
this chapter shall become final as follows:
(a) Upon the expiration of the time allowed for filing a
petition for review if a petition has not been duly filed within
that time, except that the commissioner may thereafter modify or
set
aside his or her order.
to the extent provided in section
2038(2).
(b) Upon the final decision of the court if the court directs
that the order of the commissioner be affirmed or the petition for
review dismissed.
Sec. 2055. (1) If any insurance corporation organized or
operating within this state shall, by means of any advertisement,
circular, notice, or statement, printed or written, published,
posted, or circulated through and by the agency of any officer,
agent, or other person, or by any other means, falsely represent or
hold
out to the public that the capital stock of such the
company
is
greater than its actual amount, or that the accumulation of
such
the insurer is greater than
its actual cash or market value,
or shall represent the financial condition to be other than it
actually
is or was at the time of making such the statement,
every
director or officer of such the insurer guilty of any
participation
therein shall be deemed is guilty of a misdemeanor
and
on conviction thereof shall be punished punishable by a fine
not
exceeding $100.00 of not more than $1,000.00, or by
imprisonment
in the county jail not exceeding 3 for not more than
6 months, or by both. such
fine and imprisonment, in the
discretion
of the court.
(2)
If any such insurer, after such a
false advertisement,
circular,
notice, or statement shall have under subsection (1)
has been published, posted, or
circulated, shall receive receives
any money, note, or obligation for the payment of money, from any
person, as a consideration for any insurance made or policy issued
or
to be issued by such the insurer, such that
money, note, or
obligation
shall be deemed and taken considered to have been
received
without consideration; and the directors of such the
insurer, and any officer or agent receiving the same, shall be
jointly and severally liable in an action of assumpsit for the
repayment
thereof of the money,
note, or obligation, and shall
also, in like manner, be liable to the person insured for the
amount of the insurance.
(3)
Any such false advertisement, circular, notice, or
statement
shall be under
subsection (1) is sufficient ground for
proceedings in any court of competent jurisdiction to forfeit the
chartered
privileges of such the insurer, or for an order
prohibiting the further transaction of business by it within this
state. :
Provided, That However, no such forfeiture shall be
declared on that ground solely, if it shall appear either that the
publication was by mistake, or that the directors, officers, or
agents
making the same have been dismissed from the service of
such
the insurer, and that the
insurer has published such a true
statement of its affairs as may have been directed by the
commissioner
, or such court.
(4) Any officer or agent guilty of any intentional violation
of
this section, or who aids or abets others in any such violation,
shall
be deemed is
guilty of a misdemeanor and upon conviction
thereof
shall be punished punishable by a fine not exceeding
$1,000.00
of not more than $7,000.00,
or by imprisonment not
exceeding
6 months for not more than 1 year, or by both. such
fine
and imprisonment, in the discretion of the court.
Sec.
2057. (1) No An insurer or and a department or
general
agency of an insurer, doing business in this state, or
and its officers or agents, shall not issue any false or misleading
advertisement through newspapers or other periodicals, or any false
or misleading representations by signs, cards, letterheads, or
other stationery, tending to conceal or misrepresent the true
identity
of the issuer or insurer which that is carrying the
liability
under any policy issued in this state. Nor shall any An
insurer
or and a department or general agency of an insurer,
doing business in this state, shall not issue any advertisement or
representation of any character, giving the appearance of a
separate or independent insuring organization on the part of any
department or general agency, and the type or lettering used in any
advertisement or representation shall set forth the name of the
company or organization assuming the risk more conspicuously than
that of any department or general agency.
(2)
Nothing herein contained shall be construed as limiting
This section does not limit the right of any representative of a
fire insurance company to advertise his or her own individual
business.
(3)
Any A violation of this section shall be punished is
punishable
as a misdemeanor and by a fine of
not exceeding
$500.00,
as a misdemeanor more than $3,500.00.
Sec.
2062. (1) It shall be is unlawful for any person in any
report required by law to be made by any insurance corporation,
organized
or authorized to do business in this state, to make any
such
statement or report as to
fraudulently conceal the real
facts. ,
and if intentionally so made shall, if the insurer is
organized
under the laws of this state, be cause of forfeiture of
the
corporate franchise, and if the insurer is organized under the
laws
of any other state or government, be cause for revocation of
such
insurer's authority to do business in this state by the
commissioner,
after hearing granted.
(2)
Any officer or agent guilty of any such a fraudulent
statement under subsection (1) or of any intentional violation of
this
section, or who aids or abets others in any such violation,
shall
be deemed is
guilty of a misdemeanor and upon conviction
thereof
shall be punished punishable by a fine not exceeding
$1,000.00
of not more than $7,000.00,
or by imprisonment not
exceeding
6 for not more than 12 months,
or by both. such fine
and
imprisonment, in the discretion of the court.
Sec. 2069. Any insurer, agent, solicitor, or any person, firm,
association, or corporation, violating any of the provisions of
sections
2064 and 2066 shall be is guilty of a misdemeanor. Upon
conviction of violating section 2066 the offender shall be
sentenced
to pay a fine of not more than $100.00 $200.00 for each
violation ,
or in the discretion of the court, to
imprisonment
in the county jail of the county in which the offense is committed.
Upon conviction of violating section 2064 the offender shall be
sentenced
to pay a fine of not more than $1,000.00 $2,000.00
for
each
violation , or in the discretion of the court, to
imprisonment in the county jail of the county in which the offense
is committed for a term not to exceed one year.
Sec.
2077. (1) No A person shall not require, as a condition
precedent to the lending of money or extension of credit, or any
renewal
thereof of the loan or
extension, that the person , to
whom
such the money or credit is extended or whose obligation the
creditor is to acquire or finance, negotiate any policy or contract
of insurance through a particular insurance agent or with a
particular
insurer. No A person engaged in the business of
financing real or personal property, other than motor vehicles, or
of lending money or extending credit, shall not, directly or
indirectly,
require that the borrower
to pay a consideration of
any kind to substitute the insurance policy of 1 insurer for that
of another.
(2) If an instrument requires that a purchaser, mortgagor, or
borrower furnish insurance of any kind on real property being
conveyed
or which that is collateral security to a loan, the
vendor, mortgagee, or lender shall refrain from using or disclosing
any
such information to his
or her own advantage or to the
detriment of the purchaser, mortgagor, borrower, insurance company,
or
agency complying with such the requirement.
(3) This section shall not be construed as forbidding the
vendor or creditor from exercising a reasonable right to approve or
disapprove the insurance selected by the debtor for protection of
the property securing the credit or lien, but the vendor or
creditor
shall not disapprove a policy which that contains
coverages in excess of the basic coverage required by the vendor or
creditor.
(4)
Nothing in this This section shall does not
forbid any
insurer from requiring as a condition precedent for the lending of
its own funds that the debtor insure his or her own life for a
reasonable
amount with such the insurer.
(5)
Each violation of this section shall be is a misdemeanor
,
punishable by a fine of not more
than $100.00 $600.00.
Sec.
2080. (1) It shall be is unlawful for any life or
accident insurer authorized to do business in this state to own,
manage, supervise, operate, or maintain a mortuary or undertaking
establishment, or to permit its officers, agents, or employees to
own or maintain any such funeral or undertaking establishment.
(2)
Except as otherwise provided in subsection (6), it shall
be
is unlawful for any life insurance, sick or funeral
benefit
company, or any company, corporation, or association engaged in a
similar business to contract or agree with any funeral director,
undertaker, or mortuary to the effect that such funeral director,
undertaker, or mortuary shall conduct the funeral of any person
insured
by such the
company, corporation, or association.
(3) A funeral establishment, cemetery, or seller shall not be
licensed
as an insurance agent producer
under chapter 12 other
than as a limited licensee pursuant to this subsection and chapter
12. A funeral establishment, cemetery, or seller shall not be a
limited life insurance agent unless that funeral establishment,
cemetery, or seller provides a written assurance to the
commissioner at the time of application for the limited licensure
and with each renewal thereof that he or she has read and
understands the conditions contained in subsection (9) and agrees
to comply with those conditions. A person licensed as a limited
life
insurance agent producer
under this subsection and chapter
12 shall be authorized and licensed to sell only associated life
insurance policies or annuity contracts and shall not be authorized
or licensed to sell any other type of insurance policy or annuity
contract.
A person licensed as a limited life insurance agent
producer under this subsection and chapter 12 to sell associated
life insurance policies or annuity contracts shall not sell
cemetery goods or services or funeral goods or services unless all
of the conditions provided in subsection (9) are met. A person
licensed
as a life insurance agent producer, other than a limited
life
insurance agent producer, shall not sell cemetery goods or
services or funeral goods or services or be associated with a
funeral establishment, cemetery, or seller. Notwithstanding any
other provision in this act, a funeral establishment, cemetery, or
seller may advise customers or potential customers of the
availability of life insurance, the proceeds of which may be
assigned pursuant to subsection (6), and may provide application
forms
and other information in regard to
such that life
insurance. If an application form is provided, the funeral
establishment, cemetery, or seller shall also provide to the person
a list annually prepared by the commissioner setting forth the life
insurance companies offering in Michigan associated life insurance
policies or annuity contracts. The list shall include the name,
address,
and telephone number of an agent a producer for each of
the life insurance companies listed. The list also shall include a
statement that a person who is insured under any life insurance
policy or annuity contract may assign all or a portion of the
proceeds, not to exceed the amount provided in subsection (6)(g),
of the existing life insurance policy or annuity contract for the
payment of funeral services and goods or cemetery services or goods
to
any funeral establishment, cemetery, or seller which that has
accepted any other assignment of an associated life insurance
policy or annuity contract during that calendar year. The funeral
establishment, cemetery, or seller shall accept an assignment on
the proceeds from any associated or nonassociated life insurance
policy or annuity contract pursuant to subsection (6), and this
requirement on the funeral establishment, cemetery, or seller shall
be set forth in the statement prepared by the insurance
commissioner. The assignor or the person or persons legally
entitled to make funeral arrangements for the person whose life was
insured may contract with the funeral establishment, cemetery, or
seller of his or her choice for the rendering of the funeral goods
or services or cemetery goods or services. Each associated life
insurance policy or annuity contract delivered or issued for
delivery in this state shall have a death benefit that is
sufficient to cover the initial contract price of the cemetery
goods or services or funeral goods or services and that increases
at an annual rate of not less than the consumer price index.
(4) A person shall not be designated as the beneficiary in any
policy of life or accident insurance whereby the beneficiary,
directly or indirectly, shall, in return for all or a part of the
proceeds
of such the
policy of insurance, furnish cemetery
services or goods or funeral services or goods in connection
therewith.
(5)
Except as otherwise provided in subsection (6), it shall
be
is unlawful for any life or accident, or sick or
funeral
benefit company, or any person, company, corporation, or
association, to offer or furnish goods or services or anything but
money to its insureds or to his or her heirs, representatives,
attorneys, relatives, associates, or assigns in any connection
with, or by way of encumbrance, assignment, payment, settlement,
satisfaction, discharge, or release of any insurance policy.
However,
this subsection shall does
not prohibit any company,
corporation, or association from furnishing medical, surgical, or
hospital service.
(6) Notwithstanding any other provision in this act, a life
insurer
may write a life insurance policy or annuity contract
which
that is subject to an assignment of the proceeds of the
insurance policy or annuity contract as payment for cemetery
services or goods or funeral services or goods as provided in this
subsection regardless of the relationship between the life insurer
and the assignee. An assignment of the proceeds of the insurance
policy or annuity contract pursuant to this subsection shall be in
writing on a form approved by the commissioner. A predeath
assignment of the proceeds of a life insurance policy or annuity
contract as payment for cemetery or funeral services or goods is
void unless all of the following conditions and criteria are met:
(a) The assignment is an inseparable part of the contract for
the cemetery services or goods or funeral services or goods for
which the assigned proceeds serve as payment.
(b) The assignment is revocable by the assignor, assignor's
successor, or if the assignor is the insured by the representative
of the insured's estate prior to the provision of the cemetery
services or goods or funeral services or goods.
(c) The contract for funeral services or goods or cemetery
services or goods and the assignment provide that upon revocation
of the assignment, the contract for the cemetery services or goods
or funeral services or goods is revoked and cemetery services or
goods or funeral services or goods may be obtained from any
cemetery, funeral establishment, or seller.
(d) The assignment contains the following disclosure in
boldfaced type:
"This assignment may be revoked by the assignor or assignor's
successor or, if the assignor is also the insured and deceased, by
the representative of the insured's estate before the rendering of
the cemetery services or goods or funeral services or goods. If the
assignment is revoked, the death benefit under the life insurance
policy or annuity contract shall be paid in accordance with the
beneficiary designation under the insurance policy or annuity
contract."
(e) The assignment provides for all of the following:
(i) That the actual price of the cemetery services or goods or
funeral services or goods delivered at the time of death may be
more than or less than the price set forth in the assignment.
(ii) For the assignment of an associated life insurance policy
or annuity contract, that any increase in the price of the cemetery
services or goods or funeral services or goods shall not exceed the
ultimate death benefit under the life insurance policy or annuity
contract.
(iii) For the assignment of a nonassociated life insurance
policy or annuity contract, that any increase in the price of the
cemetery services or goods or the funeral services or goods shall
not exceed the consumer price index or the retail price list in
effect when the death occurs, whichever is less.
(iv) That if the ultimate death benefit under a life insurance
policy or annuity contract exceeds the price of the cemetery
services or goods or funeral services or goods at the time of
performance, the excess amount shall be distributed to the
beneficiary designated under the life insurance policy or annuity
contract or the insured's estate.
(v) That any addition to or modification of the contract for
cemetery services or goods or funeral services or goods does not
revoke the assignment or the contract for the cemetery services or
goods
or funeral services or goods which that
are not affected by
the addition or modification for which the assigned proceeds are
payment unless the assignment is revoked.
(f) The assignment is limited to that portion of the proceeds
of
the life insurance policy or annuity contract which that is
needed to pay for the cemetery services or goods or funeral
services or goods for which the assignor has contracted.
(g) In
the case of For an associated life insurance policy
or annuity contract, the death benefit of the life insurance policy
or
annuity contract which that
is subject to the assignment does
not exceed $5,000.00 when the first premium payment is made on the
life
insurance policy or annuity contract.
In the case of For a
nonassociated life insurance policy or annuity contract, the
initial amount of proceeds assigned does not exceed $5,000.00. The
maximum amounts in this subdivision shall be adjusted annually in
accordance with the consumer price index.
(h) The assignment shall contain the dispute resolution rights
set forth in subsection (8). After the death of the insured but
before the cemetery services or goods or funeral services or goods
are provided, the funeral establishment, cemetery, or seller shall
provide to a representative of the insured's estate a separate
document entitled, "dispute resolution disclosure statement," which
shall clearly set forth the dispute resolution rights set forth in
subsection (8). The dispute resolution disclosure statement shall
be filed with the commissioner and shall be considered approved
unless disapproved within 30 days after the submission. The
language used to set forth the dispute resolution rights in
subsection (8) shall be written in a manner calculated to be
understood by a person of ordinary intelligence.
(i) The assignor and not the assignee is responsible for
making the premium payments due on the life insurance policy or
annuity
contract. This subdivision does not apply to an insurance
agent
producer when acting as a fiduciary pursuant to section
1207.
(j) After the death of the insured but before the cemetery
services or goods or funeral services or goods are provided, the
representative of the insured's estate is provided with a current
price list for the cemetery services or goods or funeral services
or goods provided pursuant to the assignment.
(k) At the time the assignment is made, the assignee complies
with the price disclosure rules of the federal trade commission
prescribed
in 16 C.F.R. CFR, part 453, whether or not the rules
by their own terms apply to the offering.
(l) At the time the assignment is made, the assignor certifies
that the insured does not have in effect other life insurance
policies or annuity contracts that have been assigned as payment
for cemetery goods or services or funeral goods or services which
together with the additional assignment would have an aggregate
face
value in excess of the limitation provided in subdivision (h)
(g).
(m) For the assignment of a nonassociated life insurance
policy or annuity contract, the assignment complies with both of
the following:
(i) The assignment is sufficient to cover the initial contract
price of the cemetery goods or services or funeral goods or
services.
(ii) The assignment provides that any increase in the price of
the cemetery services or goods or the funeral services or goods
shall not exceed the consumer price index or the retail price list
in effect when the death occurs, whichever is less.
(7) An insurer or an insurance agent shall not make a false or
misleading statement, oral or written, regarding an assignment
subject to subsection (6) or regarding the rights or obligations of
any party or prospective party to such an assignment. An insurer or
an insurance agent shall not advertise or promote an assignment
subject
to subsection (6) in a manner which that
is false,
misleading, deceptive, or unfair. The commissioner shall promulgate
rules regulating the solicitation of plans promoting assignments
subject
to subsection (6) to protect against solicitations which
that are intimidating, vexatious, fraudulent, or misleading, or
which take unfair advantage of a person's ignorance or emotional
vulnerability.
(8) After the cemetery services or goods or funeral services
or goods are provided, the funeral establishment, cemetery, or
seller shall provide to a representative of the insured's estate a
statement to be signed by the representative of the insured's
estate authorizing the release of the assignment proceeds for the
payment of the cemetery services or goods or funeral services or
goods. The insurer shall release to the funeral establishment,
cemetery, or seller the assignment proceeds upon receipt of the
authorization statement signed by a representative of the insured's
estate. If a representative of the insured's estate fails to sign
the authorization statement, the following shall take place:
(a) The funeral establishment, cemetery, or seller shall
provide the representative of the insured's estate with a dispute
resolution notice, a copy of which is to be sent to the insurer and
the insurance commissioner that states all of the following:
(i) That the funeral establishment, cemetery, or seller has
provided the cemetery services or goods or funeral services or
goods.
(ii) That a representative of the insured's estate has refused
to authorize the insurer to release the assignment proceeds for the
payment of the cemetery services or goods or funeral services or
goods.
(iii) That a representative of the insured's estate may seek
arbitration to resolve the payment dispute.
(b) Upon the receipt of the dispute resolution notice
described in subdivision (a), the insurer shall retain the
assignment proceeds for 30 days. The insurer shall release the
assignment proceeds to the funeral establishment, cemetery, or
seller if after the expiration of the 30 days the insurer is not
informed that arbitration proceedings have been commenced, or
pursuant to the award of the arbitrator.
(c) The funeral establishment, cemetery, seller, or a
representative of the insured's estate may commence arbitration
proceedings to determine the disposition of the assignment
proceeds. Arbitration shall be conducted pursuant to the rules and
procedures of the American arbitration association. Expenses of the
arbitration shall be shared equally by the insured's estate and the
assignee unless otherwise ordered by the arbitrator.
(d)
Nothing in this subsection shall limit limits the right
of any party involved in the payment dispute to seek other recourse
permitted by law.
(9)
A life insurance agent producer
shall not sell or
solicit the sale of a life insurance policy or annuity contract
with the intention of having the purchaser assign the proceeds of
the policy or contract to a funeral establishment, cemetery, or
seller
with which the agent producer
is associated unless all of
the following conditions are met:
(a)
The agent producer
shall disclose in writing to the
purchaser the nature of his or her association with the funeral
establishment, cemetery, or seller and that both the funeral
establishment, cemetery, or seller and the agent will or may profit
from the transaction, if that is the case.
(b)
A funeral establishment, cemetery, or seller which that
accepts assignments pursuant to subsection (6) shall also offer to
sell or provide cemetery goods or services or funeral goods or
funeral services pursuant to prepaid funeral contracts as provided
in
the prepaid funeral contract funding act and cemetery sales
act, 1986 PA 255, MCL 328.211 to 328.235, or pursuant to the trust
provisions
of the cemetery regulation act, Act No. 251 of the
Public
Acts of 1968, being sections 456.521 to 456.543 of the
Michigan
Compiled Laws 1968 PA 251,
MCL 456.521 to 456.543.
(c) If the contemplated assignment is to be made to pay the
cost of cemetery goods or services or funeral goods or funeral
services, the agent shall disclose in writing to the purchaser that
the cemetery goods or services or funeral goods or services may
also be purchased prior to death by making payment directly to a
funeral establishment, cemetery, or seller who will hold funds in
escrow for the benefit of the purchaser pursuant to the prepaid
funeral contract
funding act and cemetery
sales act, 1986 PA 255,
MCL 328.211 to 328.235, or in trust pursuant to the provisions of
the
cemetery regulation act, Act No. 251 of the Public Acts of
1968
1968 PA 251, MCL 456.521 to
456.543. The written disclosure
shall also state that upon cancellation of the prepaid funeral
contract, the purchaser is entitled to a refund of at least 90% of
the principal and income earned.
(d) The sale of cemetery goods or services or funeral goods or
services shall not be conditioned on the purchaser buying or
agreeing to buy a life insurance policy or annuity contract or on
the assignment of the proceeds of the policy or contract to that
funeral establishment, cemetery, or seller.
(e) The sale of a life insurance policy or annuity contract
shall not be conditioned on the purchaser buying or agreeing to buy
cemetery goods or services or funeral goods or services from the
funeral establishment, cemetery, or seller with which the agent is
associated or on the assignment of the proceeds of the policy or
contract to that funeral establishment, cemetery, or seller.
(f) A discount from the current price of cemetery goods or
services or funeral goods or services shall not be offered as an
inducement to purchase or assign a life insurance policy or annuity
contract.
(g) The life insurance policy or annuity contract sold by the
agent may be canceled by the purchaser within 10 days after the
receipt of the policy or annuity contract, in which event a full
refund of all premiums shall be paid to the purchaser.
(h) The agent shall disclose in writing to the purchaser that
the funeral establishment, cemetery, or seller with which the agent
is associated will accept assignments of life insurance policies or
annuity contracts sold by any other licensed agent.
(10) The commissioner or any other person, in order to force
compliance with subsection (6) or (7), may bring an action in a
circuit
court in any county in which the assignee or insurance
agent
producer or any other person has solicited or sold a life
insurance policy or annuity contract that is assigned pursuant to
subsection (6), whether or not that person has purchased the life
insurance policy or annuity contract or is personally aggrieved by
a violation of this section. The court may award damages and issue
equitable orders in accordance with the Michigan court rules to
restrain conduct in violation of this section.
(11) Any
person violating any of the provisions A violation
of
this section shall be deemed guilty of is a
misdemeanor, and
each violation thereof shall be a separate offense and upon
conviction shall
be punished is punishable by a fine not
exceeding $1,000.00
$2,000.00 or by imprisonment for not more
than 6 months, or both such fine and imprisonment within the
discretion of the courts.
(12)
In addition to the penalty provided in subsection (11),
if,
after a hearing conducted pursuant to the administrative
procedures
act of 1969, Act No. 306 of the Public Acts of 1969,
being
sections 24.201 to 24.328 of the Michigan Compiled Laws, the
commissioner
determines a person has violated this section, the
commissioner
may order the person to pay a civil fine of not more
than
$10,000.00 for each violation and may also impose other
sanctions
provided pursuant to chapter 12. The money collected
under
this subsection shall be deposited in the funeral consumers
education
and advocacy fund. The funeral consumers education and
advocacy
fund is created within the insurance bureau. The fund
shall
be administered by the commissioner. The money in the fund
shall
be used to do both of the following:
(a)
To promote the education of consumers with regard to the
prearrangement
and purchase of cemetery or funeral services or
goods
through the purchase and assignment of life insurance or
annuity
contracts.
(b)
To provide legal assistance to persons who were injured as
a
result of a violation of this section.
(13)
For purposes of this section, a life insurance agent
producer is associated with a funeral establishment, cemetery, or
seller if any of the following apply:
(a)
The agent producer
is a funeral establishment, cemetery,
or seller.
(b)
The agent producer
owns an interest, directly or
indirectly,
in a corporation or other entity which that
holds an
interest in a funeral establishment, cemetery, or seller.
(c)
The agent producer
is an officer, employee, or agent of
a funeral establishment, cemetery, or seller.
(d)
The agent producer
is an officer, employee, or agent of
a corporation or other entity which holds an interest, either
directly or indirectly, in a funeral establishment, cemetery, or
seller,
or in a corporation or other entity
which that holds
an
interest,
directly or indirectly, in a corporation or other entity
which
that holds an interest in a funeral establishment,
cemetery,
or seller.
(14) As used in this section:
(a) "Associated life insurance policy or annuity contract" is
a life insurance policy or annuity contract that is marketed,
designed, and intended to be assigned as payment for cemetery goods
or services or funeral goods or services.
(b) "Casket" means any box or container consisting of 1 or
more parts in which a dead human body is placed prior to interment,
entombment,
or cremation which that
may or may not be permanently
interred, entombed, or cremated with the dead human body. A
permanent
interment or entombment receptacle
which that is
designed or intended for use without a cemetery burial vault or
other outside container shall also be considered a casket.
(c) "Catafalque" means an ornamental or decorative object or
structure which
that is placed beneath, over, or around a casket,
vault, or a dead human body prior to final disposition of the dead
human body.
(d) "Cemetery" means that term as defined in but not
necessarily regulated under section 2 of the cemetery regulation
act, Act
No. 251 of the Public Acts of 1968, being section 456.522
of
the Michigan Compiled Laws 1968
PA 251, MCL 456.522, or an
officer, agent, or employee thereof.
(e) "Cemetery burial vault or other outside container" means a
box
or container which that
is used solely at the place of
interment to permanently surround or enclose a casket and to
support the earth above the casket after burial.
(f) "Cemetery goods" means land or interests in land, crypts,
lawn crypts, mausoleum crypts, or niches that are sold by a
cemetery.
In addition, cemetery goods shall include cemetery
burial vaults or other outside containers, markers, monuments,
urns, and merchandise items used for the purpose of memorializing a
decedent and placed on or in proximity to a place of interment or
entombment of a casket, catafalque, or vault or to a place of
inurnment which
that are sold by a cemetery.
(g) "Cemetery services" means those services customarily
performed by a cemetery.
(h) "Combination unit" means any product consisting of a unit
or
a series of units which are designed or intended to be
used
together as both a casket and as a permanent burial receptacle.
(i) "Consumer price index" means the annual average percentage
increase in the Detroit consumer price index for all items for the
prior 12-month period as reported by the United States department
of labor, bureau of labor statistics, and as certified by the
commissioner.
(j) "Funeral establishment" means a funeral establishment or a
person who is engaged in the practice of mortuary science as those
terms
are defined in section 1801 of the occupational code, Act
No.
299 of the Public Acts of 1980, being section 339.1801 of the
Michigan
Compiled Laws 1980 PA 299,
MCL 339.1801, or an officer,
agent, or employee thereof.
(k)
"Funeral goods" means items of merchandise which
that
will be used in connection with a funeral or an alternative to a
funeral or final disposition of human remains including, but not
limited to, caskets, other burial containers, combination units,
and catafalques. Funeral goods does not include cemetery goods.
(l) "Funeral services" means services customarily performed by
a
person who is licensed pursuant to
sections 1801 to 1812
article
12 of the occupational code, Act
No. 299 of the Public
Acts
of 1980, being sections 339.1801 to 339.1812 of the Michigan
Compiled
Laws 1980 PA 299, MCL
339.1801 to 339.1812. Funeral
services includes
include, but is are
not limited to, care of
human remains, embalming, preparation of human remains for final
disposition, professional services relating to a funeral or an
alternative to a funeral or final disposition of human remains,
transportation of human remains, limousine services, use of
facilities or equipment for viewing human remains, visitation,
memorial services, or services which are used in connection with a
funeral or alternative to a funeral, coordinating or conducting
funeral rites or ceremonies, and other services provided in
connection with a funeral, alternative to a funeral, or final
disposition of human remains.
(m) "Nonassociated life insurance policy or annuity contract"
means a life insurance policy or annuity contract that is not
marketed to be assigned, designed to be assigned, or intended to be
assigned as payment for cemetery goods or services or funeral goods
or services.
(n) "Representative of insured's estate" means the person or
persons legally entitled to make the funeral arrangements for the
person whose life was insured.
(o) "Seller" means a person who offers to sell cemetery goods
or services or funeral goods or services or any agent, officer, or
employee thereof.
Sec.
2082. (1) No A life insurer doing business in this
state
shall not make any distinction or discrimination between
white
persons and colored persons, wholly or partially of African
descent,
individuals based on race or color as to the premiums or
rates
charged for policies upon the lives of such persons those
individuals, or in any other manner. whatever
; nor shall any such
A life insurer doing business in this state shall not demand or
require
a greater premium from such colored persons than is at
that
time required by such insurer from white persons of the same
age,
sex, general condition of health and prospect of longevity;
nor
an individual based on that individual's race or color. A life
insurer doing business in this state shall not make or require any
rebate,
diminution, or discount upon the amount to be paid on such
a
life policy in case of death of
such colored person insured; nor
based on an individual's race or color or insert in the policy any
condition,
nor or make any stipulation whereby such person the
insured
shall bind individual
binds himself or herself or his or
her heirs, executors, administrators, and assigns to accept any sum
less
than the full amount or value of such the policy in case of
a
claim accruing thereon by reason of the death of such person
the insured , other than such as are imposed on
white persons in
similar
cases; individual, based on that individual's race or
color, and any such stipulations or conditions so made or
inserted
shall
be are void.
(2)
Any insurer which that violates any of the provisions of
this
section shall forfeit to the state the sum of $500.00
$3,500.00 for each violation, to be recovered by the attorney
general by appropriate action in any court of competent
jurisdiction,
and any judgment therefor may be collected in the
same
manner as is herein provided for collecting judgments
rendered
in favor of policyholders. And any Any officer or agent
who
violates any of the provisions of this section shall be
deemed
is guilty of a misdemeanor ,
and upon conviction thereof
shall
be punished punishable by imprisonment in the county jail
not
exceeding for not more than 1 year, or by a fine of not less
than
$50.00 $350.00, and not exceeding $500.00 more than
$3,500.00, or by both. such fine and
imprisonment, in the
discretion
of the court.
Sec. 2086. Any physician who, as medical examiner for any life
or
casualty insurer , or as the reference of, or medical
examiner
for any person seeking that
insurance therein, shall
knowingly
make any makes a false statement or report to the
insurer,
or any insurer officer, thereof, concerning the bodily
health
or condition of any an applicant for insurance, or
concerning
any other matter or thing which that might affect the
propriety
or prudence of granting such that insurance, shall be
deemed
is guilty of a misdemeanor ,
and on conviction thereof,
shall
be liable to punishable by a fine not exceeding $1,000.00
of
not more than $7,000.00, or to by
imprisonment in the county
jail
not exceeding 3 for not more than 6 months, in the
discretion
of the court. And such physician shall and is also be
liable to the insurer in an action on the case for the full amount
of
any insurance obtained from such the insurer by means or
through
the assistance of such the false statement or report.
Sec. 2236. (1) A basic insurance policy form or annuity
contract form shall not be issued or delivered to any person in
this state, and an insurance or annuity application form if a
written application is required and is to be made a part of the
policy
or contract, a printed rider or indorsement endorsement
form or form of renewal certificate, and a group certificate in
connection with the policy or contract, shall not be issued or
delivered to a person in this state, until a copy of the form is
filed
with the insurance bureau office of financial and insurance
services and approved by the commissioner as conforming with the
requirements of this act and not inconsistent with the law. Failure
of the commissioner to act within 30 days after submittal
constitutes approval. All such forms, except policies of disability
insurance as defined in section 3400, shall be plainly printed with
type size not less than 8-point unless the commissioner determines
that portions of such a form printed with type less than 8-point is
not deceptive or misleading.
(2) An insurer may satisfy its obligations to make form
filings by becoming a member of, or a subscriber to, a rating
organization, licensed under section 2436 or 2630, which makes such
filings and by filing with the commissioner a copy of its
authorization of the rating organization to make the filings on its
behalf. Every member of or subscriber to a rating organization
shall adhere to the form filings made on its behalf by the
organization except that an insurer may file with the commissioner
a substitute form, and thereafter if a subsequent form filing by
the rating organization affects the use of the substitute form, the
insurer shall review its use and notify the commissioner whether to
withdraw its substitute form.
(3) Beginning January 1, 1992, the commissioner shall not
approve a form filed pursuant to this section providing for or
relating to an insurance policy or an annuity contract for
personal, family, or household purposes if the form fails to obtain
the readability score or meet the other requirements of this
subsection, as applicable:
(a) The readability score for a form for which approval is
required by this section shall not be less than 45, as determined
by the method provided in subdivisions (b) and (c).
(b) The readability score for a form shall be determined as
follows:
(i) For a form containing not more than 10,000 words, the
entire form shall be analyzed. For a form containing more than
10,000 words, not less than two 200-word samples per page shall be
analyzed instead of the entire form. The samples shall be separated
by at least 20 printed lines.
(ii) Count the number of words and sentences in the form or
samples and divide the total number of words by the total number of
sentences. Multiply this quotient by a factor of 1.015.
(iii) Count the total number of syllables in the form or samples
and divide the total number of syllables by the total number of
words. Multiply this quotient by a factor of 84.6. As used in this
subparagraph, "syllable" means a unit of spoken language consisting
of 1 or more letters of a word as indicated by an accepted
dictionary. If the dictionary shows 2 or more equally acceptable
pronunciations of a word, the pronunciation containing fewer
syllables may be used.
(iv) Add the figures obtained in subparagraphs (ii) and (iii) and
subtract this sum from 206.835. The figure obtained equals the
readability score for the form.
(c) For the purposes of subdivision (b)(ii) and (iii), the
following procedures shall be used:
(i) A contraction, hyphenated word, or numbers and letters when
separated by spaces shall be counted as 1 word.
(ii) A unit of words ending with a period, semicolon, or colon,
but excluding headings and captions, shall be counted as 1
sentence.
(d) In determining the readability score, the method provided
in subdivisions (b) and (c):
(i) Shall be applied to an insurance policy form or an annuity
contract,
together with a rider or indorsement endorsement form
usually associated with such an insurance policy form or annuity
contract.
(ii) Shall not be applied to words or phrases that are defined
in an insurance policy form, an annuity contract, or riders,
indorsements
endorsements, or group certificates pursuant to an
insurance policy form or annuity contract.
(iii) Shall not be applied to language specifically agreed upon
through collective bargaining or required by a collective
bargaining agreement.
(iv) Shall not be applied to language that is prescribed by
state or federal statute or by rules or regulations promulgated
pursuant to a state or federal statute.
(e) Each form for which approval is required by this section
shall contain both of the following:
(i) Topical captions.
(ii) An identification of exclusions.
(f) Each insurance policy and annuity contract that has more
than 3,000 words printed on not more than 3 pages of text or that
has more than 3 pages of text regardless of the number of words
shall contain a table of contents. This subdivision does not apply
to indorsements
endorsements.
(g)
Each rider or indorsement endorsement form that
changes
coverage shall do all of the following:
(i) Contain a properly descriptive title.
(ii) Reproduce either the entire paragraph or the provision as
changed.
(iii) Be accompanied by an explanation of the change.
(h) If a computer system approved by the commissioner
calculates the readability score of a form as being in compliance
with this subsection, the form is considered in compliance with the
readability score requirements of this subsection.
(4) After January 1, 1992, any change or addition to a policy
or annuity contract form for personal, family, or household
purposes,
whether by indorsement endorsement, rider, or
otherwise,
or a change or addition to a rider or
indorsement
endorsement form to such policy or annuity contract form, which
policy or annuity contract form has not been previously approved
under subsection (3), shall be submitted for approval pursuant to
subsection (3).
(5) Upon written notice to the insurer, the commissioner may
disapprove, withdraw approval, or prohibit the issuance,
advertising, or delivery of any form to any person in this state if
it violates any provisions of this act, or contains inconsistent,
ambiguous, or misleading clauses, or contains exceptions and
conditions that unreasonably or deceptively affect the risk
purported to be assumed in the general coverage of the policy. The
notice shall specify the objectionable provisions or conditions and
state the reasons for the commissioner's decision. If the form is
legally in use by the insurer in this state, the notice shall give
the effective date of the commissioner's disapproval, which shall
not be less than 30 days subsequent to the mailing or delivery of
the notice to the insurer. If the form is not legally in use, then
disapproval shall be effective immediately.
(6) If a form is disapproved or approval is withdrawn under
the provisions of this act, the insurer is entitled upon demand to
a hearing before the commissioner or a deputy commissioner within
30 days after the notice of disapproval or of withdrawal of
approval. After the hearing, the commissioner shall make findings
of fact and law, and either affirm, modify, or withdraw his or her
original order or decision.
(7) Any issuance, use, or delivery by an insurer of any form
without the prior approval of the commissioner as required by
subsection (1) or after withdrawal of approval as provided by
subsection
(5) constitutes a separate violation.
for which the
commissioner
may order the imposition of a civil penalty of $25.00
for
each offense, but not to exceed the maximum penalty of $500.00
for
any 1 series of offenses relating to any 1 basic policy form,
which
penalty may be recovered by the attorney general as provided
in
section 230.
(8) The filing requirements of this section do not apply to
any of the following:
(a) Insurance against loss of or damage to:
(i) Imports, exports, or domestic shipments.
(ii) Bridges, tunnels, or other instrumentalities of
transportation and communication.
(iii) Aircraft and attached equipment.
(iv) Vessels and watercraft under construction or owned by or
used in a business or having a straight-line hull length of more
than 24 feet.
(b) Insurance against loss resulting from liability, other
than worker's compensation or employers' liability arising out of
the ownership, maintenance, or use of:
(i) Imports, exports, or domestic shipments.
(ii) Aircraft and attached equipment.
(iii) Vessels and watercraft under construction or owned by or
used in a business or having a straight-line hull length of more
than 24 feet.
(c) Surety bonds other than fidelity bonds.
(d)
Policies, riders, indorsements endorsements, or forms of
unique character designed for and used with relation to insurance
upon a particular subject, or that relate to the manner of
distribution of benefits or to the reservation of rights and
benefits under life or disability insurance policies and are used
at the request of the individual policyholder, contract holder, or
certificate holder. Beginning September 1, 1968, the commissioner
by order may exempt from the filing requirements of this section
and sections 2242, 3606, and 4430 for so long as he or she
considers proper any insurance document or form, except that
portion of the document or form that establishes a relationship
between group disability insurance and personal protection
insurance benefits subject to exclusions or deductibles pursuant to
section 3109a, as specified in the order to which this section
practicably may not be applied, or the filing and approval of which
are considered unnecessary for the protection of the public.
Insurance documents or forms providing medical payments or income
replacement benefits, except that portion of the document or form
that establishes a relationship between group disability insurance
and personal protection insurance benefits subject to exclusions or
deductibles pursuant to section 3109a, exempt by order of the
commissioner from the filing requirements of this section and
sections 2242 and 3606 are considered approved by the commissioner
for purposes of section 3430.
(e) Insurance that meets both of the following:
(i) Is sold to an exempt commercial policyholder.
(ii) Contains a prominent disclaimer that states "This policy
is exempt from the filing requirements of section 2236 of the
insurance code of 1956, 1956 PA 218, MCL 500.2236." or words that
are substantially similar.
(9) As used in this section and sections 2401 and 2601,
"exempt commercial policyholder" means an insured that purchases
the insurance for other than personal, family, or household
purposes.
(10) Every order made by the commissioner under the provisions
of this section is subject to court review as provided in section
244.
Sec. 2912. (1) A person shall not be issued a policy of home
insurance at a rate requiring consent under section 2414 or 2614. A
person shall not be issued basic property insurance coverage at a
rate requiring consent under section 2414 or 2614 until an
inspection has been made by the inspection bureau and the person
has filed with the inspection bureau a sworn statement
acknowledging his or her rights under this chapter and waiving
those rights. The person's agent shall make a sworn statement that
the person has been fully advised of his or her rights under this
chapter and has been furnished a written description of those
rights.
(2) A false affidavit by an agent is grounds for refusal,
suspension,
or revocation of license pursuant to section 1242 as
provided in this act.
(3) A person shall not employ the services of a surplus lines
agent in obtaining basic property or home insurance until the
person has filed with the commissioner a sworn statement
acknowledging and waiving his or her rights under this chapter. The
person's surplus lines agent shall make a sworn statement that the
person has been fully advised of his or her rights under this
chapter and has been furnished a written description of those
rights.
(4) A false affidavit by a surplus lines agent constitutes
grounds
for refusal, suspension, or revocation of license pursuant
to
section 1242 as provided in
this act.
(5) The commissioner shall prescribe the forms of sworn
statements and written descriptions of rights used in connection
with this section.
Sec. 3861. (1) If the commissioner has probable cause to
believe that an insurer or agent has violated or is violating this
chapter and that a hearing by the commissioner would be in the
public interest, the commissioner shall give notice in writing to
the person involved pursuant to the administrative procedures act
of
1969, Act No. 306 of the Public Acts of 1969, being
sections
24.201
to 24.328 of the Michigan Compiled Laws 1969 PA 306, MCL
24.201 to 24.328, setting forth the general nature of the complaint
against him or her, and the proceedings contemplated. Before the
issuance of a notice of hearing, the commissioner shall give the
person an opportunity to confer and discuss the possible complaint
and proceedings in person with the commissioner or his or her
representative, and the matter may be disposed of summarily upon
agreement of the parties.
(2) The provisions of section 2030 shall apply with respect to
a hearing held pursuant to subsection (1), except that the use of
an independent hearing officer shall not be allowed.
(3)
If, after opportunity for a hearing held pursuant to Act
No.
306 of the Public Acts of 1969 the
administrative procedures
act of 1969, 1969 PA 306, MCL 24.201 to 24.328, the commissioner
determines that the insurer or agent has violated this chapter, the
provisions
of sections 2038 2039
to 2040 shall apply. Each
medicare supplement policy issued or delivered in violation of any
of
the provisions contained in this chapter shall constitute
constitutes a separate violation for purposes of assessing a civil
fine.
(4) In addition to any other applicable penalties for
violations of this act, the commissioner may require insurers
violating this chapter to cease marketing any medicare supplement
policy or certificate in this state that is related directly or
indirectly to a violation or may require the insurer to take such
actions as are necessary to comply with this chapter.
Sec. 5208a. (1) As used in this section:
(a) "Noninsured benefit plan" means a benefit plan without
insurance or the noninsured portion of a benefit plan which has
specific or aggregate excess loss insurance.
(b) "Process a claim" means the services performed in
connection with a claim for benefits including the disbursement of
benefit amounts.
(2) An insurer providing services under section 5208 in
connection
with a noninsured benefit plan, with respect to such
those services, shall not do any of the following:
(a) Misrepresent pertinent facts relating to coverage.
(b) Fail to acknowledge promptly or to act reasonably and
promptly upon communications with respect to a claim for benefits.
(c) Fail to adopt and implement reasonable standards for the
prompt investigation of a claim for benefits.
(d) Refuse to process claims without conducting a reasonable
investigation based upon the available information.
(e) Fail to communicate affirmation or denial of coverage of a
claim for benefits within a reasonable time after a claim has been
received.
(f) Fail to attempt in good faith to promptly, fairly, and
equitably process a claim for benefits.
(g) Knowingly compel covered individuals to institute
litigation to recover amounts due under a benefit plan by offering
substantially less than the amounts due.
(h) For the purpose of coercing a covered individual to accept
a settlement or compromise in a claim, inform the covered
individual of a policy of appealing administrative hearing
decisions which are in favor of covered individuals.
(i) Delay the investigation or processing of a claim by
requiring a covered individual, or the provider of services to the
covered individual, to submit a preliminary claim and then
requiring subsequent submission of a formal claim, seeking solely
the duplication of a verification.
(j) Fail to promptly provide a reasonable explanation of the
basis for denial or partial denial of a claim for benefits.
(k) Fail to promptly process a claim where liability has
become reasonably clear under 1 portion of a benefit plan in order
to influence a settlement under another portion of the benefit
plan.
(l) Refuse to enter into a service contract nor refuse to
provide services under a service contract because of race, color,
creed, marital status, sex, national origin, residence, age,
disability, or lawful occupation.
(3) An insurer providing services under section 5208 in
connection with a noninsured benefit plan shall not, in order to
induce a person to contract or to continue to contract with the
insurer for the provision of services under a service contract
offered by the insurer; to induce a person to lapse, forfeit, or
surrender a policy or service contract issued by the insurer; or to
induce a person to secure or terminate coverage with another
insurer, health care corporation, health maintenance organization,
or other person, directly or indirectly:
(a) Issue or deliver to the person money or any other valuable
consideration.
(b) Offer to make or make an agreement relating to a service
contract other than as plainly expressed in the service contract.
(c) Offer to give or pay, or give or pay, directly or
indirectly, a rebate or adjustment of the rate payable on the
service contract, or an advantage in the services thereunder,
except as reflected in the rate and expressly provided in the
service contract. Readjustment of the rate for services provided
under the service contract may be made at the end of any contract
year or contract period and may be made retroactive.
(d) Make, issue, or circulate, or cause to be made, issued, or
circulated, any estimate, illustration, circular, or statement
misrepresenting the terms, advantages, or true nature of a service
contract. ,
the advantages provided thereunder, or the true nature
thereof.
(e) Make a misrepresentation in a comparison, whether oral or
written, between service contracts of the insurer or between
service contracts of the insurer and another insurer, health care
corporation, health maintenance organization, or other person.
(4) When the commissioner has probable cause to believe that
an insurer is violating, or has violated subsection (2), indicating
a persistent tendency to engage in conduct prohibited by that
subsection, or has probable cause to believe that an insurer is
violating or has violated subsection (3), he or she shall give
written notice to the insurer, pursuant to the administrative
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, setting
forth the general nature of the complaint against the insurer and
the proceedings contemplated under this section. Before the
issuance
of a notice of hearing, the staff of the bureau of
insurance
office of financial and
insurance services responsible
for
the matters which that
would be at issue in the hearing shall
give the insurer an opportunity to confer and discuss the possible
complaint and proceedings in person with the commissioner or a
representative of the commissioner, and the matter may be disposed
of summarily upon agreement of the parties. This subsection shall
not be construed to diminish the right of a person to bring an
action for damages under this section.
(5) A hearing held pursuant to subsection (4) shall be held
pursuant to the administrative procedures act of 1969, 1969 PA 306,
MCL 24.201 to 24.328. If, after the hearing, the commissioner
determines that the insurer is violating, or has violated
subsection (2), indicating a persistent tendency to engage in
conduct prohibited by that subsection, or has violated or is
violating subsection (3), the commissioner shall reduce his or her
findings and decision to writing, and shall issue and cause to be
served upon the insurer a copy of the findings and an order
requiring the insurer to cease and desist from engaging in the
prohibited activity. The commissioner may at any time, by order,
and after notice and opportunity for a hearing, reopen and alter,
modify, or set aside, in whole or in part, an order issued by him
or her under this subsection, when in his or her opinion conditions
of fact or law have so changed as to require that action, or if the
public interest so requires.
(6) An insurer providing services under section 5208 in
connection with a noninsured benefit plan shall process claims for
benefits on a timely basis. When not paid on a timely basis,
benefits payable to a covered individual shall bear simple interest
from a date 60 days after a satisfactory claim form was received by
the insurer, at a rate of 12% interest per annum. The interest
shall be paid by the noninsured benefit plan in addition to, and at
the time of payment of, the claim.
(7) An insurer providing services under section 5208 in
connection with a noninsured benefit plan shall specify in writing
the
materials which that
constitute a satisfactory claim form
not
later than 30 days after receipt of a claim, unless the claim is
settled within 30 days. If a claim form is not supplied as to the
entire claim, the amount supported by the claim form shall be
considered to be paid on a timely basis if paid within 60 days
after receipt of the claim form by the insurer.
(8) An insurer providing the services under section 5208 in
connection with a noninsured benefit plan shall provide in its
service contract a provision that the person contracting for the
services in connection with a noninsured benefit plan shall notify
each covered individual what services are being provided; the fact
that individuals are not insured or are only partially insured, as
the case may be; which party is liable for payment of benefits; and
of future changes in benefits.
(9)
An insurer which violates this section shall be subject to
the
same penalties as provided in section 2038.
(9) (10)
The sections and subsections of this act are
declared to be severable and if any court of competent jurisdiction
finds that any section or subsection is invalid, the remaining
sections or subsections shall remain in full force and effect.
Sec. 5252. (1) A director or officer of an insurance
corporation doing business in this state shall not knowingly and
intentionally, directly or indirectly, receive any money or
valuable thing for negotiating, procuring, recommending, or aiding
in
any purchase by or sale to such the corporation of any
property
or any loan from such the corporation, or be pecuniarily
interested, either as principal, co-principal, agent, or
beneficiary in any such purchase, sale, or loan. This section does
not do any of the following:
(a) Prohibit a life insurer from making a loan upon a policy
held by the borrower not in excess of the net value of the policy.
(b) Prohibit an insurer, in connection with the relocation of
the
place of employment of an officer, from :
(i) Making making
a loan to the officer for a mortgage on real
estate
which that is to be used as the officer's residence as
long as the loan does not exceed the fair market value of the
property
.
(ii) Acquiring or acquiring the officer's residence at not
more than its fair market value.
(c) Prohibit an officer of an insurer, in connection with the
relocation
of his or her place of employment, from :
(i) Accepting accepting a loan from the insurer for a mortgage
on
real estate which that is to be used as the officer's
residence as long as the loan does not exceed the fair market value
of
the property .
(ii) Selling or selling the officer's home to the insurer at
not more than its fair market value.
(d) Prohibit the conveyance of property between an insurer and
an officer or director of an insurer if all of the following occur:
(i) Any interest in the conveyance on the part of any officer
or director is disclosed or known to its board of directors or
committee
which that authorizes, approves, or ratifies the
conveyance,
and noted in the board or
committee minutes, thereof,
and the board or committee authorizes, approves, or ratifies the
conveyance by a vote sufficient for the purpose without counting
the vote or votes of any interested officer or director, however,
an interested officer or director may be counted for purposes of a
quorum.
(ii) The fact of such the
interest is disclosed, before or
after the conveyance, to the shareholders in the case of a stock
insurance company, or in the case of a mutual insurer, to the
policyholders.
(iii) The insurer has obtained from the commissioner a
certificate of exemption permitting the specific transaction. An
insurer seeking to obtain a certificate of exemption shall file
with the commissioner a written request for a certificate of
exemption, which request shall include all of the following:
(A) A full description and disclosure of the transaction for
which the certificate is sought.
(B) Copies of all contracts or other legal documents involved
or to be involved in the transaction.
(C) A description of all assets involved in the transaction.
(D) The names, titles, capacities, and business relationships
of all persons directly involved in the transaction.
(E) A description of any and all consideration on either or
any side of the transactions.
(F)
Such other Other information, opinions, or matters as
the commissioner may reasonably require.
(2) The commissioner shall issue a certificate of exemption
within 30 days after a request for a certificate of exemption has
been received by him or her if the commissioner finds that the
specific transaction for which the certificate of exemption is
requested is fair, just, and equitable, and is not hazardous to the
policyholders, stockholders, or creditors of the insurer.
(3) If the commissioner does not issue the certificate of
exemption
within such 30 days, the insurer seeking the
certificate of exemption shall be entitled to a hearing before the
commissioner
pursuant to the administrative procedures act of 1969,
Act
No. 306 of the Public Acts of 1969, being sections 24.201 to
24.315
of the Michigan Compiled Laws 1969 PA 306, MCL 24.201 to
24.328. The hearing shall be conducted within 60 days after the
request for the certificate of exemption has been received by the
commissioner. The commissioner may refuse to issue a certificate of
exemption if he or she finds that the specific transaction for
which the certificate of exemption is requested does not meet the
requirements provided in subsection (2). In the order refusing the
request for a certificate of exemption, the commissioner shall set
forth in what respect the specific transaction fails to meet the
requirements of subsection (2). The decision of the commissioner
shall be subject to judicial review as provided in the
administrative
procedures act of 1969, Act No. 306 of the Public
Acts
of 1969 1969 PA 306, MCL 24.201 to 24.328.
(4)
Any A person violating any provision of this section
shall
be is guilty of a felony and
upon conviction shall be
punished
punishable by a fine not
exceeding $5,000.00
$10,000.00, restitution of the sum or asset transferred or
diverted,
or by imprisonment for a term not to
exceed 5 10 years,
or
by both such any combination of fine,
restitution, and
imprisonment, in the discretion of the court.
Sec. 5256. (1) Each domestic insurer shall keep under its
control all records relating to the insurer's business or affairs
at 1 or more of the following locations:
(a) The principal place of doing business in this state.
(b) One or more locations outside the state approved for that
purpose, in writing, by the commissioner.
(2) A domestic insurer shall produce those records relating to
the insurer's business or affairs and personnel knowledgeable about
the records at a principal place of doing business in or outside
this state for examination within a reasonable time period
specified by the commissioner.
(3) A domestic insurer may place for safekeeping all or any
part of its securities, notes, mortgages, or other evidences of
indebtedness, with any national bank, state bank, trust company, or
any other United States corporation authorized as a custodian to
accept and hold personal property for safekeeping. A national bank,
state bank, trust company, or United States corporation authorized
to accept and hold personal property for safekeeping may employ a
subcustodian outside of the United States to hold assets that are
not in physical form or that are customarily traded outside the
United States. A statutory deposit required by any state or foreign
country shall be excepted and any delivery and pledge or assignment
of its notes, mortgages, or other securities by any such insurer,
as security for money borrowed by it or as required in the regular
course of its business by the laws of any state or foreign country,
shall also be excepted. The insurer may hold certificates
evidencing shares of stock or other registrable securities in the
name of a nominee or nominees employed by the insurer and
responsible to the insurer. The nominee or nominees, on the request
of the insurer, shall indorse the certificate representing shares
of stock or other registrable securities in blank or by assignment
separate from the certificates. The insurer at all times shall
maintain control or possession of the certificate representing the
share of stock or other registrable securities, but, if necessary,
the nominee or nominees may have access thereto for the purpose of
examination under the supervision of the corporation.
(4) The records required to be retained by this section may be
maintained in paper, photograph, micro process, magnetic,
mechanical or electronic media, or by any process that accurately
reproduces or forms a durable medium for the reproduction of a
record. If the original document is unavailable, the domestic
insurer may produce in an alternative format the same data that was
contained on the original document.
(5) Removal of all or a material part of the records of a
domestic insurer from this state, except pursuant to a plan or
merger or consolidation approved by the commissioner under this act
or as may be approved in writing by the commissioner, is
prohibited. If after a hearing is held pursuant to the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328, the commissioner determines that the insurer has violated
this section, the commissioner shall reduce his or her findings and
decision
to writing and shall issue and cause to be served upon
serve the insurer charged with the violation a copy of the findings
and order requiring the insurer to return the office, records, and
assets to this state. An insurer that violates this section shall
be treated as a foreign insurer for the period of time the records
were removed from this state, and the insurer shall be liable for
both of the following:
(a) The amount of tax prescribed in section 476a and interest
in the amount of 3% of the amount due and unpaid for each month or
part of a month that the insurer was in violation of this section.
(b)
A penalty of $5,000.00 $10,000.00 plus an additional
$50.00
$100.00 for each day that
the insurer was not in compliance
with this section. A domestic insurer that fails to comply with an
order of the commissioner issued under this section is presumed to
be no longer safe, reliable, and entitled to public confidence
under section 436.
(6) If an insurer fails to comply with an order issued under
this section, as modified or extended, the commissioner shall
suspend or revoke the insurer's certificate of authority.
(7) The commissioner may require a domestic insurer to
transfer its domicile to another state if the commissioner is not
satisfied with the production of the records and personnel
knowledgeable about the records because all or part of the records
or personnel are located outside this state.
Sec. 6842. Any person being a resident of this state, acting
as
president, secretary, or other officer of any such a mutual
insurance company, doing business in this state under authority of
this
chapter, who shall wilfully refuse, or neglect willfully
refuses
or neglects to make assessments as
provided in section 6840
shall
be deemed is
guilty of a misdemeanor , and upon conviction
thereof
shall be punished punishable by a fine not exceeding
$1,000.00
nor of not more than $7,000.00 or
less than $500.00
$3,500.00, or by imprisonment in the county jail not less than 6
months
nor more than 1 year, or by both such fine and
imprisonment. in
the discretion of the court.
Enacting section 1. Sections 1242, 1244, and 2038 of the
insurance code of 1956, 1956 PA 218, MCL 500.1242, 500.1244, and
500.2038, are repealed.