HB-5489, As Passed Senate, December 12, 2007

SUBSTITUTE FOR

HOUSE BILL NO. 5489

      A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

by amending sections 224, 440a, 443, 476a, 476b, 1239, 2352,

2954, 3390, and 5208 (MCL 500.224, 500.440a, 500.443, 500.476a,

500.476b, 500.1239, 500.2352, 500.2954, 500.3390, and 500.5208),

section 224 as amended by 2001 PA 143, section 440a as added and

section 443 as amended by 1990 PA 256, section 476a as amended by

1998 PA 121, sections 476b, 2352, 2954, and 3390 as added by 1987

PA 261, section 1239 as added by 2001 PA 228, and section 5208 as

amended by 2002 PA 146.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1        Sec. 224. (1) All actual and necessary expenses incurred in

 2  connection with the examination or other investigation of an

 3  insurer or other person regulated under the commissioner's

 1  authority shall be certified by the commissioner, together with a

 2  statement of the work performed including the number of days

 3  spent by the commissioner and each of the commissioner's

 4  deputies, assistants, employees, and others acting under the

 5  commissioner's authority. If correct, the expenses shall be paid

 6  to the persons by whom they were incurred, upon the warrant of

 7  the state treasurer payable from appropriations made by the

 8  legislature for this purpose.

 9        (2) Except as otherwise provided in subsection (4), the

10  commissioner shall prepare and present to the insurer or other

11  person examined or investigated a statement of the expenses and

12  reasonable cost incurred for each person engaged upon the

13  examination or investigation, including amounts necessary to

14  cover the pay and allowances granted to the persons by the

15  Michigan civil service commission, and the administration and

16  supervisory expense including an amount necessary to cover fringe

17  benefits in conjunction with the examination or investigation.

18  Except as otherwise provided in subsection (4), the insurer or

19  other person, upon receiving the statement, shall pay to the

20  commissioner the stated amount. The commissioner shall deposit

21  the funds with the state treasurer as provided in section 225.

22        (3) The commissioner may employ attorneys, actuaries,

23  accountants, investment advisers, and other expert personnel not

24  otherwise employees of this state reasonably necessary to assist

25  in the conduct of the examination or investigation or proceeding

26  with respect to an insurer or other person regulated under the

27  commissioner's authority at the insurer's or other person's

 1  expense except as otherwise provided in subsection (4). Except as

 2  otherwise provided in subsection (4), upon certification by the

 3  commissioner of the reasonable expenses incurred under this

 4  section, the insurer or other person examined or investigated

 5  shall pay those expenses directly to the person or firm rendering

 6  assistance to the commissioner. Expenses paid directly to such

 7  person or firm and the regulatory fees imposed by this section

 8  shall be examination expenses under section 22e of the former

 9  single business tax act, 1975 PA 228, MCL 208.22e or under

10  section 239(1) of the Michigan business tax act, 2007 PA 36, MCL

11  208.1239.

12        (4) An insurer is subject to a regulatory fee instead of the

13  costs and expenses provided for in subsections (2) and (3). By

14  June 30 of each year or within 30 days after the enactment into

15  law of any appropriation for the insurance bureau's operation,

16  the commissioner shall impose upon all insurers authorized to do

17  business in this state a regulatory fee calculated as follows:

18        (a) As used in this subsection:

19        (i) "A" means total annuity considerations written in this

20  state in the immediately preceding year.

21        (ii) "B" means base assessment rate. The base assessment rate

22  shall not exceed .00038 and shall be a fraction the numerator of

23  which is the total regulatory fee and the denominator of which is

24  the total amount of direct underwritten premiums written in this

25  state by all insurers for the immediately preceding calendar year

26  as reported to the commissioner on the insurer's annual

27  statements filed with the commissioner.

 1        (iii) "I" means all direct underwritten premiums other than

 2  life insurance premiums and annuity considerations written in

 3  this state in the immediately preceding year by all insurers.

 4        (iv) "L" means all direct underwritten life insurance

 5  premiums written in this state in the immediately preceding year

 6  by all life insurers.

 7        (v) Total regulatory fee shall not exceed 80% of the gross

 8  appropriations for the insurance bureau's operation for a fiscal

 9  year and shall be the difference between the gross appropriations

10  for the insurance bureau's operation for that current fiscal year

11  and any restricted revenues, other than the regulatory fee

12  itself, as identified in the gross appropriation for the

13  insurance bureau's operation.

14        (vi) Direct premiums written in this state do not include any

15  amounts that represent claims payments that are made on behalf

16  of, or administrative fees that are paid in connection with, any

17  administrative service contract, cost-plus arrangement, or any

18  other noninsured or self-insured business.

19        (b) Two actual assessment rates shall be calculated so as to

20  distribute 75% of the burden of the regulatory fee shortfall

21  created by the exclusion of annuity considerations from the

22  assessment base to life insurance and 25% to all other insurance.

23  The 2 actual assessment rates shall be determined as follows:

24	(i)	L x B + .75 x B x A = assessment rate for life
25		L            insurance.
26	(ii)	I x B = .25 x B x A = assessment rate for insurance
27		I            other than life insurance.

 1        (c) Each insurer's regulatory fee shall be a minimum fee of

 2  $250.00 and shall be determined by multiplying the actual

 3  assessment rate by the assessment base of that insurer as

 4  determined by the commissioner from the insurer's annual

 5  statement for the immediately preceding calendar year filed with

 6  the commissioner.

 7        (5) Not less than 67% of the revenue derived from the

 8  regulatory fee under subsection (4) shall be used for the

 9  regulation of financial conduct of persons regulated under the

10  commissioner's authority and for the regulation of persons

11  regulated under the commissioner's authority engaged in the

12  business of health care and health insurance in this state.

13        (6) The amount, if any, by which amounts credited to the

14  commissioner pursuant to section 225 exceed actual expenditures

15  pursuant to appropriations for the insurance bureau's operation

16  for a fiscal year shall be credited toward the appropriation for

17  the insurance bureau in the next fiscal year.

18        (7) All money paid into the state treasury by an insurer

19  under this section shall be credited as provided under section

20  225.

21        (8) A regulatory fee under this section shall not be treated

22  by an insurer as a levy or excise upon premium but as a

23  regulatory burden that is apportioned in relation to insurance

24  activity in this state and reflects the insurance regulatory

25  burden on this state as a result of this insurance activity. A

26  foreign or alien insurer authorized to do business in this state

27  may consider the liability required under this section as a

 1  burden imposed by this state in the calculation of the insurer's

 2  liability required under section 476a.

 3        (9) An insurer may file with the commissioner a protest to

 4  the regulatory fee imposed not later than 15 days after receipt

 5  of the regulatory fee. The commissioner shall review the grounds

 6  for the protest and shall hold a conference with the insurer at

 7  the insurer's request. The commissioner shall transmit his or her

 8  findings to the insurer with a restatement of the regulatory fee

 9  based upon the findings. Statements of regulatory fees to which

10  protests have not been made and restatements of regulatory fees

11  are due and shall be paid not later than 30 days after their

12  receipt. Regulatory fees that are not paid when due bear interest

13  on the unpaid fee which shall be calculated at 6-month intervals

14  from the date the fee was due at a rate of interest equal to 1%

15  plus the average interest rate paid at auctions of 5-year United

16  States treasury notes during the 6 months immediately preceding

17  July 1 and January 1, as certified by the state treasurer, and

18  compounded annually, until the assessment is paid in full. An

19  insurer who fails to pay its regulatory fee within the prescribed

20  time limits may have its certificate of authority or license

21  suspended, limited, or revoked as the commissioner considers

22  warranted until the regulatory fee is paid. If the commissioner

23  determines that a regulatory fee or a part of a regulatory fee

24  paid by an insurer is in excess of the amount legally due and

25  payable, the amount of the excess shall be refunded or, at the

26  insurer's option, be applied as a credit against the regulatory

27  fee for the next fiscal year. An overpayment of $100.00 or less

 1  shall be applied as a credit against the insurer's regulatory fee

 2  for the next fiscal year unless the insurer had a $100.00 or less

 3  overpayment in the immediately preceding fiscal year. If the

 4  insurer had a $100.00 or less overpayment in the immediately

 5  preceding fiscal year, at the insurer's option, the current

 6  fiscal year overpayment of $100.00 or less shall be refunded.

 7        (10) Any amounts stated and presented to or certified,

 8  assessed, or imposed upon an insurer as provided in subsections

 9  (2), (3), and (4) that are unpaid as of the date that the insurer

10  is subjected to a delinquency proceeding pursuant to chapter 81

11  shall be regarded as an expense of administering the delinquency

12  proceeding and shall be payable as such from the general assets

13  of the insurer.

14        (11) In addition to the regulatory fee provided in

15  subsection (4), each insurer that locates records or personnel

16  knowledgeable about those records outside this state pursuant to

17  section 476a(3) or section 5256 shall reimburse the insurance

18  bureau for expenses and reasonable costs incurred by the

19  insurance bureau as a result of travel and other costs related to

20  examinations or investigations of those records or personnel. The

21  reimbursement shall not include any costs that the insurance

22  bureau would have incurred if the examination had taken place in

23  this state.

24        (12) As used in this section:

25        (a) "Annuity considerations" means receipts on the sale of

26  annuities as used in section 22a of the former single business

27  tax act, 1975 PA 228, MCL 208.22a or in section 235 of the

 1  Michigan business tax act, 2007 PA 36, MCL 208.1235.

 2        (b) "Insurer" means an insurer authorized to do business in

 3  this state and includes nonprofit health care corporations,

 4  dental care corporations, and health maintenance organizations.

 5        Sec. 440a. (1) Beginning August 3, 1987, an insurer that is

 6  subject to the worker's disability compensation act of 1969, Act

 7  No. 317 of the Public Acts of 1969, being sections 418.101 to

 8  418.941 of the Michigan Compiled Laws 1969 PA 317, MCL 418.101 to

 9  418.941, may credit against the tax imposed by section 476a or

10  the fee imposed by section 476c an amount equal to the amount

11  paid during that tax year by the insurer under section 352 of Act

12  No. 317 of the Public Acts of 1969, being section 418.352 of the

13  Michigan Compiled Laws the worker's disability compensation act

14  of 1969, 1969 PA 317, MCL 418.352, as certified by the director

15  of the bureau of worker's disability compensation under section

16  391 of Act No. 317 of the Public Acts of 1969, being section

17  418.391 of the Michigan Compiled Laws the worker's disability

18  compensation act of 1969, 1969 PA 317, MCL 418.391.

19        (2) The credit under this section shall be claimed in the

20  manner prescribed by the revenue commissioner.

21        (3) A taxpayer claiming a credit under this section shall

22  claim a portion of the credit allowed by this section equal to

23  the payments made during a calendar quarter pursuant to section

24  352 of Act No. 317 of the Public Acts of 1969 the worker's

25  disability compensation act of 1969, 1969 PA 317, MCL 418.352,

26  against the quarterly payments required under section 443. The

27  state treasurer shall refund a credit in excess of a quarterly

 1  payment to the taxpayer on a quarterly basis within 60 days after

 2  receipt of a properly completed quarterly filing as required by

 3  this act. A subsequent increase or decrease in the amount claimed

 4  for payments made by the insurer or self-insurer shall be

 5  reflected in the amount of the credit taken for the calendar

 6  quarter in which the amount of the adjustment is finalized.

 7        (4) Except as otherwise provided in this subsection, the

 8  state treasurer shall refund, without interest, a credit under

 9  this section that is in excess of the insurer's tax liability or

10  fee amount for the calendar year to the insurer within 60 days

11  after receipt of a properly completed annual tax return as

12  required by this act. The state treasurer shall only make a

13  refund to an insurer whose tax liability or fee amount under this

14  act is greater than its tax liability under the former single

15  business tax act, Act No. 228 of the Public Acts of 1975, being

16  sections 208.1 to 208.145 of the Michigan Compiled Laws 1975 PA

17  228, or the Michigan business tax act, 2007 PA 36, MCL 208.1101

18  to 208.1601.

19        (5) This section shall be applied retroactively to August 3,

20  1987.

21        Sec. 443. (1) Before April 30, July 31, October 31, and

22  January 31 of each year, each foreign insurer admitted to do

23  insurance business in this state and subject to the tax

24  prescribed in section 476a shall pay to the state treasurer,

25  accompanied by forms prescribed by the revenue commissioner,

26  quarterly installments of the insurer's total estimated tax for

27  the current year. Failure of an insurer to make quarterly

 1  payments of at least 1/4 of either of the following shall subject

 2  the insurer to the penalty and interest prescribed in Act No. 122

 3  of the Public Acts of 1941, being sections 205.1 to 205.31 of the

 4  Michigan Compiled Laws 1941 PA 122, MCL 205.1 to 205.31:

 5        (a) If the preceding year's liability was $20,000.00 or

 6  less, the total tax liability of the insurer for the previous

 7  calendar year. For purposes of this subdivision, an insurer's tax

 8  liability for the previous calendar year shall be considered to

 9  be the amount of tax imposed that year under section 476a or

10  under the former single business tax act, Act No. 228 of the

11  Public Acts of 1975, being sections 208.1 to 208.145 of the

12  Michigan Compiled Laws 1975 PA 228, or the Michigan business tax

13  act, 2007 PA 36, MCL 208.1101 to 208.1601, whichever is greater.

14        (b) Eighty-five percent of the actual tax liability of the

15  insurer for the current calendar year.

16        (2) Annually before March 1, each insurer described in

17  subsection (1) shall make and file with the revenue commissioner

18  its statement showing all of the data necessary for computation

19  of its taxes under this chapter, upon forms and including

20  information that the revenue commissioner prescribes, and shall

21  pay any additional amount due for the preceding calendar year.

22  The failure to file the statement with the revenue commissioner

23  does not excuse or relieve an insurer from the payment of the tax

24  that is justly due.

25        Sec. 476a. (1) Beginning August 3, 1987, whenever, by a law

26  in force outside of this state or country, a domestic insurer or

27  agent of a domestic insurer is required to make a deposit of

 1  securities for the protection of policyholders or otherwise, or

 2  to make payment for taxes, fines, penalties, certificates of

 3  authority, valuation of policies, or otherwise, or a special

 4  burden or other burden is imposed, greater in the aggregate than

 5  is required by the laws of this state for a similar alien or

 6  foreign insurer or agent of an alien or foreign insurer, the

 7  alien or foreign insurer of that state or country is required, as

 8  a condition precedent to its transacting business in this state,

 9  to make a like deposit for like purposes with the state treasurer

10  of this state, and to pay to the revenue commissioner for taxes,

11  fines, penalties, certificates of authority, valuation of

12  policies, and otherwise an amount equal in the aggregate to the

13  charges and payments imposed by the laws of the other state or

14  country upon a similar domestic insurer and the agents of a

15  domestic insurer, regardless of whether a domestic insurer or

16  agent of a domestic insurer is actually transacting business in

17  that state or country. For fire department or salvage corps taxes

18  or other local taxes the amount shall be computed by the revenue

19  commissioner by dividing the total of the payments made by

20  domestic insurers in that state or country by the gross premium

21  received by domestic insurers in that state or country less

22  return premiums. The commissioner shall revoke the certificate of

23  authority of an alien or foreign insurer refusing for 30 days to

24  make payment of fees or taxes as required by this chapter. Except

25  as provided in subsections (3) and (4), for purposes of this

26  section, an insurer organized under the laws of a state or

27  country other than these United States shall be considered an

 1  insurer of the state in which its general deposit for the benefit

 2  of its policyholders is made.

 3        (2) The purpose of this section is to promote the interstate

 4  business of domestic insurers by deterring other states from

 5  enacting discriminatory or excessive taxes.

 6        (3) Subsection (4) does not apply to a domestic insurer that

 7  is owned or controlled, directly or indirectly, by an alien or

 8  foreign insurer who prior to 1998 and with the commissioner's

 9  approval did not keep books, records, and files or true copies

10  thereof in this state.

11        (4) For purposes of this section, the state treasurer, after

12  consultation with the commissioner, shall determine that a

13  domestic insurer is an alien or foreign insurer domiciled in a

14  state or country determined by the state treasurer if the insurer

15  does not comply with all of the following:

16        (a) Maintain its principal place of business in this state.

17        (b) Maintain in this state officers and personnel

18  responsible for and knowledgeable of the company's operation,

19  books, records, administration, and annual statement.

20        (c) Conduct in this state a substantial portion of its

21  underwriting, sales, claims, legal, and, if applicable, medical

22  operations relating to Michigan policyholders and certificate

23  holders.

24        (d) Comply with section 5256(1)(a) and (2) through (6). The

25  commissioner shall inform the state treasurer when a domestic

26  insurer is not in compliance with section 5256(1)(a) or (2)

27  through (6).

 1        (5) Taxes collected pursuant to this section are subject to

 2  section 22d of the former single business tax act, 1975 PA 228,

 3  MCL 208.22d or section 243 of the Michigan business tax act, 2007

 4  PA 36, MCL 208.1243.

 5        (6) The state treasurer shall administer the tax prescribed

 6  by this section in the manner provided in 1941 PA 122, MCL 205.1

 7  to 205.31.

 8        (7) The requirements of section 28 of 1941 PA 122, MCL

 9  205.28, that prohibit an employee or an authorized representative

10  or former employee or authorized representative or anyone

11  connected with the department of treasury from divulging any

12  facts or information obtained in connection with the

13  administration of taxes, do not apply to disclosure of the tax

14  return prescribed in this act.

15        Sec. 476b. An authorized insurer subject to tax under this

16  chapter on August 2, 1987 shall be liable for the payment of the

17  tax under sections 440 to 476 for the 1987 tax year as calculated

18  on August 2, 1987. Beginning August 3, 1987, authorized

19  Authorized insurers shall be are subject to the tax as provided

20  in section 476a if applicable or the former single business tax

21  act, Act No. 228 of the Public Acts of 1975, being sections 208.1

22  to 208.145 of the Michigan Compiled Laws 1975 PA 228, or the

23  Michigan business tax act, 2007 PA 36, MCL 208.1101 to 208.1601,

24  whichever is greater.

25        Sec. 1239. (1) In addition to any other powers under this

26  act, the commissioner may place on probation, suspend, revoke, or

27  refuse to issue an insurance producer's license or may levy a

 1  civil fine under section 1244 or any combination of actions for

 2  any 1 or more of the following causes:

 3        (a) Providing incorrect, misleading, incomplete, or

 4  materially untrue information in the license application.

 5        (b) Violating any insurance laws or violating any

 6  regulation, subpoena, or order of the commissioner or of another

 7  state's insurance commissioner.

 8        (c) Obtaining or attempting to obtain a license through

 9  misrepresentation or fraud.

10        (d) Improperly withholding, misappropriating, or converting

11  any money or property received in the course of doing insurance

12  business.

13        (e) Intentionally misrepresenting the terms of an actual or

14  proposed insurance contract or application for insurance.

15        (f) Having been convicted of a felony.

16        (g) Having admitted or been found to have committed any

17  insurance unfair trade practice or fraud.

18        (h) Using fraudulent, coercive, or dishonest practices or

19  demonstrating incompetence, untrustworthiness, or financial

20  irresponsibility in the conduct of business in this state or

21  elsewhere.

22        (i) Having an insurance producer license or its equivalent

23  denied, suspended, or revoked in any other state, province,

24  district, or territory.

25        (j) Forging another's name to an application for insurance

26  or to any document related to an insurance transaction.

27        (k) Improperly using notes or any other reference material

 1  to complete an examination for an insurance license.

 2        (l) Knowingly accepting insurance business from an individual

 3  who is not licensed.

 4        (m) Failing to comply with an administrative or court order

 5  imposing a child support obligation.

 6        (n) Failing to pay the single business tax or the Michigan

 7  business tax or comply with any administrative or court order

 8  directing payment of the single business tax or the Michigan

 9  business tax.

10        (2) Before the commissioner denies an application for a

11  license, the commissioner shall notify in writing the applicant

12  or licensee of the denial and of the reason for the denial. Not

13  later than 30 days after this written denial, the applicant or

14  licensee may make written demand upon the commissioner for a

15  hearing before the commissioner to determine the reasonableness

16  of the commissioner's action. A hearing under this subsection

17  shall be held pursuant to the administrative procedures act of

18  1969, 1969 PA 306, MCL 24.201 to 24.328.

19        (3) The license of a business entity may be suspended,

20  revoked, or refused if the commissioner finds, after hearing,

21  that an individual licensee's violation was known or should have

22  been known by 1 or more of the partners, officers, or managers

23  acting on behalf of the partnership or corporation and the

24  violation was neither reported to the commissioner nor corrective

25  action taken.

26        (4) In addition to or in lieu of any applicable denial,

27  suspension, or revocation of a license, a person may, after

 1  hearing, be subject to a civil fine under section 1244.

 2        (5) In addition to the penalties under this section, the

 3  commissioner may enforce the provisions of and impose any penalty

 4  or remedy authorized by this act against any person who is under

 5  investigation for or charged with a violation of this act even if

 6  the person's license or registration has been surrendered or has

 7  lapsed by operation of law.

 8        Sec. 2352. Determinations made by the commissioner pursuant

 9  to this chapter shall be made independent of the credits provided

10  to insurers pursuant to the former single business tax act, Act

11  No. 228 of the Public Acts of 1975, being sections 208.1 to

12  208.145 of the Michigan Compiled Laws 1975 PA 288, or the

13  Michigan business tax act, 2007 PA 36, MCL 208.1101 to 208.1601.

14        Sec. 2954. Determinations made by the commissioner pursuant

15  to this chapter shall be made independent of the credits provided

16  to insurers pursuant to the former single business tax act, Act

17  No. 228 of the Public Acts of 1975, being sections 208.1 to

18  208.145 of the Michigan Compiled Laws 1975 PA 228, or the

19  Michigan business tax act, 2007 PA 36, MCL 208.1101 to 208.1601.

20        Sec. 3390. Determinations made by the commissioner pursuant

21  to this chapter shall be made independent of the credits provided

22  to insurers pursuant to the former single business tax act, Act

23  No. 228 of the Public Acts of 1975, being sections 208.1 to

24  208.145 of the Michigan Compiled Laws 1975 PA 228, or the

25  Michigan business tax act, 2007 PA 36, MCL 208.1101 to 208.1601.

26        Sec. 5208. (1) The corporate powers of an insurer

27  incorporated in this state is limited to the issuance of policies

 1  insuring persons or property or other hazards in the state of

 2  domicile and in other states from which it has received authority

 3  to transact insurance business from the insurance department of

 4  that state, and to the provision of services of the kind it

 5  performs in the normal conduct of its insurance business whether

 6  or not those services are performed in connection with an

 7  insurance contract. This section does not apply to insurers

 8  organized in compliance with the insurance laws of this state,

 9  which cannot be properly authorized in other states, because the

10  laws of those states do not permit the writing of the class or

11  kind of insurance written by those insurers.

12        (2) For services provided under subsection (1) that are

13  performed in connection with a noninsured benefit plan, all of

14  the following apply:

15        (a) An insurer's fees for services rendered shall be on a

16  basis that precludes cost transfers between individuals receiving

17  those services and policyholders of the insurer.

18        (b) Any insurer providing services described in subsection

19  (1) in connection with a noninsured benefit plan shall offer a

20  program of specific or aggregate excess loss insurance.

21        (c) Except as provided in subdivision (d), an insurer

22  providing the services described in subsection (1) in connection

23  with a noninsured benefit plan shall not enter into the service

24  contract for a plan covering a group of less than 500

25  individuals. However, an insurer may continue a service contract

26  for a plan covering a group of less than 500 individuals if the

27  contract was in existence on December 29, 1981.

 1        (d) An insurer may enter into a service contract for a plan

 2  covering a group of less than 500 individuals if either the

 3  insurer makes arrangements for excess loss insurance or the

 4  sponsor of the plan that covers the individuals is liable for the

 5  plan's liabilities and is a sponsor of 1 or more plans covering

 6  500 or more individuals in the aggregate. The commissioner, upon

 7  obtaining the advice of insurers, shall establish the standards

 8  for the manner and amount of the excess loss insurance required

 9  by this subdivision. It is the intent of the legislature that the

10  excess loss insurance requirements be uniform as between insurers

11  and other persons authorized to provide similar services.

12        (e) An insurer providing the services described in

13  subsection (1) in connection with a noninsured benefit plan shall

14  comply with section 5208a.

15        (f) A service contract containing an administrative services

16  only arrangement between an insurer and a governmental entity not

17  subject to ERISA, whose plan provides coverage under a collective

18  bargaining agreement utilizing a policy or certificate issued by

19  an insurer, health care corporation, dental care corporation, or

20  health maintenance organization before the signing of the service

21  contract, is void unless the governmental entity has provided the

22  notice described in section 5208a(8) to the collective bargaining

23  agent and to the members of the collective bargaining unit not

24  less than 30 days before signing the service contract. The

25  voiding of a service contract under this subdivision does not

26  relieve the governmental entity of any obligations to the insurer

27  under the service contract.

 1        (3) Nothing in this section shall be construed to permit an

 2  actionable interference by an insurer with the rights and

 3  obligations of the parties under a collective bargaining

 4  agreement.

 5        (4) Services provided under subsection (1) that are

 6  performed in connection with a noninsured benefit plan shall be

 7  considered a business activity that is not an insurance carrier

 8  service and are subject to tax as authorized by the former single

 9  business tax act, 1975 PA 228, MCL 208.1 to 208.145 or the

10  Michigan business tax act, 2007 PA 36, MCL 208.1101 to 208.1601.

11        (5) An insurer shall report with its annual statement the

12  amount of business it has conducted as services provided under

13  subsection (1) that are performed in connection with a noninsured

14  benefit plan, and the commissioner shall annually transmit this

15  information to the state commissioner of revenue.

16        (6) An employee covered under a noninsured benefit plan for

17  which services are provided under a service contract authorized

18  under subsection (1) is not liable for that portion of claims

19  incurred and subject to payment under the plan if the service

20  contract is entered into between an employer and insurer, unless

21  that portion of the claim has been paid directly to the employee.

22        (7) As used in this section, "noninsured benefit plan" or

23  "plan" means a benefit plan without insurance or the noninsured

24  portion of a benefit plan that has specific or aggregate excess

25  loss insurance.