HOUSE BILL No. 4811


     May 23, 2001, Introduced by Rep. Hager and referred to the Committee on Insurance and Financial Services.


        A bill to amend 1956 PA 218, entitled

   "The insurance code of 1956,"

   by amending sections 5028, 5412, and 7918 (MCL 500.5028,

   500.5412, and 500.7918), section 7918 as amended by 1980 PA 41.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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           Sec. 5028.  (1) The incorporators shall, after the filing

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      and approval of  such  THE REQUIRED articles,  as aforesaid,

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      proceed to the completion of organization of the proposed

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      insurer.

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           (2) A stock corporation shall at once open its books of sub-

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      scription to the capital stock, and  no  A certificate of author-

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      ity shall NOT be issued by the commissioner to  any such  THE

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      corporation until it  shall have  HAS issued stock certificates

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      representing the minimum capitalization  as set forth in  UNDER

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      its articles of incorporation  ,  and  shall have  HAS
   collected


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      in cash both its minimum capital  ,  and any premium  thereon

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      for surplus requirements.  ; and if such  IF capital stock is not

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       so  subscribed and paid for  , as above provided,  AS
   PROVIDED

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      IN THIS SUBSECTION within  the period of  1 year from the opening

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      of  such  THE books,  such  THE corporation  shall
   proceed fur-

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      ther in such sale of stock only  MAY ONLY SELL STOCK on petition

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      to  ,  and consent by the commissioner.  , who may  THE

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      COMMISSIONER, if public policy warrants, MAY extend  such time

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      THIS 1-YEAR PERIOD for a period of 3 months  ; and upon like

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      AND, AFTER petition,  again extend such time  for a second period

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      of 3 months.  ; and if  IF at the expiration of 18 months  , 
   the

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      corporation  shall not have  HAS NOT met the  above 
   requirements

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      OF THIS SUBSECTION, the commissioner shall proceed to liquidate

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       such  THE corporation through receivership proceedings as pre-

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      scribed by chapter  78  81.

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           (3) A mutual corporation shall at once open books to receive

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      propositions and enter into agreements as specified in the chap-

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      ter under which it intends to operate.  The acquisition of mem-

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      bers shall proceed for  such  THE length of time, and be subject

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      to  such  periods of time extension  ,  and  such
    liquidation

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      proceedings, as  is above provided for stock corporations

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      PROVIDED IN SUBSECTION (2).

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           Sec. 5412.  If at any time it  shall appear  APPEARS from an

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      examination of the insurer or from any statement filed by  it

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      THE INSURER that the number of risks insured,  or  the number of

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      policies in force, or the number of members or the amount of

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      premiums on insurance in force are below the number and amounts



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      required under section 5408,  on organization,  the commissioner

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      shall issue an order directing the insurer  ,  within a period of

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      90 days  thereafter  to secure bona fide applications for insur-

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      ance in  such  THE insurer, together with the NECESSARY premiums,

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       therefor,  from persons who, together with the existing members,

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      shall equal the number of members required under section 5408 and

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      whose insurance policies, together with those in force, cover the

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      number of risks and provide for the amount of insurance  so

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      required upon organization.   In the event that  IF the insurer

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      does not within  such  THIS period become entitled to issue poli-

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      cies, the commissioner may in his OR HER discretion take proceed-

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      ings for the liquidation of  such  THE insurer  under the provi-

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      sions of chapter 78  AS PROVIDED IN CHAPTER 81.

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           Sec. 7918.  (1) The association may borrow funds when neces-

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      sary to implement this act.

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           (2) The association, either in its own name or through a

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      servicing facility, may sue or be sued, and may use the courts to

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      assert or defend any rights the association may have under this

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      chapter, to the extent necessary to fully exercise its rights and

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      perform its duties under, and to implement, this chapter.

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           (3) The association may retain and employ legal counsel in

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      its discretion to represent the association in all respects.

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           (4) Upon request of the commissioner, consent of the associ-

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      ation, and appointment by the court, the association may act as

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      deputy receiver in delinquency proceedings under chapter  78

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      81.





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