HOUSE BILL No. 5400


     November 1, 2001, Introduced by Reps. Julian, Richner, Scranton, Bisbee, Hager and Van Woerkom 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 section 5208 (MCL 500.5208), as amended by 1984 PA

   267, and by adding section 407a.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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           SEC. 407A.  (1) AN INSURER AUTHORIZED UNDER SECTION 602 OR

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      606 MAY OFFER AND WRITE SPECIFIC OR AGGREGATE EXCESS LOSS INSUR-

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      ANCE TO A NONINSURED BENEFIT PLAN.  EXCESS LOSS INSURANCE IS

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      SUBJECT TO ALL CASUALTY INSURANCE REQUIREMENTS UNDER THIS ACT,

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      INCLUDING, BUT NOT LIMITED TO, POLICY RATE AND FORM REQUIREMENTS

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      UNDER CHAPTERS 24 AND 30.

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           (2) AS USED IN THIS SECTION, "NONINSURED BENEFIT PLAN" MEANS

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      THAT TERM AS DEFINED IN SECTION 5208.






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           (3) THIS SECTION DOES NOT LIMIT THE AUTHORITY OF AN INSURER

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      AUTHORIZED UNDER SECTION 624 TO OFFER AND WRITE SPECIFIC OR

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      AGGREGATE EXCESS LOSS INSURANCE TO A NONINSURED BENEFIT PLAN.

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           Sec. 5208.  (1) The corporate powers of  each  AN insurer

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      incorporated in this state  shall be  IS limited to the issuance

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      of policies insuring persons or property or other hazards in the

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      state of domicile and in other states from which it has received

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      authority to transact insurance business from the insurance

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      department of  such  THAT state, and to the provision of services

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      of the kind it performs in the normal conduct of its insurance

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      business whether or not  such  THOSE services are performed in

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      connection with an insurance contract.   The prohibition of this

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      section shall  THIS SECTION DOES not apply to insurers organized

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      in compliance with the insurance laws of this state, which cannot

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      be properly authorized in other states, because the laws of

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       such  THOSE states do not permit the writing of the class or

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      kind of insurance written by  such  THOSE insurers.

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           (2) For services provided under subsection (1)  which  THAT

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      are performed in connection with a noninsured benefit plan, ALL

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      OF the following  standards shall be met  APPLY:

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

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      basis  which  THAT precludes cost transfers between individuals

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      receiving  such  THOSE services and policyholders of the

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      insurer.

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           (b) Any insurer providing services described in subsection

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      (1)  may write, and  in connection with a noninsured benefit plan





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      shall offer a program of  ,  specific or aggregate excess loss

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      insurance.

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           (c) Except as provided in subdivision (d),  any  AN insurer

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      providing the services described in subsection (1) in connection

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      with a noninsured benefit plan shall not enter into the service

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      contract for a plan covering a group of less than 500

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      individuals.  However, an insurer may continue a service contract

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

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      contract was in existence on December 29, 1981.

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

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      covering a group of less than 500 individuals if either the

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      insurer makes arrangements for excess loss insurance or the spon-

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      sor of the plan  which  THAT covers the individuals is liable for

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      the plan's liabilities and is a sponsor of 1 or more plans cover-

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      ing 500 or more individuals in the aggregate.  The commissioner,

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      upon obtaining the advice of insurers, shall establish the stan-

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      dards for the manner and amount of the excess loss insurance

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      required by this subdivision.  It is the intent of the legisla-

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      ture that the excess loss insurance requirements be uniform as

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      between insurers and other persons authorized to provide similar

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      services.

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           (e)  Any  AN insurer providing the services described in

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

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       conform to the requirements under  COMPLY WITH section 5208a.

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           (f) A service contract containing an administrative services

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      only arrangement between an insurer and a governmental entity not

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      subject to ERISA, whose plan provides coverage under a collective



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      bargaining agreement utilizing a policy or certificate issued by

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      an insurer, health care corporation,  medical care corporation,

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      hospital service corporation,  dental care corporation, or health

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      maintenance organization before the signing of the service con-

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      tract, is void unless the governmental entity has provided the

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

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      agent and to the members of the collective bargaining unit not

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      less than 30 days before signing the service contract.  The void-

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      ing of a service contract under this subdivision  shall  DOES not

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      relieve the governmental entity of any obligations to the insurer

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      under the service contract.

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

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      actionable interference by an insurer with the rights and obliga-

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      tions of the parties under a collective bargaining agreement.

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           (4) Services provided under subsection (1)  which  THAT are

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      performed in connection with a noninsured benefit plan shall be

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      considered a business activity  which  THAT is not an insurance

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      carrier service and  shall be  ARE subject to tax as authorized

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      by the single business tax act,  Act No. 228 of the Public Acts

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      of 1975, as amended, being sections 208.1 to 208.145 of the

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      Michigan Compiled Laws  1975 PA 228, MCL 208.1 TO 208.145.

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

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      amount of business it has conducted as services provided under

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      subsection (1)  which  THAT are performed in connection with a

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      noninsured benefit plan, and the commissioner shall annually

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      transmit this information to the state commissioner of revenue.

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       The commissioner shall submit to the legislature on April 1,



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      1985, a report detailing the impact of the act on employers, and

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      covered individuals, and similar activities under other provi-

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      sions of law, and in consultation with the revenue commissioner

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      the total financial impact on the state of Michigan for the pre-

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      ceding legislative biennium.

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

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      which services are provided under a service contract authorized

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      under subsection (1)  shall  IS not  be  liable for that
   portion

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      of claims incurred and subject to payment under the plan if the

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      service contract is entered into between an employer and insurer,

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      unless that portion of the claim has been paid directly to the

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      employee.

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

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

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      portion of a benefit plan  which  THAT has specific or aggregate

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      excess loss insurance.

























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