HB-6230, As Passed House, June 29, 2006
June 20, 2006, Introduced by Rep. Mortimer and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 7931 (MCL 500.7931), as amended by 1980 PA 41.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
7931. (1) The association shall pay and discharge
covered
claims for the amount by which each covered claim exceeds
$10.00.
The association may pay or discharge the
covered claims
directly, through a servicing facility, or through a contract for
reinsurance or transfer of liabilities with a member insurer, in
accordance with the plan of operation.
(2) The association shall be a party in interest in all
proceedings involving a covered claim and shall have the same
rights as the insolvent insurer would have had if not in
receivership, including the right to appear, defend, and appeal a
claim in a court of competent jurisdiction; to receive notice of,
investigate, adjust, compromise, settle, and pay a covered claim;
and to investigate, handle, and deny a noncovered claim. The
association shall not have a cause of action against the insureds
of the insolvent insurer for any sums it has paid out, except those
causes
of action which that
the insolvent insurer would have had
if the sums had been paid by the insolvent insurer, or except as
otherwise provided by this chapter.
(3) If damages or benefits are recoverable by a claimant other
than from any disability policy or life insurance policy owned or
paid for by the claimant or by a claimant or insured under an
insurance
policy other than a policy of the insolvent insurer, or
from
the motor vehicle accident claims fund, or a similar fund
under a self-insured program of a self-insured entity, the damages
or benefits recoverable shall be a credit against a covered claim
payable under this chapter. The claimant, insured, or self-insured
entity shall first exhaust all coverage provided by any policy or
the self-insured retention of an excess insurance policy. If
damages against an insured who is not a resident of this state are
recoverable by a claimant who is a resident of this state, in whole
or
in part, from any insolvency insurance guaranty association or
fund or its equivalent in the state where the insured is a
resident, the damages recoverable shall be a credit against a
covered claim payable under this chapter. To the extent that the
association's obligation is reduced by this section, the liability
of the person insured by the insolvent insurer's policy shall be
reduced
in the same amount. An insurer, or
a fund may self-
insured entity, or any other person shall not maintain an action
against
an insured of the insolvent insurer to recover an amount
which
that constitutes a credit against a covered claim under
this
section. An amount paid to a claimant in excess of the amount
authorized by this section may be recovered by an action brought by
the association. If the claims made arise under the worker's
disability compensation act of 1969, 1969 PA 317, MCL 418.101 to
418.941, this subsection does not provide credits in excess of
those specified in section 354 of the worker's disability
compensation act of 1969, 1969 PA 317, MCL 418.354, and does not
limit the liability of the guaranty association or the insured
under a policy of the insolvent insurer for benefits provided under
the worker's disability compensation act of 1969, 1969 PA 317, MCL
418.101 to 418.941.
(4) The association shall continue coverage for covered claims
under each insurance policy of the insolvent insurer that was in
force on the date the receiver was appointed until the insurance
policy has expired in accordance with its terms, has been replaced
by the insured, or has been canceled by the association as provided
in this chapter, but in no event for more than 30 days after the
date the receiver was appointed.
(5) The association may cancel insurance policies of the
insolvent insurer by mailing or delivering to the insured at the
last known address within this state a 10 days' written notice of
cancellation, notwithstanding a statute or policy provision to the
contrary.
(6) As used in this section:
(a) "Self-insured entity" means a person or employer that
covers its liability through a qualified individual or group self-
insurance program.
(b) "Self-insured program" means any formal program created
for the specific purpose of covering liabilities typically covered
by insurance.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 93rd Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No. 6235(request no.
07127'06).
(b) Senate Bill No.____ or House Bill No. 6234(request no.
07128'06).
(c) Senate Bill No.____ or House Bill No. 6233(request no.
07129'06).
(d) Senate Bill No.____ or House Bill No. 6232(request no.
07130'06).
(e) Senate Bill No.____ or House Bill No. 6231(request no.
07131'06).
(f) Senate Bill No.____ or House Bill No. 6229(request no.
07133'06).
(g) Senate Bill No.____ or House Bill No. 6228(request no.
07134'06).
(h) Senate Bill No.____ or House Bill No. 6227(request no.
07135'06).
(i) Senate Bill No.____ or House Bill No. 6226(request no.
07136'06).
(j) Senate Bill No.____ or House Bill No. 6225(request no.
07137'06).
(k) Senate Bill No.____ or House Bill No. 6224(request no.
07138'06).
(l) Senate Bill No.____ or House Bill No. 6223(request no.
07139'06).