HB-6231, As Passed Senate, August 30, 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 7925 (MCL 500.7925), as amended by 1980 PA 41.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 7925. (1) "Covered claims" means obligations of an
insolvent
insurer which that
meet all of the following
requirements:
(a) Arise out of the insurance policy contracts of the
insolvent insurer issued to residents of this state or are payable
to residents of this state on behalf of insureds of the insolvent
insurer.
(b) Were unpaid by the insolvent insurer.
(c) Are presented as a claim to the receiver in this state or
the asssociation
association on or before the last date fixed for
the filing of claims in the domiciliary delinquency proceedings.
(d) Were incurred or existed before, at the time of, or within
30 days after the date the receiver was appointed.
(e) Arise out of policy contracts of the insolvent insurer
issued for all kinds of insurance except life and disability
insurance.
(f) Arise out of insurance policy contracts issued on or
before the last date on which the insolvent insurer was a member
insurer.
(2) Covered claims shall not include any of the following:
(a) Obligations to refund unearned premiums above the first
$500.00 of unearned premiums from each person from any 1 insolvent
insurer. The maximum amount of unearned premiums which shall
constitute a covered claim shall be adjusted annually to reflect
changes in the cost of living under rules prescribed by the
commissioner. A refund in an amount less than $50.00 shall not be
made for unearned premiums.
(b) Obligations incurred after the expiration date of the
insurance policy, after the insurance policy has been replaced by
the insured, or after the insurance policy has been canceled by the
association as provided in this chapter.
(c)
Obligations which arise arising out of sections
2001 to
2050, or similar provisions of law in another jurisdiction.
(3)
Covered claims shall not include obligations to an
insurer,
insurance pool, underwriting association, or to a person
who
has a net worth greater than 1/10 of 1% of the aggregate
premiums
written by member insurers in this state in the preceding
calendar
year. any amount due any
reinsurer, insurer, insurance
pool, underwriting association, health maintenance organization, or
health care corporation as subrogation recoveries, contribution,
indemnification, or other obligation. A claim for any amount due
any reinsurer, insurer, insurance pool, underwriting association,
health maintenance organization, or health care corporation shall
not be brought against an insured or claimant under a policy issued
by the insolvent insurer unless the claim exceeds the association's
obligation limitations under subsection (6).
(4) Covered claims shall not include obligations for any first
party or third party claim by or against an insured whose net worth
exceeds $25,000,000.00 on December 31, or on the last date of the
insured's fiscal period if that is other than December 31, of the
year immediately preceding the date the insurer becomes an
insolvent insurer. In determining net worth on this date, an
insured's net worth shall include the aggregate net worth of the
insured and all of its subsidiaries and affiliates as calculated on
a consolidated basis. The $25,000,000.00 net worth limit shall be
adjusted annually to reflect the aggregate annual percentage change
in the consumer price index since the previous adjustment, rounded
to the nearest $10,000.00. The effective date of the adjustment
shall be January 1 of each year. This subsection applies to an
insolvency that occurs on or after the effective date of the
amendatory act that added this subsection.
(5) (4)
Covered claims shall not include any portion of a
claim which
that is in excess of an applicable limit provided in
the insurance policy.
(6) (5)
Covered claims shall not include that portion of a
claim,
other than a worker's compensation claim , which is in
excess
of 1/20 of 1% of the aggregate premiums written by member
insurers
in this state in the preceding calendar year. or a claim
for personal protection insurance benefits under section 3107, that
is in excess of $5,000,000.00. The $5,000,000.00 claim cap shall be
adjusted annually to reflect the aggregate annual percentage change
in the consumer price index since the previous adjustment, rounded
to the nearest $10,000.00. The effective date of the adjustment
shall be January 1 of each year and shall apply to claims made on
or after that date. The claim cap in effect at the time of payment
of a claim shall apply.
(7) (6)
Covered claims shall not include adjustment fees and
expenses, attorneys' fees and expenses, court costs, interest, or
bond premiums if the fees, expenses, costs, interest, or premiums
were incurred by the insolvent insurer before the receiver was
appointed.
(8) As used in this section:
(a) "Consumer price index" means the consumer price index for
all urban consumers in the US city average, as most recently
reported by the United States department of labor, bureau of labor
statistics, and as certified by the commissioner.
(b) "Control" means that term as defined in section 115(b)(i).
(c) "Health care corporation" means that term as defined in
section 105 of the nonprofit health care corporation reform act,
1980 PA 350, MCL 550.1105.
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. 6230(request no.
07132'06).
(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).