HB-4325, As Passed Senate, June 15, 2017
SENATE SUBSTITUTE FOR
HOUSE BILL NO. 4325
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 835a, 1204a, and 1204c (MCL 500.835a,
500.1204a, and 500.1204c), section 835a as added by 2016 PA 558,
section 1204a as amended by 2008 PA 575, and section 1204c as
amended by 2008 PA 574; and to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 835a. (1) Except as otherwise provided in section 836,
2 the minimum standard for the valuation of all individual annuity
3 and pure endowment contracts issued after December 31, 2014 and for
4 all annuities and pure endowments purchased after December 31, 2014
5 under group annuity and pure endowment contracts must be the
6 Commissioner's Reserve Valuation Method described in section 834(2)
1 and (3), and the following tables and interest rates:
2 (a) For individual single premium immediate annuity contracts,
3 excluding any disability and accidental death benefits in these
4 contracts, the standard must be the 2012 IAR Table or any
5 individual annuity mortality table adopted after 2015 by the
6 National Association of Insurance Commissioners that is approved by
7 a rule promulgated by the director for use in determining the
8 minimum standard of valuation for such contracts, or a modification
9 of these tables approved by the director, and an interest rate as
10 determined by the methodology described in section 836.
11 (b) For Except
as otherwise provided in subdivision (d), for
12 individual annuity and pure endowment contracts, other than single
13 premium immediate annuity contracts, excluding any disability and
14 accidental death benefits in the contracts, the standard must be
15 the 2012 Individual Annuity Mortality Table or any individual
16 annuity mortality table adopted after 2017 by the National
17 Association of Insurance Commissioners that is approved by a rule
18 promulgated by the director for use in determining the minimum
19 standard of valuation for such contracts, or a modification of
20 these tables approved by the director, and an interest rate as
21 determined by the methodology described in section 836 for single
22 premium deferred annuity and pure endowment contracts, and an
23 interest rate as determined by the methodology described in section
24 836 for all other such individual annuity and pure endowment
25 contracts.
26 (c) For all annuities and pure endowments purchased under
27 group annuity and pure endowment contracts, excluding any
1 disability and accidental death benefits purchased under these
2 contracts, the standard must be the 1994 GAR Table, or any group
3 annuity mortality table adopted after 2017 by the National
4 Association of Insurance Commissioners that is approved by a rule
5 promulgated by the director for use in determining the minimum
6 standard of valuation for such annuities and pure endowments, or a
7 modification of these tables approved by the director, and an
8 interest rate as determined by the methodology described in section
9 836.
10 (d) For individual annuity and pure endowment contracts, the
11 standard must be the 1983 Table a without projection only if the
12 contract is based on life contingencies and is issued to fund
13 periodic benefits arising from either of the following:
14 (i) Settlements of various forms of claims pertaining to court
15 settlements, out of court settlements from tort actions, or
16 settlements involving similar actions such as worker's compensation
17 claims.
18 (ii) Settlement of long-term disability claims if a temporary
19 or life annuity has been used instead of continuing disability
20 payments.
21 (2) As used in this section:
22 (a) "Annuity 2000 Table" means the mortality table developed
23 by the Society of Actuaries Committee on Life Insurance Research
24 and shown on page 240 of volume XLVII of the Transactions of the
25 Society of Actuaries.
26 (b) "Generational Mortality Table" means a mortality table
27 containing a set of mortality rates that decrease for a given age
1 from 1 year to the next based on a combination of a period table
2 and a projection scale containing rates of mortality improvement.
3 (c) "Period table" means a table of mortality rates applicable
4 to a given calendar year.
5 (d) "Projection Scale G2" means the table of annual rates,
6 G2X, of mortality improvement by age for projecting future
7 mortality rates beyond calendar year 2012 developed by the Society
8 of Actuaries Committee on Life Insurance Research.
9 (e) "1983 GAM Table" means that mortality table developed by
10 the Society of Actuaries committee on annuities and adopted as a
11 recognized mortality table for annuities in December 1983 by the
12 National Association of Insurance Commissioners.
13 (f) "1983 Table a" means the mortality table developed by the
14 Society of Actuaries committee to recommend a new mortality basis
15 for individual annuity valuation and adopted as a recognized
16 mortality table for annuities in June 1982 by the National
17 Association of Insurance Commissioners.
18 (g) "1994 GAR Table" means the mortality table developed by
19 the Society of Actuaries group annuity valuation table task force
20 and published on pages 866-867 of volume XLVII of the Transactions
21 of the Society of Actuaries, where the mortality rate for an
22 individual of age x in year 1994+n, QX1994+N, is determined as
23 follows:
|
24 |
QX1994+N = QX1994(1-AAX)N |
25 where QX1994 is as specified in the 1994 GAR Table, n is the
26 number of years that have elapsed since 1994, and AAX is as
1 specified in the 1994 GAR Table.
2 (h) "2012 IAM Period Table" means the period table developed
3 by the Society of Actuaries Committee on Life Insurance Research
4 that contains loaded mortality rates for calendar year 2012.
5 (i) "2012 IAR Table" means the generational mortality table
6 developed by the Society of Actuaries Committee on Life Insurance
7 Research that contains rates derived from a combination of the 2012
8 IAM Period Table and Projection Scale G2, where mortality rates for
9 an individual of age x in year 2012+n, QX2012+N, are determined as
10 follows, and the results rounded to the nearest one-thousandth:
|
11 |
QX2012+N = QX2012(1-G2X)N |
12 where QX2012 is as specified in the 2012 IAM Period Table, n
13 is the number of years that have elapsed since 2012, and G2X is as
14 specified in Projection Scale G2.
15 Sec. 1204a. (1) To qualify as a registered insurance agent
16 producer program of study,
the program of study shall must
meet all
17 of the following criteria:
18 (a) Be conducted through an educational institution offering
19 home study courses that has been in existence for not less than 5
20 years, by an insurance trade association, by an authorized insurer
21 as provided in subsection (2), or by an educational institution
22 listed in the state board of education directory of institutions of
23 higher learning.
24 (b) Except as provided in subsection (2), provide for a
25 minimum number of hours of classroom instruction or its equivalent
26 in home study or online courses as follows:
1 (i) For a program of study for health insurance producers, 20
2 hours of instruction.
3 (ii) For a program of study for life insurance producers, 20
4 hours of instruction.
5 (iii) For a combined program of study for life and health
6 insurance producers, 40 hours of instruction.
7 (iv) For a program of study for property insurance producers
8 and solicitors, 20 hours of instruction.
9 (v) For a program of study for casualty insurance producers
10 and solicitors, 20 hours of instruction.
11 (vi) For a program of study for personal lines producers, 20
12 hours of instruction.
13 (vii) For a program of study for property and casualty
14 producers and solicitors, 40 hours of instruction. A program of
15 study completed under this subparagraph satisfies the program of
16 study requirements for personal lines producers and solicitors.
17 (c) Include instruction in ethical practices in the marketing
18 and selling of insurance.
19 (d) Instruction shall Subject to subsection (5), instruction
20 must be given only by individuals who meet the qualifications
21 required by the commissioner. director. The commissioner,
after
22 consulting the insurance agent education advisory council, director
23 shall promulgate rules prescribing the criteria that must be met by
24 a person in order to render instruction in a registered
insurance
25 agent producer program of study.
26 (2) An authorized insurer may conduct that portion of the
27 minimum number of hours of instruction under subsection (1) as the
1 commissioner director
considers appropriate. Any combination
of
2 classroom, online, or self-study hours may be used in satisfying
3 the minimum number of hours of instruction under subsection (1).
4 (3) The commissioner director shall promulgate
rules
5 prescribing the subject matter that a program of study must possess
6 to qualify for registration under this section.
7 (4) The commissioner director may make
recommendations for
8 recommend improvements in course materials as considered necessary
9 by the commissioner. director.
The commissioner director may,
after
10 notice and opportunity for a hearing, withdraw the registration of
11 a program of study that does not maintain reasonable standards as
12 determined by the commissioner director for the protection
of the
13 public.
14 (5) For a registered insurance producer program of study under
15 this section, the director may refuse to approve an insurance
16 education instructor, and the director may place an approved
17 insurance education instructor on probation or suspend or revoke
18 approval of an approved insurance education instructor, or take any
19 combination of these actions, if 1 or more of the following apply:
20 (a) The insurance education instructor violates an insurance
21 law or violates a rule, subpoena, or order of the director or of
22 another state's insurance commissioner.
23 (b) The insurance education instructor uses fraudulent,
24 coercive, or dishonest practices or demonstrates incompetence,
25 untrustworthiness, or financial irresponsibility in the conduct of
26 business in this state or outside this state.
27 (c) The insurance education instructor's insurance producer
1 license or its equivalent is revoked in conjunction with a
2 disciplinary action in any state, province, district, or territory.
3 Sec. 1204c. (1) As
used in this section:
4 (a) "Hour" means a period of time of not less than 50
minutes.
5 (b) "Insurance producer" means a life-health agent or
6 property-casualty agent.
7 (c) "Life-health agent" means a resident or nonresident
8 individual insurance producer licensed for life, limited life,
9 mortgage redemption, accident and health, or any combination
10 thereof.
11 (d) "Property-casualty agent" means a resident or
nonresident
12 individual insurance producer or solicitor licensed for automobile,
13 fire, multiple lines, any limited or minor property and casualty
14 line, or any combination thereof.
15 (1) (2) An
insurance producer's hours of study accrued under
16 this section shall must
be reviewed for license continuance
every 2
17 years under a schedule established by the commissioner. director.
18 The commissioner director
may establish a schedule for license
19 continuation that staggers license continuation dates to apportion
20 the continuation dates throughout the calendar year. If the system
21 of staggered continuation is adopted, the commissioner director may
22 extend the licensure period for some licensees.
23 (2) (3) Except
as provided in subsections (10) (9)
to (13),
24 (12), and subject to subsection (13), before the review date of
25 each applicable 2-year period provided for under subsection (2),
26 (1), an insurance producer wishing to renew his or her license
27 shall renew his or her license by attending or instructing not less
1 than 24 hours of continuing education classes approved by the
2 commissioner director
or 24 hours of home study or online
training
3 if evidenced by successful completion of course work coursework
4 approved by the commissioner. director. Of the 24 hours of
5 continuing education required, not less than 3 hours shall must be
6 in ethics in insurance classes or course work.coursework.
7 (3) (4) After reviewing recommendations made by the
council
8 under section 1204b, the commissioner the director shall approve a
9 registered insurance producer program
of study if the commissioner
10 director determines that the program increases knowledge of
11 insurance and related subjects as follows:
12 (a) For a life-health agent program of study, the program
13 offers instruction in 1 or more of the following:
14 (i) The fundamental considerations and major principles of
15 life insurance.
16 (ii) The fundamental considerations and major principles of
17 health insurance.
18 (iii) Estate planning and taxation as related to insurance.
19 (iv) Industry and legal standards concerning ethics in
20 insurance.
21 (v) Legal, legislative, and regulatory matters concerning
22 insurance, the insurance code, and the insurance industry.
23 (vi) Principal provisions used in life insurance contracts,
24 health insurance contracts, or annuity contracts and differences in
25 types of coverages.
26 (vii) Accounting and actuarial considerations in insurance.
27 (viii) Principles of agency management, excluding
1 telemarketing or other marketing instruction.
2 (ix) The fundamental considerations, major principles, and
3 statutory requirements of long-term care insurance.
4 (b) For a property-casualty agent program of study, the
5 program offers instructions in 1 or more of the following:
6 (i) The fundamental considerations and major principles of
7 property insurance.
8 (ii) The fundamental considerations and major principles of
9 casualty insurance.
10 (iii) Basic principles of risk management.
11 (iv) Industry and legal standards concerning ethics in
12 insurance.
13 (v) Legal, legislative, and regulatory matters concerning
14 insurance, the insurance code, and the insurance industry.
15 (vi) Principal provisions used in casualty insurance
16 contracts, no-fault insurance contracts, or property insurance
17 contracts and differences in types of coverages.
18 (vii) Accounting and actuarial considerations in insurance.
19 (viii) Principles of agency management, excluding
20 telemarketing or other marketing instruction.
21 (4) (5) A
provider of a program of study for insurance
22 producers applying for approval or reapproval from the commissioner
23 director under this section shall file, on a form provided by the
24 commissioner, director,
a description of the course of study
25 including a description of the subject matter and course materials,
26 hours of instruction, location of classroom, qualifications of
27 instructors, and maximum student-instructor ratio and shall pay a
1 nonrefundable $25.00 filing fee. Any material change in a program
2 of study shall require requires
the reapproval by of the
3 commissioner. director.
If the information in an application
for
4 approval or reapproval is insufficient for the commissioner
5 director to determine whether the program of study meets the
6 requirements under subsection (4), (3), the
commissioner director
7 shall give written notice to the provider, within 15 days after the
8 provider's filing of the application for approval or reapproval, of
9 the additional information needed by the commissioner. director. An
10 application for approval or reapproval shall be is considered
11 approved unless disapproved by the commissioner director within
90
12 days after the application for approval or reapproval is filed, or
13 within 90 days after the receipt of additional information if the
14 information was requested by the commissioner, director, whichever
15 is later.
16 (5) (6) A
provider of a program of study approved by the
17 commissioner director
under this section shall pay a provider
18 authorization fee of $500.00 for the first year the provider's
19 program of study was is
approved under this section and a
$100.00
20 provider renewal fee for each subsequent
year thereafter that the
21 provider offers the approved program of study.
22 (6) (7) A
person dissatisfied with an approved program of
23 study may petition the commissioner director for
a hearing on the
24 program or the commissioner director on his or her own
initiative
25 may request a hearing on a program of study. If the commissioner
26 director finds that
the petition to have been was
submitted in good
27 faith, that the petition if true shows that the program of study
1 does not satisfy the criteria in subsection (4), (3), or
that the
2 petition otherwise justifies holding a hearing, the commissioner
3 director shall hold a
hearing pursuant to under chapter 4 of the
4 administrative procedures act of 1969, 1969 PA 306, MCL 24.271 to
5 24.287, within 30 days after receipt of the petition and upon on
6 not less than 10 days' written notice to the petitioner and the
7 provider of the program of study. If the commissioner director
8 requests a hearing on a program of study on his or her own
9 initiative, the commissioner director shall hold a
hearing pursuant
10 to under chapter 4 of the administrative procedures act of
1969,
11 1969 PA 306, MCL 24.271 to 24.287, upon on not
less than 10 days'
12 written notice to the provider of the program of study.
13 (7) (8) If
after a hearing under subsection (7) (6) the
14 commissioner director
finds that the program of study does
not
15 satisfy the requirements under subsection (4), (3), the
16 commissioner director
shall state, in a written order mailed
first-
17 class to the petitioner and provider of the program of study, his
18 or her findings and the date upon on which the commissioner
19 director will revoke approval of the program of study, which date
20 shall must be within a reasonable time of the issuance of the
21 order.
22 (8) (9) A
certificate of attendance or instruction of in an
23 approved program of study or a certificate of successful completion
24 of course work shall coursework
must be filed as directed by the
25 commissioner director
on a form prescribed by the commissioner
26 director and shall must indicate
the name and number of the course
27 of study, the number of hours, dates of completion, and the name
1 and number of schools attended or taught by the insurance producer
2 or the evidence of successful completion of course work.
3 coursework. A representative of the approved program of study shall
4 file the form and a fee of $1.00 per hour for course credit for
5 each insurance producer license renewal as directed by the
6 commissioner director
within 30 days after the insurance
producer
7 completes the program. A copy of the form shall must also
be mailed
8 first-class to the insurance producer who attended, taught, or
9 successfully completed the program of study. The commissioner
10 director may enter into contracts to provide for the administrative
11 functions of this subsection.
12 (9) (10) The
commissioner director shall waive the continuing
13 education requirements of this section for an insurance producer if
14 the producer is unable to comply with the continuing education
15 requirements of this section due to because of military service or
16 if the commissioner director
determines that enforcement of the
17 requirements would cause a severe hardship. The commissioner
18 director shall waive the continuing education requirements of this
19 section for the following insurance producers:
20 (a) An insurance producer who is licensed to write only travel
21 or baggage insurance policies and whose employment is for a purpose
22 other than the sale of those policies.
23 (b) An insurance producer who is licensed to write only
24 limited line credit insurance.
25 (10) (11) The
commissioner director may enter into reciprocal
26 continuing education agreements with insurance commissioners from
27 other states.
1 (11) (12) If
an insurance producer has not met his or her
2 continuing education requirements by the expiration date of his or
3 her license, the insurance producer shall have has a
90-day grace
4 period in which to meet the continuing education requirements of
5 this section. During the 90-day grace period, the insurance
6 producer shall not solicit or sell new policies of insurance, bind
7 coverage, or otherwise act as an insurance producer, except that
8 the insurance producer may continue to service policies previously
9 sold and may receive commissions on policies previously sold. If
10 the insurance producer has not met his or her continuing education
11 requirements by the expiration of the 90-day grace period, the
12 director shall cancel the insurance
producer's license. shall be
13 canceled. An insurance
producer whose license has been canceled
14 under this section may reapply for a license to act as an insurance
15 producer under section 1204., except that the program of study
16 requirements under section 1204 shall not be waived.
17 (12) (13) An
insurance producer who has sold his or her
18 insurance business and who has not met the continuing education
19 requirements of this section shall not solicit or sell new policies
20 of insurance, bind coverage, or otherwise act as an insurance
21 producer, except that the insurance producer may continue to
22 service policies previously sold and may receive commissions on
23 policies previously sold as well as receive partial commissions on
24 policies of insurance sold by a purchasing insurance producer. An
25 insurance producer who is in the process of selling his or her
26 insurance business and who has not met the continuing education
27 requirements of this section shall not solicit or sell new policies
1 of insurance, bind coverage, or otherwise act as an insurance
2 producer, except that the insurance producer may continue to
3 service policies previously sold and may receive commissions on
4 policies previously sold as well as receive partial commissions on
5 policies of insurance sold by a purchasing insurance producer, for
6 a period not to exceed 12 months after the selling insurance
7 producer's license review date under subsection (2). (1). An
8 insurance producer whose license has been canceled and who wishes
9 to resume soliciting or selling new policies of insurance, bind
10 coverage, or otherwise act as an insurance producer and who has not
11 met the continuing education requirements within the immediately
12 preceding 2-year period 12
months may reapply for a license
to act
13 as an insurance producer under section 1204.
14 (13) After 1 year after the effective date of the amendatory
15 act that added subsection (14), for a review date of an applicable
16 2-year period under subsection (1), all of the following apply:
17 (a) Subject to subdivisions (b) and (c), if an insurance
18 producer completes more than 24 hours of continuing education in an
19 applicable 2-year period, the insurance producer may, for purposes
20 of subsection (2), apply each hour more than 24 hours to the next
21 2-year period. However, no more than 12 hours may be applied to the
22 next applicable 2-year period under this subdivision.
23 (b) An insurance producer may not apply any hours in ethics in
24 insurance classes or coursework to the next applicable 2-year
25 period under subdivision (a).
26 (c) If an insurance producer completes the same continuing
27 education class or coursework under subsection (2) in an applicable
1 2-year period, an hour associated with a duplicative class or
2 coursework may not be applied to the next applicable 2-year period
3 under subdivision (a).
4 (14) The director or his or her designee may access any
5 classroom while instruction for a program of study under section
6 1204a or this section is in progress to monitor the classroom
7 instruction.
8 (15) For an insurance producer program of study under this
9 section, the director may refuse to approve an insurance education
10 instructor, and the director may place an approved insurance
11 education instructor on probation or suspend or revoke approval of
12 an approved insurance education instructor, or take any combination
13 of these actions, if 1 or more of the following apply:
14 (a) The insurance education instructor violates an insurance
15 law or violates a rule, subpoena, or order of the director or of
16 another state's insurance commissioner.
17 (b) The insurance education instructor uses fraudulent,
18 coercive, or dishonest practices or demonstrates incompetence,
19 untrustworthiness, or financial irresponsibility in the conduct of
20 business in this state or outside this state.
21 (c) The insurance education instructor's insurance producer
22 license or its equivalent is revoked in conjunction with a
23 disciplinary action in any state, province, district, or territory.
24 (16) As used in this section:
25 (a) "Hour" means a period of time of not less than 50 minutes.
26 (b) "Insurance producer" means a life-health agent or
27 property-casualty agent.
1 (c) "Life-health agent" means a resident or nonresident
2 individual insurance producer licensed for life, limited life,
3 mortgage redemption, or accident and health or a combination of
4 life, limited life, mortgage redemption, or accident and health.
5 (d) "Property-casualty agent" means a resident or nonresident
6 individual insurance producer or solicitor licensed for automobile,
7 fire, multiple lines, or any limited or minor property and casualty
8 lines or a combination of automobile, fire, multiple lines, or
9 limited or minor property and casualty lines.
10 Enacting section 1. Section 1204b of the insurance code of
11 1956, 1956 PA 218, MCL 500.1204b, is repealed.