HOUSE BILL No. 4913


     June 6, 2001, Introduced by Rep. George and referred to the Committee on Transportation.


        A bill to amend 1956 PA 218, entitled

   "The insurance code of 1956,"

   by amending sections 3103, 3104, and 3114 (MCL 500.3103,

   500.3104, and 500.3114), section 3103 as amended by 1986 PA 173,

   section 3104 as amended by 1980 PA 445, and section 3114 as

   amended by 1984 PA 372.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1
           Sec. 3103.   (1)  An owner or registrant of a motorcycle

 2
      shall  provide  MAINTAIN security  against loss resulting from

 3
      liability imposed by law for property damage, bodily injury, or

 4
      death suffered by a person arising out of the ownership, mainte-

 5
      nance, or use of that motorcycle.  The security shall conform

 6
      with the requirements of section 3009(1).  FOR PAYMENT OF

 7
      BENEFITS UNDER PERSONAL PROTECTION INSURANCE, PROPERTY PROTECTION

 8
      INSURANCE, AND RESIDUAL LIABILITY INSURANCE.  SECURITY IS ONLY


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      REQUIRED TO BE IN EFFECT DURING THE PERIOD THE MOTORCYCLE IS

 2
      DRIVEN OR MOVED UPON A HIGHWAY.  NOTWITHSTANDING ANY OTHER PROVI-

 3
      SION IN THIS ACT, AN INSURER THAT HAS ISSUED AN INSURANCE POLICY

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      ON A MOTORCYCLE THAT IS NOT DRIVEN OR MOVED UPON A HIGHWAY MAY

 5
      ALLOW THE INSURED OWNER OR REGISTRANT OF THE MOTORCYCLE TO DELETE

 6
      A PORTION OF THE COVERAGES UNDER THE POLICY AND MAINTAIN THE COM-

 7
      PREHENSIVE COVERAGE PORTION OF THE POLICY IN EFFECT.

 8
            (2) Each insurer transacting insurance in this state which

 9
      affords coverage for a motorcycle as described in subsection (1)

10
      also shall offer, to an owner or registrant of a motorcycle,

11
      security for the payment of first-party medical benefits only, in

12
      increments of $5,000.00, payable in the event the owner or regis-

13
      trant is involved in a motorcycle accident.  An insurer providing

14
      first-party medical benefits may offer, at appropriate premium

15
      rates, deductibles, provisions for the coordination of these ben-

16
      efits, and provisions for the subtraction of other benefits pro-

17
      vided or required to be provided under the laws of any state or

18
      the federal government, subject to the prior approval of the

19
      commissioner.  These deductibles and provisions shall apply only

20
      to benefits payable to the person named in the policy, the spouse

21
      of the insured, and any relative of either domiciled in the same

22
      household.

23
           Sec. 3104.  (1) An unincorporated, nonprofit association to

24
      be known as the catastrophic claims association, hereinafter

25
      referred to as the association, is created.  Each insurer engaged

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      in writing insurance coverages  which  THAT provide the security

27
      required by section 3101(1) OR 3103 within this state, as a



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      condition of its authority to transact insurance in this state,

 2
      shall be a member of the association and shall be bound by the

 3
      plan of operation of the association.   Each insurer engaged in

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      writing insurance coverages which provide the security required

 5
      by section 3103(1) within this state, as a condition of its

 6
      authority to transact insurance in this state, shall be consid-

 7
      ered a member of the association, but only for purposes of

 8
      assessments under subsection (7)(d).  Except as expressly pro-

 9
      vided in this section, the association  shall  IS not  be

10
      subject to any laws of this state with respect to insurers, but

11
      in all other respects the association  shall be  IS subject to

12
      the laws of this state to the extent that the association would

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      be IF IT were  it  an insurer organized and subsisting under

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      chapter 50.

15
           (2) The association shall provide and each member shall

16
      accept indemnification for 100% of the amount of ultimate loss

17
      sustained under personal protection insurance coverages in excess

18
      of $250,000.00 in each loss occurrence.  As used in this section,

19
      "ultimate loss" means the actual loss amounts  which  THAT a

20
      member is obligated to pay and  which  THAT are paid or payable

21
      by the member, and  shall  DO not include claim expenses.  An

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      ultimate loss is incurred by the association on the date  which

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      THAT the loss occurs.

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           (3) An insurer may withdraw from the association only upon

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      ceasing to write insurance  which  THAT provides the security

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      required by section 3101(1) OR 3103 in this state.





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           (4) An insurer whose membership in the association has been

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      terminated by withdrawal shall continue to be bound by the plan

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      of operation, and upon withdrawal, all unpaid premiums  which

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      THAT have been charged to the withdrawing member  shall be  ARE

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      payable as of the effective date of the withdrawal.

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           (5) An unsatisfied net liability to the association of an

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      insolvent member shall be assumed by and apportioned among the

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      remaining members of the association as provided in the plan of

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      operation.  The association  shall have  HAS all rights allowed

10
      by law on behalf of the remaining members against the estate or

11
      funds of the insolvent member for sums due the association.

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           (6)  When  IF a member has been merged or consolidated into

13
      another insurer or another insurer has reinsured a member's

14
      entire business  which  THAT provides the security required by

15
      section 3101(1) OR 3103 in this state, the member and successors

16
      in interest of the member  shall  remain liable for the member's

17
      obligations.

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           (7) The association shall do all of the following on behalf

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      of the members of the association:

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           (a) Assume 100% of all liability as provided in subsection

21
      (2).

22
           (b) Establish procedures by which members shall promptly

23
      report to the association each claim  which  THAT, on the basis

24
      of the injuries or damages sustained, may reasonably be antici-

25
      pated to involve the association if the member is ultimately held

26
      legally liable for the injuries or damages.  Solely for the

27
      purpose of reporting claims, the member shall in all instances



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      consider itself legally liable for the injuries or damages.  The

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      member shall also advise the association of subsequent develop-

 3
      ments likely to materially affect the interest of the association

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      in the claim.

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           (c) Maintain relevant loss and expense data relative to all

 6
      liabilities of the association and require each member to furnish

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      statistics, in connection with liabilities of the association, at

 8
      the times and in the form and detail as may be required by the

 9
      plan of operation.

10
           (d) In a manner provided for in the plan of operation, cal-

11
      culate and charge to members of the association a total premium

12
      sufficient to cover the expected losses and expenses of the asso-

13
      ciation  which  THAT the association will likely incur during the

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      period for which the premium is applicable.  The premium shall

15
      include an amount to cover incurred but not reported losses for

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      the period and may be adjusted for any excess or deficient premi-

17
      ums from previous periods.  Excesses or deficiencies from previ-

18
      ous periods may be fully adjusted in a single period or may be

19
      adjusted over several periods in a manner provided for in the

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      plan of operation.  Each member shall be charged an amount equal

21
      to that member's total earned car years of insurance providing

22
      the security required by section 3101(1) or  3103(1)  3103, or

23
      both, written in this state during the period to which the pre-

24
      mium applies, multiplied by the average premium per car.  The

25
      average premium per car shall be the total premium calculated

26
      divided by the total earned car years of insurance providing the

27
      security required by section 3101(1) or  3103(1)  3103 written in



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      this state of all members during the period to which the premium

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      applies.  As used in this subdivision, "car" includes a

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      motorcycle.

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           (e) Require and accept the payment of premiums from members

 5
      of the association as provided for in the plan of operation.  The

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      association shall do either of the following:

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           (i) Require payment of the premium in full within 45 days

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      after the premium charge.

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           (ii) Require payment of the premiums to be made periodically

10
      to cover the actual cash obligations of the association.

11
           (f) Receive and distribute all sums required by the opera-

12
      tion of the association.

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           (g) Establish procedures for reviewing claims procedures and

14
      practices of members of the association.  If the claims proce-

15
      dures or practices of a member are considered inadequate to prop-

16
      erly service the liabilities of the association, the association

17
      may undertake or may contract with another person, including

18
      another member, to adjust or assist in the adjustment of claims

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      for the member on claims  which  THAT create a potential liabil-

20
      ity to the association and may charge the cost of the adjustment

21
      to the member.

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           (8) In addition to other powers granted to it by this sec-

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      tion, the association may do all of the following:

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           (a) Sue and be sued in the name of the association.  A judg-

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      ment against the association shall not create any direct liabil-

26
      ity against the individual members of the association.  The

27
      association may provide for the indemnification of its members,



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      members of the board of directors of the association, and

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      officers, employees, and other persons lawfully acting on behalf

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      of the association.

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           (b) Reinsure all or any portion of its potential liability

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      with reinsurers licensed to transact insurance in this state or

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      approved by the commissioner.

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           (c) Provide for appropriate housing, equipment, and person-

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      nel as may be necessary to assure the efficient operation of the

 9
      association.

10
           (d) Pursuant to the plan of operation, adopt reasonable

11
      rules for the administration of the association, enforce those

12
      rules, and delegate authority, as the board considers necessary

13
      to assure the proper administration and operation of the associa-

14
      tion consistent with the plan of operation.

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           (e) Contract for goods and services, including independent

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      claims management, actuarial, investment, and legal services,

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      from others within or without this state to assure the efficient

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      operation of the association.

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           (f) Hear and determine complaints of a company or other

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      interested party concerning the operation of the association.

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           (g) Perform other acts not specifically enumerated in this

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      section  which  THAT are necessary or proper to accomplish the

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      purposes of the association and  which  THAT are not inconsistent

24
      with this section or the plan of operation.

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           (9) A board of directors is created, hereinafter referred to

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      as the board, which shall be responsible for the operation of the





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      association consistent with the plan of operation and this

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      section.

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           (10) The plan of operation shall provide for all of the

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      following:

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           (a) The establishment of necessary facilities.

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           (b) The management and operation of the association.

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            (c) A preliminary premium, payable by each member in pro-

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      portion to its total first-year premium, for initial expenses

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      necessary to commence operation of the association.

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           (C)  (d)  Procedures to be utilized in charging premiums,

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      including adjustments from excess or deficient premiums from

12
      prior periods.

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           (D)  (e)  Procedures governing the actual payment of premi-

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      ums to the association.

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           (E)  (f)  Reimbursement of each member of the board by the

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      association for actual and necessary expenses incurred on associ-

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      ation business.

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           (F)  (g)  The investment policy of the association.

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           (G)  (h)  Any other matters required by or necessary to

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      effectively implement this section.

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           (11)  Not more than 30 days after the effective date of this

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      section, the commissioner shall convene an organizational meeting

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      of the board.  The board shall be initially composed of 5 members

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      of the association appointed by the commissioner to serve as

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      directors, and the commissioner or a designated representative of

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      the commissioner serving as an ex officio member of the board

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      without vote.  The initial board and each successor  EACH board



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      shall include members  which  THAT would contribute a total of

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      not less than 40% of the total premium calculated pursuant to

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      subsection (7)(d).  Each director shall be entitled to 1 vote.

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      The initial term of office of a director shall be 2 years.

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           (12) As part of the plan of operation, the board shall adopt

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      rules providing for the composition and term of successor boards

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      to the initial board, consistent with the membership composition

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      requirements in subsections (11) and (13).  Terms of the direc-

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      tors shall be staggered so that the terms of all the directors do

10
      not expire at the same time and so that a director does not serve

11
      a term of more than 4 years.

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           (13) The board shall consist of 5 directors, and the commis-

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      sioner shall be an ex officio member of the board without vote.

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           (14) Each director shall be appointed by the commissioner

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      and shall serve until that member's successor is selected and

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      qualified.  The chairperson of the board shall be elected by the

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      board.  A vacancy on the board shall be filled by the commis-

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      sioner consistent with the plan of operation.

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           (15) After the board is appointed, the board shall meet as

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      often as the chairperson, the commissioner, or the plan of opera-

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      tion shall require, or at the request of any 3 members of the

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      board.  The chairperson shall retain the right to vote on all

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      issues.  Four members of the board shall constitute a quorum.

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           (16) An annual report of the operations of the association

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      in a form and detail as may be determined by the board shall be

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      furnished to each member.





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           (17) Not more than 60 days after the initial organizational

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      meeting of the board, the board shall submit to the commissioner

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      for approval a proposed plan of operation consistent with the

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      objectives and provisions of this section, which shall provide

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      for the economical, fair, and nondiscriminatory administration of

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      the association and for the prompt and efficient provision of

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      indemnity.  If a plan is not submitted within this 60-day period,

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      then the commissioner, after consultation with the board, shall

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      formulate and place into effect a plan consistent with this

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      section.

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           (18) The plan of operation, unless approved sooner in writ-

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      ing, shall be considered to meet the requirements of this section

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      if it is not disapproved by written order of the commissioner

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      within 30 days after the date of its submission.  Before disap-

15
      proval of all or any part of the proposed plan of operation, the

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      commissioner shall notify the board in what respect the plan of

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      operation fails to meet the requirements and objectives of this

18
      section.  If the board fails to submit a revised plan of opera-

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      tion  which  THAT meets the requirements and objectives of this

20
      section within the 30-day period, the commissioner shall enter an

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      order accordingly and shall immediately formulate and place into

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      effect a plan consistent with the requirements and objectives of

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      this section.

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           (19) The proposed plan of operation or amendments to the

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      plan of operation  shall be  ARE subject to majority approval by

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      the board, ratified by a majority of the membership having a

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      vote, with voting rights being apportioned according to the



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      premiums charged in subsection (7)(d) and  shall be  ARE subject

 2
      to approval by the commissioner.

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           (20) Upon approval by the commissioner and ratification by

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      the members of the plan submitted, or upon the promulgation of a

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      plan by the commissioner, each insurer authorized to write insur-

 6
      ance providing the security required by section 3101(1) OR 3103

    7 in this state, as  defined  PROVIDED in this section,  shall
   be

 8
      IS bound by and shall formally subscribe to and participate in

 9
      the plan approved as a condition of maintaining its authority to

10
      transact insurance in this state.

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           (21) The association  shall be  IS subject to all the

12
      reporting, loss reserve, and investment requirements of the com-

13
      missioner to the same extent as would a member of the

14
      association.

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           (22) Premiums charged members by the association shall be

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      recognized in the rate-making procedures for insurance rates in

17
      the same manner that expenses and premium taxes are recognized.

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           (23) The commissioner or an authorized representative of the

19
      commissioner may visit the association at any time and examine

20
      any and all the association's affairs.

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           (24)  This section shall take effect on July 1, 1978.  The

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      association  shall  DOES not have liability for losses occurring

23
      before  the effective date of this section  JULY 1, 1978.

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           Sec. 3114.  (1) Except as provided in subsections (2)  ,

25
      AND (3),  and (5),  a personal protection insurance policy

26
      described in section 3101(1) OR 3103 applies to accidental bodily

27
      injury to the person named in the policy, the person's spouse,



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      and a relative of either domiciled in the same household, if the

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      injury arises from a motor vehicle accident OR MOTORCYCLE

 3
      ACCIDENT.   A personal injury insurance policy described in sec-

 4
      tion 3103(2) applies to accidental bodily injury to the person

 5
      named in the policy, the person's spouse, and a relative of

 6
      either domiciled in the same household, if the injury arises from

 7
      a motorcycle accident.  When personal protection insurance bene-

 8
      fits or personal injury benefits described in section 3103(2) are

 9
      payable to or for the benefit of an injured person under his or

10
      her own policy and would also be payable under the policy of his

11
      or her spouse, relative, or relative's spouse, the injured

12
      person's insurer shall pay all of the benefits and shall not be

13
      entitled to recoupment from the other insurer.

14
           (2) A person suffering accidental bodily injury while an

15
      operator or a passenger of a motor vehicle operated in the busi-

16
      ness of transporting passengers shall receive the personal pro-

17
      tection insurance benefits to which the person is entitled from

18
      the insurer of the motor vehicle.  This subsection shall not

19
      apply to a passenger in the following, unless that passenger is

20
      not entitled to personal protection insurance benefits under any

21
      other policy:

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           (a) A school bus, as defined by the department of education,

23
      providing transportation not prohibited by law.

24
           (b) A bus operated by a common carrier of passengers certi-

25
      fied by the public service commission.

26
           (c) A bus operating under a government sponsored

27
      transportation program.



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           (d) A bus operated by or providing service to a nonprofit

 2
      organization.

 3
           (e) A taxicab insured as prescribed in section 3101 or

 4
      3102.

 5
           (f) A bus operated by a canoe or other watercraft, bicycle,

 6
      or horse livery used only to transport passengers to or from a

 7
      destination point.

 8
           (3) An employee, his or her spouse, or a relative of either

 9
      domiciled in the same household, who suffers accidental bodily

10
      injury while an occupant of a motor vehicle owned or registered

11
      by the employer, shall receive personal protection insurance ben-

12
      efits to which the employee is entitled from the insurer of the

13
      furnished vehicle.

14
           (4) Except as provided in subsections (1) to (3), a person

15
      suffering accidental bodily injury arising from a motor vehicle

16
      accident OR MOTORCYCLE ACCIDENT while an occupant of a motor

17
      vehicle OR MOTORCYCLE shall claim personal protection insurance

18
      benefits from insurers in the following order of priority:

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           (a) The insurer of the owner or registrant of the MOTOR

20
      vehicle OR MOTORCYCLE occupied.

21
           (b) The insurer of the operator of the MOTOR vehicle OR

22
      MOTORCYCLE occupied.

23
            (5) A person suffering accidental bodily injury arising

24
      from a motor vehicle accident which shows evidence of the

25
      involvement of a motor vehicle while an operator or passenger of

26
      a motorcycle shall claim personal protection insurance benefits

27
      from insurers in the following order of priority:



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           (a) The insurer of the owner or registrant of the motor

 2
      vehicle involved in the accident.

 3
           (b) The insurer of the operator of the motor vehicle

 4
      involved in the accident.

 5
           (c) The motor vehicle insurer of the operator of the motor-

 6
      cycle involved in the accident.

 7
           (d) The motor vehicle insurer of the owner or registrant of

 8
      the motorcycle involved in the accident.

 9
           (6) If 2 or more insurers are in the same order of priority

10
      to provide personal protection insurance benefits under subsec-

11
      tion (5), an insurer paying benefits due is entitled to partial

12
      recoupment from the other insurers in the same order of priority,

13
      together with a reasonable amount of partial recoupment of the

14
      expense of processing the claim, in order to accomplish equitable

15
      distribution of the loss among all of the insurers.

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           Enacting section 1.  This amendatory act takes effect

17
      January 1, 2002.























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