HB-6229, As Passed Senate, August 30, 2006

HOUSE BILL No. 6229

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 7941 (MCL 500.7941), as amended by 1990 PA 137.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 7941. (1) To the extent necessary to secure funds for the

association for payment of covered claims and for payment of

reasonable costs of administering the association, including the

cost of indemnifying members of the board of governors, other

member insurers, officers, employees, and other persons acting on

behalf of the association to the extent permitted by law and the

plan of ~~the~~ operation, the association shall levy assessments

upon all member insurers. The association shall allocate its claim

payments and costs to the following 5 categories:

(a) Worker's compensation insurance.

(b) Automobile insurance.

(d) Fire, allied lines, farm owner's multiple peril,

homeowner's multiple peril, inland marine, earthquake, and credit

insurance.

(e) All other kinds of insurance except life and disability

insurance.

(2) Separate assessments shall be made for each category

prescribed in subsection (1). The assessment for each category

shall be used to pay the claim payments and costs allocated to that

category. The assessment for each category shall be in proportion

to the net direct premiums written, after deducting dividends paid

or credited to policyholders, by each member insurer in this state

for kinds of insurance included within each category, as reported

in the most recent annual statement available at the time of

assessment. The rate of assessment shall be a uniform percentage of

the premiums for all member insurers. The assessments shall be

remitted to and administered by the association in accordance with

the plan of operation. Each member insurer assessed shall have not

less than 30 days' advance written notice of the date the

assessment is due and payable.

(3) A member insurer shall not be assessed during a calendar

year for more than 1% of its net direct premiums written in this

state during the previous calendar year. The commissioner may

exempt a member insurer from all or part of an assessment or may

defer, in whole or in part, the assessment of a member insurer, if

the assessment would cause the member insurer's financial statement

to reflect amounts of capital or surplus less than the minimum

amounts required for a certificate of authority by any jurisdiction

in which the member insurer is authorized to transact insurance.

However, during the period of exemption or deferment, dividends

shall not be declared or paid to shareholders or policyholders. If

a member insurer is exempted from all or part of an assessment, or

if an assessment against a member insurer is deferred in whole or

in part, the amount of the exemption or deferred assessment may be

assessed against the other member insurers in a manner consistent

with the basis for assessments prescribed in this section. The

commissioner may impose conditions on an exemption or deferral

which he or she considers reasonable and necessary. ~~The state~~

~~accident fund shall not be liable for any assessment based on~~

~~premiums written after the effective date of this 1990 amendatory~~

~~act including any assessment for an insolvency occurring before the~~

~~date of termination of its membership in the association.~~

(4) The assessments shall be recognized in the rate-making

procedures for insurance rates in the same manner that expenses and

premium taxes are recognized. Unused assessments and reimbursements

from the receiver remaining in a category in excess of covered

claims and expenses allocated to that category shall be refunded by

the association to each member insurer who paid the assessments for

that category in proportion to its assessments paid. An insurer

~~which~~ that ceases to be a member of the association shall not have

a right to a refund of an assessment previously remitted to the

association. The commissioner may revoke the certificate of

authority to transact business in this state of a member insurer

~~which~~ that fails to pay an assessment when due as provided in this

act and after a demand has been made.

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).

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. 6230(request no.

07132'06).

(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).