January 13, 2016, Introduced by Rep. Lucido and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 3020 (MCL 500.3020), as amended by 2006 PA 106,
and by adding section 2111f.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2111f. (1) For an automobile policy that provides the
security required under section 3101(1), the premium must be
structured so that the full amount that reflects the premium
charged members as required to be included in rates under section
3104 for the entire term of the policy is included in the initial
premium.
(2) An insurer that issues a policy described in this section
shall charge and collect from the insured with the initial premium
payment on the policy the full amount that reflects the premium
charged members as required to be included in rates under section
3104 for the entire term of the policy.
(3) Subject to subsection (4), if a policy described in this
section is canceled, the insurer shall not refund to the insured
the portion of the initial premium payment on the policy that
comprises the full amount that reflects the premium charged members
as required to be included in rates under section 3104 for the
entire term of the policy.
(4) Subsection (3) does not apply if the policy is canceled
for 1 or more of the reasons enumerated in section 3020(2)(c).
Sec.
3020. (1) A An authorized
insurer shall not issue or
deliver in this state a policy of casualty insurance, except
worker's compensation and mortgage guaranty insurance, including
all
classes of motor vehicle coverage, shall not be issued or
delivered
in this state by an insurer authorized to do business in
this
state for which a premium or
advance assessment is charged,
unless the policy contains the following provisions:
(a) That the policy may be canceled at any time at the request
of the insured, in which case the insurer shall refund the excess
of paid premium or assessment above the pro rata rates for the
expired
time, except as otherwise provided in subsections (2) ,
(3),
and (4).to (5).
(b) Except as otherwise provided in subdivision (d), that the
policy may be canceled at any time by the insurer by mailing to the
insured at the insured's address last known to the insurer or an
authorized agent of the insurer, with postage fully prepaid, a not
less than 10 days' written notice of cancellation with or without
tender of the excess of paid premium or assessment above the pro
rata premium for the expired time.
(c) That the minimum earned premium on any policy canceled
pursuant
to under this subsection, other than automobile insurance
as
defined in section 2102(2)(a) and or (b), shall will not
be less
than the pro rata premium for the expired time or $25.00, whichever
is greater.
(d) That an insurer may refuse to renew a malpractice
insurance policy only by mailing to the insured at the insured's
address last known to the insurer or an authorized agent of the
insurer, with postage fully prepaid, a not less than 60 days'
written notice of refusal to renew. As used in this subdivision,
"malpractice insurance" means malpractice insurance as described in
section 624(1)(h).
(2)
An insurer may file a rule with the commissioner director
providing for a minimum retention of premium for automobile
insurance
as defined in section 2102(2)(a) and or (b). The rule
shall
must describe the circumstances under which the retention
is
applied
and shall must set forth the amount to be retained, which
is
subject to the approval of the commissioner. director. The rule
shall
must include, but need not be limited to, the following
provisions:
(a)
That a minimum retention shall will
be applied only when
the amount exceeds the amount that would have been retained had the
policy been canceled on a pro rata basis.
(b) That a minimum retention does not apply to renewal
policies.
(c) That a minimum retention does not apply when a policy is
canceled for the following reasons:
(i) The insured is no longer required to maintain security
pursuant
to under section 3101(1).
(ii) The insured has replaced the automobile insurance policy
being canceled with an automobile insurance policy from another
insurer and provides proof of the replacement coverage to the
canceling insurer.
(3) Notwithstanding subsection (1), an insurer may issue a
noncancelable, nonrefundable, 6-month prepaid automobile insurance
policy in order for an insured to meet the registration
requirements of section 227a of the Michigan vehicle code, 1949 PA
300, MCL 257.227a.
(4) An insurer may provide for a short rate premium for
insurance on a motorcycle, watercraft, off-road vehicle, or
snowmobile. As used in this subsection:
(a) "Motorcycle" means that term as defined in section 3101.
(b) "Off-road vehicle" means an ORV as defined in section
81101 of the natural resources and environmental protection act,
1994 PA 451, MCL 324.81101.
(c) "Snowmobile" means that term as defined in section 82101
of the natural resources and environmental protection act, 1994 PA
451, MCL 324.82101.
(d) "Watercraft" means that term as defined in section 80301
of the natural resources and environmental protection act, 1994 PA
451, MCL 324.80301.
(5) If the policy canceled is a policy that provides the
security required under section 3101(1), unless the policy is
canceled for 1 or more of the reasons enumerated in subsection
(2)(c), the insurer shall not refund the portion of the premium
that comprises the full amount that reflects the premiums charged
members as required to be included in rates under section 3104 for
the entire term of the policy.
(6) (5)
Cancellation as prescribed in this
section is without
prejudice to any claim originating before the cancellation. The
mailing of notice is prima facie proof of notice. Delivery of
written notice is equivalent to mailing.
(7) (6)
A notice of cancellation, including
a cancellation
notice
under section 3224, shall must
be accompanied by a statement
that the insured shall not operate or permit the operation of the
vehicle to which notice of cancellation is applicable, or operate
any other vehicle, unless the vehicle is insured as required by
law.
(8) (7)
An insurer who wishes to provide
for a short rate
premium
under subsection (4) shall file with the commissioner
pursuant
to director under chapter 24 or 26 a rule establishing a
short
rate premium. The rule shall must
describe the circumstances
under
which the short rate is applied and shall set forth the
amount or percentage to be retained.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.