HOUSE BILL NO. 5848

June 11, 2020, Introduced by Reps. Lasinski, Yancey, Stone, Bolden, Hood, Brenda Carter, Tyrone Carter, Hope, Whitsett, Sneller, Sabo, Warren, Sowerby, Cambensy, Clemente, Cherry, Manoogian, Kuppa, Hoadley, Gay-Dagnogo, Guerra, Brann, O'Malley, Kahle, Wozniak, Brixie, Peterson, Meerman, Ellison, Wittenberg, Hammoud, Kennedy, Chirkun and Cynthia Johnson and referred to the Committee on Judiciary.

"The insurance code of 1956,"

by amending sections 3303 and 3320 (MCL 500.3303 and 500.3320), section 3303 as amended by 1980 PA 461 and section 3320 as amended by 2012 PA 204.

the people of the state of michigan enact:

Sec. 3303. As used in this chapter:

(a) "Automobile insurance" means insurance for automobiles which provides any of the following:

(i) Security required pursuant to under section 3101.

(ii) Personal protection, property protection, and residual liability insurance for amounts in excess of the amounts required under chapter 31.

(iii) Insurance coverage customarily known as comprehensive and collision.

(iv) Other insurance coverages for a private passenger nonfleet automobile as prescribed by rule promulgated by the commissioner.

(b) "Qualified applicant", for automobile insurance, means a person who is an owner or registrant of an automobile registered or to be registered in this state or who holds a valid license to operate a motor vehicle, but does not include any of the following:

(i) A person who is not required to maintain security pursuant to under section 3101, unless the person intends to reside in this state for 30 days or more and makes a written statement of that intention on a form approved by the commissioner.

(ii) A person whose license to operate a vehicle is under suspension or revocation, unless the suspension was made pursuant to under section 310, 310b, 310d, 315, 321a, 324, 328, 512, 515, 625, 625b, 625f, 748, 801c, or 907 of Act No. 300 of the Public Acts of 1949, as amended, being sections the Michigan vehicle code, 1949 PA 300, MCL 257.310, 257.310b, 257.310d, 257.315, 257.321a, 257.324, 257.328, 257.512, 257.515, 257.625, 257.625b, 257.625f, 257.748, 257.801c, and 257.907. of the Michigan Compiled Laws.

(iii) A person whose policy of automobile insurance has been cancelled canceled because of nonpayment of premium or finance premium within the immediately preceding 2-year period, unless the applicant or insured pays in full a premium installment developed under section 3350(a) before issuance, continuation, or renewal of the policy.

(d) "Participating member" means an insurer who is required by this chapter to be a member of the facility and who in any given calendar year has a participation ratio greater than zero in the facility for that year.

(e) "Participation ratio" means the ratio of the participating member's Michigan premiums or exposure units to the comparable statewide totals for all participating members, as follows:

(i) For private passenger nonfleet automobile insurance, for distribution of risk or distribution of loss, the ratio shall must be based on voluntary net direct automobile insurance car years written in this state for the calendar year ending December 31 of the second prior year as reported to the statistical agent of each participating member as private passenger nonfleet exposure.

(ii) For all other automobile insurance, including insurance for fleets, commercial vehicles, public vehicles, and garages, the ratio for distribution of risks or distribution of loss shall must be based on the total Michigan automobile insurance gross direct premiums written, including policy and membership fees, less return premiums and premiums on policies not taken, without including reinsurance assumed and without deducting reinsurance ceded, reduced by the amount of premiums reported as private passenger nonfleet for the calendar year ending December 31 of the second prior year.

(iii) For expenses of operation of the facility and for voting rights, the ratio shall must be based on the total Michigan automobile insurance gross direct premiums written, including policy and membership fees, less return premiums and premiums on policies not taken, without including reinsurance assumed and without deducting reinsurance ceded for the calendar year ending December 31 of the second prior year.

(f) "Private passenger nonfleet automobile" means a motorized vehicle designed for transporting passengers or goods, subject to specific contemporary definitions for insurance purposes as provided in the plan of operation.

Sec. 3320. (1) The facility, with respect to private passenger nonfleet automobiles, shall provide for all of the following:

(a) The equitable distribution of applicants to designated participating members in accordance with the plan of operation.

(b) Issuance of policies of automobile insurance to qualified applicants as provided in the plan of operation.

(c) The appointment of a number of participating members appointed by the facility to act on behalf of the facility for the distribution of risks or for the servicing of insureds, as provided in the plan of operation and consistent with this section. The facility shall do all of the following:

(i) Appoint those members having the 5 highest participation ratios, as defined in section 3303(e)(i), to act on behalf of the facility.

(ii) Appoint other members to act on behalf of the facility who volunteer to so act and who meet reasonable servicing standards established in the plan of operation, up to a maximum of 5 in addition to those appointed pursuant to under subparagraph (i).

(iii) Appoint additional members to act on behalf of the facility as necessary to do all of the following:

(A) Assure convenient access to the facility for all citizens of this state.

(B) Assure a reasonable quality of service for persons insured through the facility.

(D) Assure reasonable claims handling.

(E) Assure a reasonable range of choice of insurers for persons insured through the facility.

(d) Standards and monitoring procedures to assure that participating members acting on behalf of the facility do all of the following:

(i) Provide service to persons insured through the facility equivalent to the service provided to persons insured by the insurer voluntarily.

(ii) Handle claims in an efficient and reasonable manner.

(iii) Provide internal review procedures for persons insured through the facility identical to those established pursuant to under chapter 21 for persons insured voluntarily.

(e) The establishment of procedures and guidelines for the issuance of binders by agents upon receipt of the application for coverage.

(f) Issuance of policies of automobile insurance to qualified applicants whose licenses to operate a vehicle have been suspended under section 310, 310d, 315, 321a, 324, 328, 512, 515, 625, 625b, 625f, 748, 801c, or 907 of the Michigan vehicle code, 1949 PA 300, MCL 257.310, 257.310d, 257.315, 257.321a, 257.324, 257.328, 257.512, 257.515, 257.625, 257.625b, 257.625f, 257.748, 257.801c, and 257.907, as provided in the plan of operation. These policies may be canceled after a period of not less than 30 days if the insured fails to produce proof that the suspended license has been reinstated.

(g) Administration of the assigned claims plan as required under chapter 31.

(2) Automobile insurance made available under this section shall be equivalent to the automobile insurance normally available in the voluntary competitive market in forms as approved by the commissioner with any changes, additions, and amendments adopted by the board of governors and approved by the commissioner.

Enacting section 1. This amendatory act does not take effect unless Senate Bill No.____ or House Bill No. 5846 (request no. 05617'20 *) of the 100th Legislature is enacted into law.