A bill to amend 1956 PA 218, entitled “The insurance code of 1956,” by amending section 8182 (MCL 500.8182), as added by 1990 PA 1, and by adding sections 8199b and 8199c.
Senate Bill No. 495 seeks to amend the Insurance Code of 1956 to address the operations and regulations of fraternal benefit societies. Key provisions include:
Certificates and Contracts: The bill mandates that fraternal benefit societies provide detailed certificates to benefit contract owners, which, along with related documents, constitute the benefit contract. This includes outlining the application of society law changes, obligations under reserve impairments, and requirements for certificate form filings similar to those of life insurers.
Contract Provisions: It sets standards for contract provisions, including premium payment grace periods and conditions for benefit termination or reduction.
Transfer and Control: The bill addresses the transfer of control or ownership of certificates, assignment of benefit contracts, and director intervention in cases of unremedied control level events. This could lead to the transfer of members, certificates, and assets to another society or insurer, with such transfers being considered a novation effective upon transfer, subject to board approval.
Membership Qualifications: It allows for the suspension or modification of membership qualifications to facilitate transfers.
Rehabilitation or Liquidation: Specifies conditions under which terms of certificates may be voided post-transfer and outlines grounds for rehabilitation or liquidation of societies. It emphasizes asset conservation and avoidance of deficiency assessments during liquidation.
Transfer to Insurers: Clarifies that any transfer to an insurer not a fraternal benefit society involves the voiding of certain policy or certificate terms related to the society's solvency and the endorsement of the policy or certificate by the receiving insurer, with such transfers constituting a novation effective on the date of transfer.
The bill aims to modernize and clarify the regulatory framework for fraternal benefit societies, particularly in areas of liquidation, rehabilitation, and the transfer of control or ownership of certificates.
Introduced
by
Referred to the Committee on Finance, Insurance, and Consumer Protection
Reported with substitute S-1
Referred to the Committee of the Whole
Reported with substitute S-1
Substitute S-1 concurred in by voice vote
Passed in the Senate 38 to 0 (details)
Referred to the Committee on Insurance and Financial Services
