HB-5146, As Passed House, May 20, 2014HB-5146, As Passed Senate, May 20, 2014
November 13, 2013, Introduced by Reps. Segal, Leonard, Glardon, Goike, Cochran and Hovey-Wright and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 4404, 4420, 4424, 4426, 4434, 4438, 4442, and
4446 (MCL 500.4404, 500.4420, 500.4424, 500.4426, 500.4434,
500.4438, 500.4442, and 500.4446), section 4404 as amended by 2006
PA 511 and section 4424 as amended by 2008 PA 497.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 4404. (1) Group life insurance may be issued covering not
less than 2 employees with or without medical examination, written
under a policy issued to the employer or to the trustees of a fund
established by the employer, the premium on which is to be paid by
the employer, the employees, or by the employer and the employees
jointly, and insuring only all of his or her employees, or all of
any class or classes of employees determined by conditions
pertaining to the employment, for amounts of insurance based upon
some plan that will preclude individual selection, for the benefit
of persons other than the employer. This section does not require
an employee to purchase group life insurance. Group life insurance
may be written as part of a combined group life and disability
insurance policy.
(2) A policy issued under subsection (1) may define
"employees" to include 1 or more of the following:
(a) The employees of 1 or more subsidiary corporations.
(b) The employees, individual proprietors, and partners of 1
or more affiliated corporations, proprietorships, or partnerships
if the business of the employer and the affiliated corporations,
proprietorships, or partnerships is under common control.
(c) The retired employees, former employees, and directors of
a corporate employer.
(d) For a policy issued to insure the employees of a public
body, elected or appointed officials.
Sec. 4420. (1) Group life insurance may be issued covering the
executives of employer members of any nonprofit incorporated
industrial
association, which that is now and has been actively
functioning
as such a nonprofit
incorporated industrial association
under its articles of incorporation for a period of not less than
10
years, written under a policy issued to such the association
which
shall be deemed to be that is
the employer for the purposes
of
this chapter, or to the association and the executives of such
the
employer members jointly, and insuring
only all of such the
executives
for amounts of insurance based upon some a plan which
that will preclude individual selection, for the benefit of persons
other
than such the association, and the premium on which shall be
paid by the employer members or the employer members and the
executives
of such the employer members jointly.
(2) In addition to a policy issued under subsection (1), group
life insurance may be issued to an association, other than an
association described under subsection (1), or to a trust or to the
trustees of a fund established or maintained for the benefit of
members of 1 or more associations. Group life insurance shall not
be issued to an association under this subsection unless all of the
following criteria are met:
(a) The association at the outset has not fewer than 100
members.
(b) The association has been organized and maintained for a
purpose other than obtaining insurance.
(c) The association has been in active existence for not less
than 2 years.
(d) The association's bylaws provide for all of the following:
(i) Association members shall meet not less frequently than
annually.
(ii) Except for an association that is a credit union, the
association shall collect dues and solicit contributions from its
members.
(iii) The members shall have voting rights and representation on
the governing board.
(3) A policy issued under subsection (2) is subject to all of
the following:
(a) The policy may insure members of the association,
employees of the association, or employees of members for the
benefit of persons other than the employee's employer.
(b) The premium for the policy shall be paid from money
contributed by 1 or more of the following:
(i) The association.
(ii) Employer members.
(iii) Covered persons.
(c) Except as provided in subdivision (d), a policy on which
no part of the premium shall come from money contributed by the
covered persons specifically for their insurance must insure all
eligible persons, except those eligible persons who reject coverage
in writing.
(d) An insurer may exclude or limit coverage on an individual
as to whom evidence of individual insurability is not satisfactory
to the insurer.
Sec.
4424. (1) The commissioner may authorize the insuring on
a
group insurance basis of groups other than those specifically
defined
in sections 4404 to 4420 if conditions or circumstances
indicate
that granting permission for discretionary group life
insurance
coverages is in the interest of public policy. This
section
does not limit the commissioner to only authorize those
groups
that are logically analagous in character and composition to
the
groups specifically defined in sections 4404 to 4420.
(2)
The commissioner may refuse to grant permission in any
instance
on the basis of a finding that the requested group plan:
(a)
Would not result in economies of acquisition and
administration
that justify a group rate.
(b)
Would present hazards of voluntary adverse selection to a
degree
not usually present in group insurance.
(c)
Would be actuarially unsound.
(d)
Would fail to preclude individual selection among persons
to
be insured under the proposed group plan.
(3)
The discretionary group shall consist of not less than 250
persons.
The discretionary group may consist of only a portion of
the
employees of an employer or of the members of an organization,
if
segregation arises out of reasonable grounds, geographical or
otherwise,
that make it presently impossible or undesirable to
include
in a single group all of the employees or members. The
discretionary
group may consist of employees of more than 1
employer,
or the members of more than 1 organization or
association,
if evidence submitted clearly indicates the
desirability
of embracing the proposed assemblage of individuals
under
a single group. By way of particular, but not in limitation,
the
group may consist of the employees of 1 or more governmental or
quasigovernmental
units, federal, state, municipal, or local.
(4)
If, for reasons that the commissioner determines to be
adequate,
it appears to be impossible or infeasible for the
employer
to be the policyholder in any group authorized under this
section,
the commissioner may authorize the designation of a
trustee
or trustees to be the policyholder, subject to rules the
commissioner
approves.
(5)
The commissioner may authorize discretionary groups and
plans
of group insurance that qualify in all other respects under
this
section although there be no contribution to the premium
payment
from the employer or organization if the commissioner finds
that
circumstances render the contribution inequitable, impossible,
or
impracticable.
(6)
The percentage of employees or members required to
participate
in any group authorized under this section, the types
of
insurance coverage to be offered to the members of the group,
and
the amounts of insurance to be provided, shall be as the
commissioner
determines.
(7)
Before any application for permission to qualify under
this
section is considered, the applicant shall deposit with the
commissioner
a specific fee of $100.00 to defray the costs of
examining
into the circumstances and conditions appertaining to the
proposed
group and group insurance and shall covenant to compensate
the
office of financial and insurance regulation for any additional
unusual
expenses that it may incur. The applicant shall furnish
such
information, documents, and data pertaining to the proposed
group
plan as the commissioner requires to arrive at his or her
determination.
The commissioner shall, from time to time,
promulgate
rules for the enforcement of this section.
(8)
The applicant may appeal from the commissioner's refusal
to
authorize the discretionary group to the circuit court for the
county
of Ingham on the grounds that the refusal is arbitrary or
capricious
and devoid of sound underwriting or actuarial grounds;
but
any fees or costs paid to or incurred by the office of
financial
and insurance regulation under subsection (7) is not
subject
to recovery.Group life
insurance offered to a resident of
this state under a group life insurance policy issued to a group
other than a group described in sections 4404 to 4420 is subject to
all of the following:
(a) A group life insurance policy shall not be issued in this
state unless the director of the department of insurance and
financial services finds all of the following:
(i) The issuance of the group policy is not contrary to the
best interest of the public.
(ii) The issuance of the group policy would result in economies
of acquisition and administration.
(iii) The benefits of the group policy are reasonable in
relation to the premiums charged.
(b) The premium for the policy is paid from the policy
holder's funds, the funds contributed by the covered persons, or
both.
(c) An insurer may exclude or limit the coverage on an
individual as to whom evidence of individual insurability is not
satisfactory to the insurer
Sec. 4426. (1) Insurance under any group life insurance policy
issued
pursuant to under sections 4400, 4404, 4408, 4412, 4420, and
4424 may be extended to insure the eligible dependents of each
insured employee or member who so elects.
(2) The amounts of dependent insurance shall be in accordance
with
a plan which that precludes individual selection.
(3) The premiums for the insurance on dependents may be paid
by the employer or policyholder, or the employee or member, or the
employer or policyholder and the employee or member, jointly.
(4) As used in this section:
(a) "Child" includes a biological, legally adopted, and step
or foster child of an employee or member who is dependent on the
employee or member.
(b) "Eligible dependent" includes the legal spouse and a child
of an employee or member.
Sec.
4434. There shall be Each
group life insurance policy
shall
contain a provision that the policy , and the
application
applications of the employer and, if applicable, of the individual
applicants,
if any, of the employees insured, shall
constitute are
the entire contract between the parties, and that all statements
made by the employer or by the individual employees shall, in the
absence
of fraud, be deemed considered
representations and not
warranties. ,
and that no Any such statement shall not be used in
defense
to a claim under the policy, unless it the statement is
contained in a written application. For purposes of this section,
an enrollment form is not an application described in this section.
Sec.
4438. (1) There shall be a Each group life insurance
policy shall contain a provision that the company will issue to the
employer for delivery to the employee, whose life is insured under
such
the policy, an individual certificate setting forth a
statement
as to the insurance protection to which he is entitled,
to
whom payable, together with provision to the effect that in case
of
the termination of the that
contains all of the following:
(a) A description of the employee's insurance coverage and to
whom the insurance is payable.
(b) A statement that if the employee is terminated from
employment
for any reason, whatsoever the employee shall be is
entitled
to have issued to him the
employee by the company, without
further
evidence of insurability, and upon application made to the
company
within 31 days after such the
termination, and upon the
payment
of the premium applicable to the class of risk to which he
the employee belongs and to the form and amount of the policy at
his
the employee's then attained age, a policy of life insurance in
any 1 of the forms customarily issued by the company, except term
insurance,
in an amount equal to the amount of his protection the
employee's
coverage under such the group
insurance policy at the
time
of such the employee's termination
of employment.
(2) An individual certificate under subsection (1) is notice
to the employee of his or her conversion rights under a group
policy. A separate notice at the time of the employee's termination
is not required.
Sec.
4442. There shall be a Each
group life insurance policy
shall
contain a provision that to the
group or class thereof
originally
insured shall be added from time to time all new
employees
of the employer eligible to insurance in such group or
class.each new employee of an employer shall
periodically be added
to coverage if the new employee satisfies the conditions for
coverage and is in the group or class of an employee originally
insured.
Sec.
4446. (1) Policies of group life insurance, when issued
in
this state by any insurer not organized under the laws of this
state,
may contain, when issued, any provision required by the law
of
the state, or territory, or district of the United States, or
foreign
country, under which the insurer is organized; and policies
issued
in other states or countries by insurers organized in this
state,
may contain any provision required by the laws of the state,
territory,
district or country, in which the same are issued,
anything
in this chapter to the contrary notwithstanding.
(2)
Any such policy may be issued or delivered in this state
which
in the opinion of the commissioner contains provisions on any
1
or more of the several foregoing requirements set forth in
sections
4432 through 4442 more favorable to the employer or to the
employee
than in such sections required.A
group policy offered by
an insurer issued in another state shall not be issued in this
state unless the director of the department of insurance and
financial services determines that requirements substantially
similar to section 4424(a) have been met.