BillCam

HOUSE BILL No. 5430

January 18, 2018, Introduced by Reps. Theis, Leutheuser, Bizon, Webber, Love, Kelly, Alexander, Vaupel, Calley and Kahle and referred to the Committee on Insurance.

A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

by amending sections 527, 1511, 1613, 1625, and 2248 (MCL 500.527,

500.1511, 500.1613, 500.1625, and 500.2248), section 527 as added

by 2001 PA 24, sections 1613 and 1625 as added by 2002 PA 655, and

section 2248 as amended by 2012 PA 454, and by adding section 2266.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 527. (1) A licensee shall provide any notice required

under this chapter so that each consumer can reasonably be expected

to receive actual notice in writing or, if the consumer agrees,

electronically. A licensee may reasonably expect that a consumer

will receive actual notice if the licensee does any of the

following:

(a) Hand delivers a printed copy of the notice to the

consumer.

(b) Mails a printed copy of the notice to the last known

address of the consumer separately, or in a policy, billing, or

other written communication.

transactions electronically, posts the notice on the electronic

site and requires the consumer to acknowledge receipt of the notice

as a necessary step to obtaining a particular insurance product or

service.

(d) For an isolated transaction with a consumer, such as the

licensee providing an insurance quote or selling the consumer

travel insurance, posts the notice and requires the consumer to

acknowledge receipt of the notice as a necessary step to obtaining

the particular insurance product or service.

(2) The following do not provide a reasonable expectation that

a consumer will receive actual notice of a licensee's privacy

policies and practices under subsection (1):

(a) The licensee only posts a sign in its office or generally

publishes advertisements of its privacy policies and practices.

(b) The licensee sends the notice via electronic mail to a

consumer who does not obtain an insurance product or service from

the licensee electronically.

(3) A Subject to section 2266, a licensee may reasonably

expect that a customer will receive actual notice of the licensee's

annual notice in either of the following cases:circumstances:

(a) The customer uses the licensee's website to access

insurance products and services electronically and agrees to

receive notices at the website and the licensee posts its current

privacy notice continuously in a clear and conspicuous manner on

the website.

(b) The customer has requested that the licensee refrain from

sending any information regarding the customer relationship, and

the licensee's current privacy notice remains available to the

customer upon on request.

(4) A licensee shall not provide any notice required by this

chapter solely by orally explaining the notice, either in person or

over the telephone.

(5) For customers only, a licensee shall provide the initial,

annual, and revised notices so that the customer can retain them or

obtain them later in writing or, subject to section 2266, if the

customer agrees, electronically. A licensee provides an initial,

annual, or revised notice to the customer so that the customer can

retain it or obtain it later if the licensee does any of the

following:

(a) Hand delivers a printed copy of the notice to the

customer.

(b) Mails a printed copy of the notice to the last known

address of the customer.

annual, or revised notice available on a website or a link to

another website for the customer who obtains an insurance product

or service electronically and agrees to receive the notice at the

website.

(6) A licensee may provide a joint notice from the licensee

and 1 or more of its affiliates or other financial institutions, as

identified in the notice, if the notice is accurate with respect to

the licensee and the other institutions. A licensee may also

provide a notice on behalf of another financial institution, as

identified in the notice, if the notice is accurate with respect to

the licensee and the other institution.

(7) If 2 or more consumers jointly obtain an insurance product

or service from a licensee, the licensee may satisfy the initial,

annual, and revised notice requirements by providing 1 notice to

those consumers jointly.

Sec. 1511. (1) When If a premium finance agreement empowers

the premium finance company to cancel any an insurance contract or

contracts listed in the agreement, the premium finance company

shall not cancel the insurance contract or contracts shall not be

canceled by the premium finance company unless such the

cancellation is effectuated in accordance with this section.

(2) Not less than 10 days' written notice shall must be mailed

to the insured of the intent of the premium finance company to

cancel the insurance contract unless the default is cured within

the 10-day period.

(3) After expiration of the 10-day period under subsection

(2), the premium finance company may request cancellation of the

insurance contract by mailing to the insurer a notice of

cancellation, and the insurer shall cancel the insurance contract

shall be cancelled by the insurer without requiring the return of

the insurance contract. The Subject to section 2266, the premium

finance company shall also mail a notice of cancellation to the

insured at his or her last known address at the same time the

premium finance company requests cancellation of the insurance

contract.

(4) All statutory, regulatory and contractual restrictions

providing that the insurance contract may not be canceled unless

notice is given to a governmental agency, mortgagee, or other third

party shall apply where if the cancellation is effected under the

provisions of this section. The insurer shall give the prescribed

notice in on behalf of itself or the insured to any governmental

agency, mortgagee, or other third party on or before the second

business day after the day it receives the notice of cancellation

from the premium finance company and shall determine the effective

date of cancellation taking into consideration the number of days'

notice required to complete the cancellation.

(5) Whenever If a financed contract is canceled, the insurer

shall return whatever the gross unearned premiums are due under the

insurance contract to the premium finance company for the account

of the insured.

(6) If the crediting of return premiums to the account of the

insured results in a surplus over the amount due from the insured,

the premium finance company shall refund the excess to the insured.

, but However, no refund shall be is required if it amounts to the

excess is less than $1.00.

Sec. 1613. Creditor-placed insurance shall must be set forth

in an individual policy or certificate of insurance. A Except as

otherwise provided in section 2266, a copy of the individual

policy, certificate of insurance coverage, or other evidence of

insurance coverage shall must be mailed, first-class mail, or

delivered in person to the last known address of the debtor.

Sec. 1625. (1) A creditor shall not impose charges, including

premium costs and related interest and finance charges, on a debtor

for creditor-placed insurance coverage unless adequate disclosure

of the requirement to maintain insurance has been made to the

debtor. Adequate disclosure is accomplished if all of the following

occur:

(a) The credit agreement sets forth the requirement that the

debtor must maintain insurance on the collateral as provided for in

section 1621.

(b) The creditor makes reasonable efforts to notify the debtor

of the requirement to maintain insurance and allows a reasonable

time for compliance with this requirement.

debtor.

(d) If creditor-placed insurance coverage is issued, a copy of

the policy or certificate is sent to the debtor as provided for in

section 1613.

(2) After adequate disclosure of the request to maintain

insurance has been made to the debtor as required by under this

section, a creditor may proceed to impose charges for creditor-

placed insurance if the debtor fails to provide evidence of

insurance. A creditor may impose charges no earlier than 10 days

after sending the final notice.

(3) Reasonable efforts to notify the debtor under subsection

(1)(b) are accomplished if the creditor does all of the following:

(a) Mails Except as otherwise provided in section 2266, mails

a notice by first-class mail to the debtor's last known address as

contained in the creditor's records, stating that the creditor

intends to charge the debtor for creditor-placed insurance coverage

on the collateral if the debtor fails to provide evidence of the

property insurance to the creditor.

(b) Allows the debtor at least 20 days to respond to the

notice and provide evidence of acceptable insurance coverage before

sending a final notice.

a final notice in compliance with this section by first-class mail

to the debtor's last known address as contained in the creditor's

records at least 10 days before the cost of insurance is charged to

the debtor by the creditor. Proof of the mailing of the final

notice shall must be retained for at least 3 years following the

expiration or termination of the coverage or as otherwise required

by law.

(4) The initial notice under this section shall must be in a

form determined by the creditor to remind the debtor of the

requirement to maintain insurance on the collateral. The final

notice under this section shall must be as complete as the

following notice, printed in not less than 12-point type, and

modified where necessary to fit the nature of the credit

transaction:

FINAL NOTICE

Your credit agreement with us requires you to have property

insurance on the collateral until you pay off your loan. You have

not given us proof you have insurance on the property. You can ask

your insurance company or agent to give us proof of insurance or

you can send us proof you have property insurance within 10

calendar days after the date this letter was postmarked. If you do

not, we will buy the insurance and charge the cost to you.

You must pay for the property insurance we buy. It may cost

more than insurance you can buy on your own. The cost of the

insurance we buy may be added to your loan balance and we may

charge you interest on it. If we do, you will pay interest at the

same rate you pay on your loan.

The insurance we buy will pay claims to us (the creditor) for

physical damage to your property. It will not pay any claims made

against you [and it may not pay you for any claims you make (delete

if limited dual interest coverage)]. The insurance we buy will not

give you any liability insurance coverage and will not meet the

requirements of a state's financial responsibility law.

We may receive compensation for placing this insurance, which

is included in the cost of coverage charged to you.

The property coverage we buy will start on the date shown in

the policy or certificate, which may go back to the date of the

loan or the date your prior coverage stopped. We will cancel the

insurance we bought for you and give you a refund or credit of

unearned charges if you give us proof you have bought property

insurance somewhere else or if you have paid off the loan.

(5) All creditor-placed insurance shall must be set forth in

an individual policy or certificate of insurance. Not Subject to

section 2266, not earlier than the sending of the final notice nor

or 25 days after a charge is made to the debtor for creditor-placed

insurance coverage, the creditor shall cause a copy of the

individual policy, certificate, or other evidence of insurance

coverage evidencing the creditor-placed insurance coverage to be

sent, first-class mail, to the debtor's last known address.

(6) A creditor's compliance with or failure to comply with

this chapter shall does not be construed to require the creditor to

purchase insurance coverage on the collateral, and the creditor is

not liable to the debtor or a third party as a result because of

its failure to purchase the insurance.

Sec. 2248. (1) A policy of insurance against fire, theft,

property damage, collision, or liability in connection with

automobile coverage shall must not be issued unless the policy, or

an exact copy of the policy, is delivered to the insured.

(2) For purposes of this section, a personal automobile

insurance policy and endorsements that do not contain personally

identifiable information may be delivered by mailing, delivery, or

posting on the insurer's internet website. If the insurer elects to

post an insurance policy and endorsements on its internet website

in lieu instead of mailing or delivering them to the named insured,

the insurer shall comply with all of the following conditions:

(a) The policy and endorsements are easily accessible and

remain easily accessible for as long as while the policy is in

force.

(b) After the expiration of the policy, the insurer archives

the policy and endorsements and makes them available on request at

no charge or for a reasonable charge.

enables the insured to print and save the policy and endorsements

using programs or applications that are widely available on the

internet and free to use.

(d) The insurer provides notice to the named insured with each

declarations page of a method by which an insured may obtain, on

request and without charge, a paper or electronic copy of the

policy or endorsements.

(e) On each declarations page issued to an the insured, the

insurer clearly identifies the exact policy and endorsement forms

purchased by the insured.

(f) The insurer provides notice, in the manner by which it

customarily communicates with a named insured, of any of the

changes to the forms or endorsements and the an insured's right to

obtain, on request and without charge, a paper copy of the forms or

endorsements.

Sec. 2266. (1) Subject to the requirements of this section, a

notice to a party or any other document that is required in an

insurance transaction or that is to serve as evidence of insurance

coverage may be delivered, stored, and presented by electronic

means if it meets the requirements of the uniform electronic

transactions act, 2000 PA 305, MCL 450.831 to 450.849.

(2) Electronic delivery of a notice or document as provided in

this section is equivalent to any delivery method otherwise

required by law, including delivery by first-class mail, first-

class mail postage prepaid, certified mail, or certificate of

mailing.

(3) If an insurer has reason to believe that a party is not

receiving notices or documents that the insurer attempts to deliver

by electronic means, including if the insurer attempts delivery by

electronic means and receives a notice that the delivery by

electronic means has failed, the insurer shall deliver the notices

or documents by first-class mail or by any other delivery method

required for the notices or documents.

(4) An insurer may use electronic delivery of a notice or a

document to a party under this section if the insurer meets the

requirements of subsection (5) and if all of the following

requirements are met:

(a) The party has affirmatively consented to the electronic

delivery method and has not withdrawn consent.

(b) Before giving consent, the insurer provides the party with

a clear and conspicuous statement informing the party of all of the

following:

(i) The right of the party at any time to have the notice or

the document provided or made available in paper form or by another

nonelectronic form.

(ii) The right of the party at any time to withdraw consent to

have a notice or document delivered by electronic means and any

conditions or consequences imposed if consent is withdrawn.

(iii) The specific notice or document or categories of notices

or documents that may be delivered by electronic means during the

course of the relationship between the insurer and the party.

(iv) The means, after consent is given, by which the party may

obtain a paper copy of a notice or document delivered by electronic

means.

(v) The procedures for the party to follow to update

information needed to contact the party electronically and to

withdraw consent to have a notice or a document delivered by

electronic means.

a statement of the hardware and software requirements for access to

and retention of a notice or document delivered by electronic

means. The party shall provide electronic consent to the hardware

and software requirements or confirm consent electronically in a

manner that reasonably demonstrates that the party can access

information in the electronic form that will be used for notices or

documents delivered by electronic means.

(5) After the party consents as provided in subsection (4), if

a change occurs in hardware or software needed to access or retain

a notice or document delivered by electronic means that creates a

material risk that the party will not be able to access or retain a

notice or document to which consent applies, the insurer shall

provide the party with a statement that includes all of the

following:

(a) Information regarding the revised hardware or software

requirements for access to and retention of a notice or document

delivered by electronic means.

(b) A description of the right of the party to withdraw

consent without the imposition of any condition or consequence that

was not disclosed under subsection (4)(b)(ii).

(6) Withdrawal of consent to electronic delivery does not

affect the legal effectiveness, validity, or enforceability of a

notice or a document that is delivered by electronic means to a

party before the withdrawal of consent is effective.

(7) Except as otherwise provided in this subsection,

withdrawal of consent by a party becomes effective 15 days after

the insurer receives notice of the withdrawal. A withdrawal becomes

effective immediately if the insurer learns that the electronic

delivery method currently used is no longer an effective delivery

mechanism.

(8) Failure by an insurer to comply with subsection (5) may be

treated, at the election of the party, as a withdrawal of consent.

(9) This section must not be construed to modify, limit, or

supersede the federal electronic signatures in global national

commerce act, 15 USC 7001 to 7031.

(10) As used in this section:

(a) "Delivered by electronic means", "delivery by electronic

means", or "electronic delivery" mean delivery by either of the

following methods:

(i) Delivery to an electronic mail address at which a party

has consented to receive notices or documents.

(ii) Both of the following:

(A) Posting on an electronic network or site accessible by the

internet through use of a mobile application, computer, mobile

device, tablet, or any other electronic device.

(B) Sending separate notice of the posting described in sub-

subparagraph (A) to the electronic mail address at which the party

consented to receive notice of the posting or using any other

delivery method to which the party has consented.

(b) "Party" means a recipient of a notice or document required

as part of an insurance transaction and includes an applicant,

insured, policy holder, or annuity contract holder.