Insurance: insurers; processing of a claim; modify duties. Amends secs. 2005, 2006, 2026 & 2049 of 1956 PA 218 (MCL 500.2005 et seq.) & adds sec. 2005b & ch. 30B.
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Senate
- Passed House
- To Governor
- Became Law
Overview
This bill modifies the duties of insurance companies in Michigan by strengthening regulations around claim processing and preventing unfair practices. It amends existing insurance code sections to clarify what constitutes misleading statements in insurance estimates and policies, and adds new provisions addressing bad-faith settlement practices and timely claim payments. The bill also introduces a new chapter outlining a civil cause of action for policyholders harmed by insurer misconduct.
Key provisions
- Clarifies what constitutes an ‘unfair method of competition’ and ‘unfair or deceptive act or practice’ in insurance, including specific examples related to misleading policy information.
- Establishes requirements for timely claim payments and interest accrual if claims are not paid promptly.
- Creates a ‘bad-faith failure to settle’ standard, allowing policyholders to recover additional damages if insurers unreasonably delay settlement offers.
- Adds a new chapter (30B) outlining a civil cause of action for policyholders harmed by insurer misconduct, including penalties and attorney fees.
- Specifies procedures for health plans to ensure timely processing and payment of claims to healthcare providers.
- Defines ‘clean claims’ and establishes timelines for claim processing and payment.
- Addresses the issue of interest accrual on unpaid claims, with higher rates for bad-faith claims.
- Provides for potential punitive damages in cases of willful or reckless insurer misconduct.
Bill text
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