Michigan House Bill HB5473

Michigan 2023-2024 Regular Session

• Introduced: 2/22/24
• Refer: 2/22/24

Caption

Insurance: other; the insurance code of 1956; amend to reflect amendments to the public health code. Amends sec. 2006 of 1956 PA 218 (MCL 500.2006). TIE BAR WITH: HB 5477'24

Impact

This bill will have a significant impact on both insurance providers and their clients in Michigan. It strengthens the rights of insured individuals and claimants by ensuring that they receive benefits promptly, which can be crucial, especially in health-related claims. The imposition of a statutory interest on delayed payments highlights the urgency of complying with payment obligations, thereby reducing the incidence of unfair trade practices among insurers. State laws concerning insurance claims will be tightened, potentially leading to improved efficiency and fairness in claims management.

Summary

House Bill 5473 seeks to amend the Insurance Code of 1956, specifically targeting the timely payment of claims made by insured individuals and third-party claimants. The bill stipulates that insurers must pay out benefits as per the insurance policy terms in a timely manner. If claim payments are delayed without just cause, the bill mandates that claimants are entitled to a simple interest of 12% per annum on the unpaid amount starting from the 60th day after satisfactory proof of loss is received by the insurer. This aims to enforce accountability among insurers regarding their claims processing obligations.

Contention

While the bill is designed to protect consumers, there may be contention regarding its practical implications for insurance companies. Some stakeholders argue that the stipulations for timely payment could place undue pressure on insurers, especially in complex claims where disputes may arise over liability or the scope of coverage. There is a concern that the bill might lead insurers to be more conservative in their claims approvals to mitigate financial risks associated with potential interest payments on delayed claims. Balancing the interests of both consumers and insurers will be crucial in the legislative discussions surrounding this bill.