| 1 | 1 | | HOUSE BILL NO. 6106 A bill to amend 1956 PA 218, entitled "The insurance code of 1956," by amending sections 4621 and 4625 (MCL 500.4621 and 500.4625), section 4621 as amended by 2018 PA 397 and section 4625 as added by 2008 PA 29. the people of the state of michigan enact: Sec. 4621. (1) A captive insurance company is not required to make an annual report except as provided in this chapter. (2) Annually, not later than 60 days after the end of a captive insurance company's fiscal year, the captive insurance company shall submit to the director a report of its financial condition, verified by oath of 2 of its executive officers. A captive insurance company may report using generally accepted accounting principles or, with the approval of the director, international financial reporting standards or statutory accounting principles, with useful or necessary modifications or adaptations required or approved or accepted by the director for the type of insurance and kinds of insurers to be reported on, and as supplemented by additional information required by the director. The director may prescribe the form and manner in which captive insurance companies shall report. Information submitted under this section is confidential as provided in section 4609. (3) The director may address inquiries to a captive insurer concerning the insurer's activities or conditions or any other matter connected with the insurer's transactions. An insurer addressed under this subsection shall reply in writing to each inquiry from the director within not later than 30 days after receipt of the inquiry. (4) The director may require interim reporting on any of the captive insurer's business, including any matter, condition, or requirement regulated by under this chapter. The director shall prescribe the format and content of the interim report. (5) A captive insurer that fails to file a report required by under this section, or fails to reply within 30 days to an inquiry of the director, is subject to a civil penalty of not less than $1,000.00 or more than $5,000.00 per occurrence, and an additional $50.00 for every day that the captive insurer fails to file the report or reply to the inquiry. In addition, a captive insurer that fails to file a report, or fails to make a satisfactory reply to an inquiry of the director concerning the captive insurer's affairs, is subject to proceedings under section 4637. (6) A pure captive insurance company may make written application for filing the annual report on a fiscal year end that is consistent with the parent company's fiscal year. The annual report must be on a form prescribed by the director. (7) A branch captive insurance company shall file with the director 60 days after the fiscal year end a copy of all reports and statements required to be filed under the laws of the jurisdiction in which the alien captive insurance company is formed, verified by oath by 2 of its executive officers. If the director is satisfied that the annual report filed by the alien captive insurance company in its domiciliary jurisdiction provides adequate information concerning the financial condition of the alien captive insurance company, the director may waive the requirement for completion of the captive annual statement. (8) A captive insurance company shall annually submit to the director the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the reserves are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. The actuarial opinion required by under this section must be submitted in a form prescribed by the director. For purposes of this section, "qualified actuary" means a member of either the American Academy of Actuaries or the Society of Actuaries who also meets any other criteria that the director may establish by rule, regulation, or order. (9) Not later than 5 months after the fiscal year end of the captive insurance company, the captive insurance company shall file with the director audited financial statements prepared by an independent public accountant. The independent public accountant must be an independent certified public accountant or accounting firm in good standing with the American Institute of Certified Public Accountants and in good standing in each state in which the independent public accountant is licensed to practice. Sec. 4625. (1) No provisions of this act, This act, other than those provisions specifically referenced in this chapter, does not apply to a captive insurance company, and those provisions apply only as modified by this chapter. If a conflict occurs between a provision of this act and a provision of this chapter, this chapter controls. (2) The commissioner by rule, regulation, or order director may exempt special purpose captive insurance companies, on a case-by-case basis, from provisions of this chapter that the commissioner director determines to be inappropriate given the nature of the risks to be insured. (3) Sections 210 to 222, 226 to 238, 244 to 251, and 2057 to 2062, and chapter 45 apply to captive insurance companies. (4) The expenses and charges of a captive insurance company examination shall must be paid to the this state by the captive insurance company or companies examined, and the office department shall issue warrants for the proper charges incurred in all examinations. The payments received by the this state shall must be deposited into the captive insurance regulatory and supervision fund. (5) A captive insurance company shall pay an annual renewal fee by March 1 of each calendar year. not later than 90 days after the captive insurance company's fiscal year ends. The annual renewal fee shall must be calculated based upon on the annual volume of insurance or reinsurance premiums received by the captive insurance company as follows: (a) For annual premiums less than $5,000,000.00, the renewal fee shall be is $5,000.00. (b) For annual premiums equal to or greater than $5,000,000.00, but less than $10,000,000.00, the renewal fee shall be is $10,000.00. (c) For annual premiums equal to or greater than $10,000,000.00, but less then $15,000,000.00, the renewal fee shall be is $15,000.00. (d) For annual premiums equal to or greater than $15,000,000.00, but less than $25,000,000.00, the renewal fee shall be is $25,000.00. (e) For annual premiums equal to or greater than $25,000,000.00, but less than $40,000,000.00, the renewal fee shall be is $40,000.00. (f) For annual premiums equal to or greater than $40,000,000.00, but less than $55,000,000.00, the renewal fee shall be is $50,000.00. (g) For annual premiums equal to or greater than $55,000,000.00, but less than $75,000,000.00, the renewal fee shall be is $75,000.00. (h) For annual premiums equal to or greater than $75,000,000.00, the renewal fee shall be is $100,000.00. (6) The office department may charge a $15.00 fee for any document requiring certification of authenticity or the signature of the commissioner. director. The payments received shall must be deposited into the captive insurance regulatory and supervision fund. (7) The office director may charge a fee of $25.00 payable to the attorney general for the examination of any amendment to the organizational documents. (8) Notwithstanding any other provision of law, the commissioner director may employ legal counsel as he or she the director considers necessary to assist in his or her the director's responsibilities under this chapter. (9) The confidentiality provisions of this chapter do not extend to final examination reports produced by the commissioner director in inspecting or examining a captive insurance company formed as a risk retention group under the liability risk retention act of 1986, 15 USC 3901 to 3906. (10) Section 222 applies to all business written by a captive insurance company except that the examination for a branch captive insurance company shall must be of branch business and branch operations only, as long as if the branch captive insurance company provides annually to the commissioner, director a certificate of compliance, or its equivalent, issued by or filed with the licensing authority of the jurisdiction in which the branch captive insurance company is formed and demonstrates to the commissioner's director's satisfaction that it is operating in sound financial condition in accordance with all applicable laws and regulations of that jurisdiction. |
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| 23 | 23 | | HOUSE BILL NO. 6106 |
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| 26 | 26 | | |
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| 27 | 27 | | A bill to amend 1956 PA 218, entitled |
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| 28 | 28 | | |
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| 29 | 29 | | "The insurance code of 1956," |
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| 30 | 30 | | |
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| 31 | 31 | | by amending sections 4621 and 4625 (MCL 500.4621 and 500.4625), section 4621 as amended by 2018 PA 397 and section 4625 as added by 2008 PA 29. |
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| 32 | 32 | | |
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| 33 | 33 | | the people of the state of michigan enact: |
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| 34 | 34 | | |
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| 35 | 35 | | Sec. 4621. (1) A captive insurance company is not required to make an annual report except as provided in this chapter. |
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| 36 | 36 | | |
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| 37 | 37 | | (2) Annually, not later than 60 days after the end of a captive insurance company's fiscal year, the captive insurance company shall submit to the director a report of its financial condition, verified by oath of 2 of its executive officers. A captive insurance company may report using generally accepted accounting principles or, with the approval of the director, international financial reporting standards or statutory accounting principles, with useful or necessary modifications or adaptations required or approved or accepted by the director for the type of insurance and kinds of insurers to be reported on, and as supplemented by additional information required by the director. The director may prescribe the form and manner in which captive insurance companies shall report. Information submitted under this section is confidential as provided in section 4609. |
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| 38 | 38 | | |
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| 39 | 39 | | (3) The director may address inquiries to a captive insurer concerning the insurer's activities or conditions or any other matter connected with the insurer's transactions. An insurer addressed under this subsection shall reply in writing to each inquiry from the director within not later than 30 days after receipt of the inquiry. |
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| 40 | 40 | | |
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| 41 | 41 | | (4) The director may require interim reporting on any of the captive insurer's business, including any matter, condition, or requirement regulated by under this chapter. The director shall prescribe the format and content of the interim report. |
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| 42 | 42 | | |
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| 43 | 43 | | (5) A captive insurer that fails to file a report required by under this section, or fails to reply within 30 days to an inquiry of the director, is subject to a civil penalty of not less than $1,000.00 or more than $5,000.00 per occurrence, and an additional $50.00 for every day that the captive insurer fails to file the report or reply to the inquiry. In addition, a captive insurer that fails to file a report, or fails to make a satisfactory reply to an inquiry of the director concerning the captive insurer's affairs, is subject to proceedings under section 4637. |
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| 44 | 44 | | |
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| 45 | 45 | | (6) A pure captive insurance company may make written application for filing the annual report on a fiscal year end that is consistent with the parent company's fiscal year. The annual report must be on a form prescribed by the director. |
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| 46 | 46 | | |
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| 47 | 47 | | (7) A branch captive insurance company shall file with the director 60 days after the fiscal year end a copy of all reports and statements required to be filed under the laws of the jurisdiction in which the alien captive insurance company is formed, verified by oath by 2 of its executive officers. If the director is satisfied that the annual report filed by the alien captive insurance company in its domiciliary jurisdiction provides adequate information concerning the financial condition of the alien captive insurance company, the director may waive the requirement for completion of the captive annual statement. |
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| 48 | 48 | | |
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| 49 | 49 | | (8) A captive insurance company shall annually submit to the director the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the reserves are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. The actuarial opinion required by under this section must be submitted in a form prescribed by the director. For purposes of this section, "qualified actuary" means a member of either the American Academy of Actuaries or the Society of Actuaries who also meets any other criteria that the director may establish by rule, regulation, or order. |
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| 50 | 50 | | |
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| 51 | 51 | | (9) Not later than 5 months after the fiscal year end of the captive insurance company, the captive insurance company shall file with the director audited financial statements prepared by an independent public accountant. The independent public accountant must be an independent certified public accountant or accounting firm in good standing with the American Institute of Certified Public Accountants and in good standing in each state in which the independent public accountant is licensed to practice. |
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| 52 | 52 | | |
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| 53 | 53 | | Sec. 4625. (1) No provisions of this act, This act, other than those provisions specifically referenced in this chapter, does not apply to a captive insurance company, and those provisions apply only as modified by this chapter. If a conflict occurs between a provision of this act and a provision of this chapter, this chapter controls. |
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| 54 | 54 | | |
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| 55 | 55 | | (2) The commissioner by rule, regulation, or order director may exempt special purpose captive insurance companies, on a case-by-case basis, from provisions of this chapter that the commissioner director determines to be inappropriate given the nature of the risks to be insured. |
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| 56 | 56 | | |
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| 57 | 57 | | (3) Sections 210 to 222, 226 to 238, 244 to 251, and 2057 to 2062, and chapter 45 apply to captive insurance companies. |
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| 58 | 58 | | |
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| 59 | 59 | | (4) The expenses and charges of a captive insurance company examination shall must be paid to the this state by the captive insurance company or companies examined, and the office department shall issue warrants for the proper charges incurred in all examinations. The payments received by the this state shall must be deposited into the captive insurance regulatory and supervision fund. |
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| 60 | 60 | | |
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| 61 | 61 | | (5) A captive insurance company shall pay an annual renewal fee by March 1 of each calendar year. not later than 90 days after the captive insurance company's fiscal year ends. The annual renewal fee shall must be calculated based upon on the annual volume of insurance or reinsurance premiums received by the captive insurance company as follows: |
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| 62 | 62 | | |
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| 63 | 63 | | (a) For annual premiums less than $5,000,000.00, the renewal fee shall be is $5,000.00. |
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| 64 | 64 | | |
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| 65 | 65 | | (b) For annual premiums equal to or greater than $5,000,000.00, but less than $10,000,000.00, the renewal fee shall be is $10,000.00. |
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| 66 | 66 | | |
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| 67 | 67 | | (c) For annual premiums equal to or greater than $10,000,000.00, but less then $15,000,000.00, the renewal fee shall be is $15,000.00. |
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| 68 | 68 | | |
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| 69 | 69 | | (d) For annual premiums equal to or greater than $15,000,000.00, but less than $25,000,000.00, the renewal fee shall be is $25,000.00. |
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| 70 | 70 | | |
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| 71 | 71 | | (e) For annual premiums equal to or greater than $25,000,000.00, but less than $40,000,000.00, the renewal fee shall be is $40,000.00. |
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| 72 | 72 | | |
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| 73 | 73 | | (f) For annual premiums equal to or greater than $40,000,000.00, but less than $55,000,000.00, the renewal fee shall be is $50,000.00. |
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| 74 | 74 | | |
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| 75 | 75 | | (g) For annual premiums equal to or greater than $55,000,000.00, but less than $75,000,000.00, the renewal fee shall be is $75,000.00. |
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| 76 | 76 | | |
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| 77 | 77 | | (h) For annual premiums equal to or greater than $75,000,000.00, the renewal fee shall be is $100,000.00. |
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| 78 | 78 | | |
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| 79 | 79 | | (6) The office department may charge a $15.00 fee for any document requiring certification of authenticity or the signature of the commissioner. director. The payments received shall must be deposited into the captive insurance regulatory and supervision fund. |
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| 80 | 80 | | |
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| 81 | 81 | | (7) The office director may charge a fee of $25.00 payable to the attorney general for the examination of any amendment to the organizational documents. |
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| 82 | 82 | | |
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| 83 | 83 | | (8) Notwithstanding any other provision of law, the commissioner director may employ legal counsel as he or she the director considers necessary to assist in his or her the director's responsibilities under this chapter. |
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| 84 | 84 | | |
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| 85 | 85 | | (9) The confidentiality provisions of this chapter do not extend to final examination reports produced by the commissioner director in inspecting or examining a captive insurance company formed as a risk retention group under the liability risk retention act of 1986, 15 USC 3901 to 3906. |
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| 86 | 86 | | |
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| 87 | 87 | | (10) Section 222 applies to all business written by a captive insurance company except that the examination for a branch captive insurance company shall must be of branch business and branch operations only, as long as if the branch captive insurance company provides annually to the commissioner, director a certificate of compliance, or its equivalent, issued by or filed with the licensing authority of the jurisdiction in which the branch captive insurance company is formed and demonstrates to the commissioner's director's satisfaction that it is operating in sound financial condition in accordance with all applicable laws and regulations of that jurisdiction. |
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