Michigan Senate Bill SB0357

Michigan 2023-2024 Regular Session

• Introduced: 5/24/23
• Refer: 5/24/23
• Report Pass: 6/14/23
• Refer: 6/14/23
• Engrossed: 6/14/23
• Report Pass: 10/5/23
• Enrolled: 10/17/23
• Chaptered: 10/24/23
• Passed: 10/24/23

Caption

Insurance: health insurers; prohibition on rescission of coverage; provide for. Amends sec. 2213b of 1956 PA 218 (MCL 500.2213b) & adds sec. 2213e.

Impact

This bill significantly impacts state health insurance laws, particularly by establishing clearer rules for insurers regarding policy cancellations. It mandates that insurers must guarantee renewal of health policies at the option of the insured, making it harder for them to deny coverage due to factors such as misrepresentation unless sufficient proof is provided. This is intended to not only protect consumers from abrupt terminations of their health insurance but also to ensure that individuals maintain access to health coverage without unpredictable interruptions.

Summary

Senate Bill 357 aims to amend the 1956 Public Act 218 regarding the insurance and surety business in Michigan. The primary focus of the bill is on the provisions that govern health insurance policies, particularly concerning the rescission of coverage and mandatory renewal of policies. Under this bill, insurers are prohibited from rescinding coverage unless there is a proven act of fraud or intentional misrepresentation by the insured. Additionally, insurers are required to provide a 30-day notice before rescission takes effect, aiming to enhance transparency and protect consumers from sudden loss of coverage.

Sentiment

The sentiment around SB 357 has been generally positive, with advocates arguing that it strengthens consumer protection in the healthcare market. They highlight the importance of stability and predictability in health coverage, particularly for vulnerable populations who depend on consistent insurance access. Critics, however, express concerns regarding the implications for insurers in managing risks and operational costs, with fears that stricter rules on policy rescission might lead to higher premiums as insurers compensate for these risks.

Contention

While the bill promotes consumer rights, it does raise points of contention among insurance companies who may view the restrictions on rescission as an encroachment on their operational autonomy. Insurers argue that such regulations could encourage fraudulent practices or lead to higher costs for consumers as they adjust their pricing models to account for the potential increase in high-risk clients. The debate centers on finding a balance between protecting consumers and allowing insurers to maintain a viable business model in a competitive market.