Michigan Senate Bill SB0495

Michigan 2023-2024 Regular Session

• Introduced: 9/14/23
• Refer: 9/14/23
• Report Pass: 6/13/24
• Refer: 6/13/24
• Report Pass: 6/18/24
• Engrossed: 6/20/24
• Refer: 6/20/24

Caption

Insurance: fraternal benefit societies; liquidation and rehabilitation procedures; modify. Amends sec. 8182 of 1956 PA 218 (MCL 500.8182) & adds secs. 8199b & 8199c.

Impact

The amendments proposed in SB 0495 are expected to provide a clearer framework for the financial health and operational standard of fraternal benefit societies. By outlining definitive rehabilitation and liquidation processes, the bill aims to enhance member protections and instill greater confidence among policyholders. It also emphasizes the responsibilities of societies in maintaining equitable reserves and allows for necessary interventions if a society's ability to meet obligations is in jeopardy. This legislative change thus seeks to balance the needs of societal members with the operational realities of fraternal benefit societies.

Summary

Senate Bill 0495 seeks to amend the Insurance Code of 1956, specifically focusing on the operations of fraternal benefit societies. The bill includes provisions that modify the procedures for liquidation and rehabilitation of these societies. One key change involves allowing the director of insurance to order a fraternal benefit society to remedy situations considered hazardous to policyholders, specifically if the society's operations pose a risk to member interests. Furthermore, the proposed changes establish new guidelines for the management of impaired reserves, which includes stipulation for the owners of benefit contracts to address any deficiencies identified by the society's board of directors.

Sentiment

The sentiment surrounding SB 0495 appears generally supportive among legislators who recognize the need for updated regulatory frameworks in light of changing economic conditions. There has been acknowledgment of the importance of protecting members' interests while ensuring that fraternal societies can operate sustainably. Nonetheless, there may be concerns from smaller societies about the potential compliance burdens that could emerge from the heightened regulatory scrutiny, which may introduce debate around the practicality of these amendments.

Contention

Notable points of contention revolve around the interpretation of what constitutes a 'hazardous condition' and the extent of the powers granted to the director of insurance. Stakeholders may question the scope of authority placed in the director, as the bill includes provisions allowing for significant regulatory interventions without extensive member consultation. The balance between enhancing consumer protections and affording societies with operational flexibility remains a pivotal topic in discussions surrounding the bill.