Michigan Senate Bill SB1088

Michigan 2023-2024 Regular Session

• Introduced: 11/13/24
• Refer: 11/13/24

Caption

Insurance: other; penalties for late payment of claims; increase. Amends secs. 2006 & 3142 of 1956 PA 218 (MCL 500.2006 & 500.3142).

Impact

If enacted, SB1088 would significantly alter the operational landscape for insurance companies in Michigan. By establishing clear timelines for claims processing, the bill is anticipated to improve the flow of payments and enhance the financial conditions for consumers awaiting claim settlements. Insurers would be held more accountable for delays, as the increased potential financial penalties for late payments may compel them to prioritize efficient claims handling and adherence to due processes.

Summary

Senate Bill 1088 seeks to amend sections of the Michigan insurance code to enhance the penalties for insurers that do not process and pay claims within designated timeframes. The bill stipulates that insurance providers are required to compensate insured parties and third-party claimants with a specific interest rate of 12% per annum if claims are not paid in a timely manner. Specifically, the legislation outlines deadlines for insurers to settle claims and provides a detailed framework outlining how interest is accrued on overdue payments depending on how late the payment is made, with rates increasing for longer delays.

Contention

Despite its potential benefits, the bill may face opposition from insurance providers who could argue that the additional financial liabilities and penalties may lead to increased costs for consumers. Critics might contend that the stricter timelines could hinder insurers from conducting thorough evaluations of claims, potentially resulting in premature payment decisions. Consequently, concerns regarding the balance between consumer protection and the operational capabilities of insurance companies could arise during legislative discussions.