A bill championed by the American Insurance Association (AIA) that changes the way insurers are assessed payments to the state’s second injury fund has been signed into law by Michigan Gov. John Engler.
“This technical but important change to state law will increase both the statutory capital of Michigan insurers and the amount of business they can write in the state,” Deirdre K. Manna, AIA assistant vice-president, Midwest region, commented. “AIA commends Michigan for joining the growing list of states that assess payments to the second injury fund on premiums written rather than paid losses.”
The measure, SB 718, was introduced in response to a national accounting rule adopted in 1999, which requires that if a state assesses insurers’ payments to the second injury fund based on paid losses, the insurer must recognize its all-time liability to the fund on its books. If the assessment is based on premiums, the liability need only be recognized for one year. SB 718 changes insurers’ assessments from paid losses to premiums, thereby allowing companies to continue writing workers compensation coverage in Michigan.
The new law, which was sponsored by Sen. Bill Bullard (R-Highland), is revenue-neutral and will result in no reduction in benefits for injured Michigan workers.
Topics Michigan
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