What Every Agent Should Know MAIA 2017 Legislative Session Policy Priorities

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1 What Every Agent Should Know MAIA 2017 Legislative Session Policy Priorities Updated August 2017 What Every Agent Should Know About Legislative Issues That Can Impact Your Business AUTO NO-FAULT Assigned Claims Plan MAIA supports changes to the ACP that consolidate claims of all uninsured persons, strengthen reporting requirements, and establish common sense benefits. A series of MAIA-supported bills amending the Insurance Code to make various changes to the requirements, procedures, and timeline for submitting a claim to the Michigan Assigned Claims Plan (ACP) have passed from committee and await further action on the House floor. The bills are an effort to both speed up the claims process and cut down on fraud, that is perceived as taking place within the process. PIP MAIA recognizes the unsustainability of the current structure for benefits provided by PIP and is open to revisions that reflect economic reality with appropriate attention to consumer protections. Significant increases in claims costs over the last decade are increasingly jeopardizing the financial stability of auto insurers in Michigan. Reforms are needed, including equitable payments to providers for similar services, family attendant care reforms, and anti-fraud efforts. MAIA believes recent proposals for reform maintain the integrity and intent of Michigan s no-fault law, continue to provide great protection and benefits for the insured, and protect insurers financial liability and integrity. Medical Payments MAIA supports payments for medical and rehabilitative services for automobile accident related injuries that are equitable and comparable to payments received by providers from traditional health insurance carriers for similar services. The escalating cost of health care is a major driver for PIP premium and MCCA assessment increases. Absent comparable payments for similar service, MAIA strongly supports allowing carriers greater flexibility in negotiating injury claims with medical providers. Catastrophic Victim Attendant Care MAIA supports attendant care cost containment criteria. Attendant care makes up a third of all MCCA-related costs. Although agents recognize the severe stress a catastrophic injury can place on a family, there should be common sense criteria for hours compensated and costs per hour for basic care for unlicensed family caretakers. Fraud Efforts MAIA supports industry efforts to prevent auto insurance fraud for auto accidents and injury treatments. The cost of fraud is borne by all other insurance consumers and the industry. MAIA has joined with industry partners to support legislation that would create the Auto Fraud Prevention Authority (AFPA) within the Auto Placement Facility. Carriers would be assessed $21 million ($6 million would still go toward the Auto Theft Prevention Authority) to be used as grants to law enforcement and prosecutors to combat auto insurance fraud.

2 Michigan Catastrophic Claims Association (MCCA) MAIA is supportive of a more transparent entity with public oversight and creating a new catastrophic claims entity to address carrier liability concerns if proposed with other auto insurance reforms. Long term financial liability concerns by ratings institutions have begun to impact carriers because of the current MCCA structure. A new entity that would relieve carriers of the long-term liability and allow for greater negotiating leverage with providers is acceptable if combined with other necessary reforms to the system. Auto Insurance Reform - Low Cost Auto Insurance Policy MAIA opposes a low-cost auto policy that is based on low limits, or non-verifiable eligibility requirements. The high cost of auto insurance in Detroit has prompted the introduction of legislation providing a Low-Cost Auto Insurance Policy or D-Insurance being promoted by the Mayor. The lower limits proposed do not impact the cost drivers behind premium increases, do not accomplish the goal of a price reduction that will influence the behavior of the uninsured, and will put injured claimants at risk of quickly exhausting benefits. Real-time Insurance Verification System MAIA is working with industry experts, the Secretary of State, and DIFS to work toward establishing a system for online verification of automobile insurance that requires automobile insurers to provide policy information for the system. Two bills have currently been introduced; they have been referred to the House Insurance Committee where they await further action. MAIA is taking part in meetings and discussions to determine the best course of action on the bills, making sure agent concerns are addressed before proceeding. Electronic Certification MAIA is supportive of E-Certification as a means of proof of insurance and to enhance enforcement of properly insured automobiles. Changes to require data reporting by carriers and continued upgrades to the Secretary of State data infrastructure are providing the opportunity for Michigan to be more aggressive in ensuring motorists have the required insurance when operating a vehicle. E-Certification or Real Time verification are an important means to ensure vehicles are properly insured. OTHER PENDING LEGISLATION Continuing Education Carryover MAIA is supportive of a Licensed Producer being able to carry over excess continuing education credits into the next licensing period. MAIA supported and helped get legislation passed into law that allows insurance producers to carryover up to 12 hours of continuing education credits to the next two-year period if they have more than 24 hours for the current two-year period. Nor credits for ethics courses may be allowed to carryover. The bill was signed by the governor on 6/29/17 and assigned PA 67 of 2017 with immediate effect. Harts v Farmers/Genesee Food Service Insurance producers have been sued in the past few years on the premise that producers have a fiduciary responsibility to the insured above the four standard of care levels that exist in the Michigan statute. A task force of the Legislative/Public Policy Council has agreed to research the levels of care in other states (whether addressed by case law or statutorily) and share its findings with the Council for possible next steps. Update: MAIA will be submitting draft legislation to the legislature to correct the problem for agents.

3 PAST MAIA POSITIONS PIP Choice MAIA opposes PIP Choice in amounts less than $1 million and more than two choices. Sales Tax on Services MAIA opposes a sales tax on services (agent commissions) increasing the cost of coverage to their clients. Trust Accounts MAIA is opposed to a mandatory separate trust account for premium payments but encourages all members to maintain separate physical accounts as a best business practice. Compensation Disclosure MAIA is opposed to mandatory producer compensation disclosure. Fingerprinting of Agents MAIA is opposed to mandatory fingerprinting in order to be licensed. Motorcycle Helmet Repeal MAIA supports reinstatement of Michigan s Motorcycle Helmet Law. Independent Auto Glass Shops (IAGS) MAIA supports the IAGS in their efforts to develop a code of conduct for third party billers specifically auto glass claims entities for auto insurers who also own glass repair shops. Kreiner vs. McCormick Decision Thresholds MAIA supports legislative efforts to clarify language because of Michigan Supreme Court decisions regarding criteria for serious impairment of bodily function. Health Care Insurance Reform and Exchange MAIA supports health care insurance reform if the agent s unique role in the process is not restricted and others are prohibited from performing agent functions unless held to similar accountability standards. MAIA RESULTS The Michigan Association of Insurance Agents (MAIA) is both Michigan s largest and premier association representing independent insurance agents. According to members, one of the most important reasons they belong to MAIA is for public policy advocacy. That advocacy effort is measured by the benchmark of what constitutes good public policy, and MAIA has delivered for its members and the consumers they serve MAIA successfully promoted and led the effort to reduce by 20% CE requirements, representing a 20% reduction in CE expenses and time lost in classes for all agents Governor Granholm proposed a 2% tax on services that included agent commissions. MAIA was the only agents association to provide testimony in committee to challenge the bill. We made a compelling case and the bill was defeated.

4 MAIA successfully petitioned the Insurance Commissioner that agencies be reimbursed for repetitively providing proofs of insurance to requesting entities MAIA, alone, successfully initiated and shepherded a change to the Worker s Compensation Law in response to a Michigan Supreme Court decision that hampered our members sports clients ability to collect worker compensation payments for their injured employees. MAIA successfully petitioned the Insurance Commissioner to issue a bulletin regarding misrepresenting policy information and coverage on Certificates of Insurance. MAIA was able to thwart efforts to encumber ALL agents to be finger printed for a background check at the expense of the agent MAIA objected to an OFIR survey that was overly intrusive and punitive for non-compliance resulting in critical changes made to the survey. MAIA persuaded legislators to remove the impact to agents of punitive Bad Faith legislation aimed at denial and delay of claims by emphasizing the valuable role agents play on behalf of the insured in the claims process. MAIA negotiated with and sought to hold OFIR accountable to original intent for new licensing renewal dates beginning in OFIR wanted to significantly shorten the transition license period for agents MAIA and other industry partners stopped the Insurance Consumer Advocate legislation that significantly increased the regulatory burden and cost of insurance without addressing underlying factors of premium costs MAIA worked repeatedly and diligently to educate policy makers at the state and federal levels on the unique role independent agents play in health care insurance. Insurance consumers need the expertise, counsel, and knowledge agents provide in their decision-making process (for reasonable compensation). OFIR Commissioner Clinton s request to the Feds for an MLR adjustment and his vote to exclude agent commissions from the MLR reveal MAIA s commitment to that end. MAIA, along with numerous other business trade groups, successfully: Passed restrictions on the ability of the Executive branch to implement jobs-killing ergonomics mandatory rules and training more restrictive than the federal government s rules, or without legislative approval. Advocated for Governor Snyder s business tax reforms that repealed the MBT/Surcharge and created a Michigan Corporate Income Tax that cut taxes on job providers by $1.7 billion and ended the double taxation on flow-through income for more than 95,000 small business. LLCs and SCorps are no longer subject to a Michigan business income tax. MAIA, along with another industry partner, successfully amended current law to permit a premium finance company that is majority owned by producers to distribute profits to share holder producers After a decade long battle in the legislature and courts, MAIA and Industry partners finally claimed victory in the use of credit based insurance scores. Legislation to protect this accurate rating resource offers common-sense regulations and consumer protections. With the support of MAIA and other industry partners, the mini-tort limit was increased from $500 to $1,000 October 1, MAIA was able to eliminate the lowest quote requirement and the $3 fee required when agents file a change in mailing address in the final recommendations of the Office of Regulatory Reform Insurance and Finance Advisory Rules

5 Committee (ARC) in June As a result, MAIA was able to advocate their passage through the state legislature at the end of MAIA along with the Department of Insurance and Financial Services (DIFS) was able to modify objectionable language in one bill that provides an insurance license exemption for travel agents and in another that defines service contracts MAIA developed, advocated for, and helped pass language that clarifies the use of certificates of insurance and makes it a civil infraction to demand or pressure a person to alter a certificate that does not reflect the policy coverage. MAIA, along with DIFS, strongly opposed an effort that would exempt Self Storage Facility operators from insurance licensing requirements leading to the Governor s veto of the bill. MAIA, along with industry friend, NAIFA of Michigan, advocated for, negotiated, and helped pass legislation that will provide for DIFS oversight of Navigators and Certified Application Counselors that work in the federal exchange or marketplace. The bill overwhelmingly passed the legislature after MAIA was able to address concerns from the Michigan Hospital Association MAIA-supported legislation was enacted that allows a driver to present an automobile proof of insurance certificate as evidence of insurance on an electronic device such as a cell phone. MAIA, because of its working relationship with DIFS, was able to encourage DIFS leadership to issue a bulletin, clarifying when appointments are needed for producers representing carriers in light of working with MGAs MAIA-supported legislation initiated in 2013 was enacted, allowing an insured to waive the late fee penalty when renewing their registration if they request such at the SOS office and can show evidence of some type of comprehensive or storage insurance during the interim of their birthday and renewal. MAIA, because of its working relationship with DIFS, was able to encourage DIFS leadership to issue a bulletin, clarifying permitted activities in the transaction of SL insurance between a licensed producer and a surplus lines licensee or broker. MAIA, along with other small business groups-supported legislation was enacted that would delay until 2019 rules requiring location identification for first responders in an emergency through the 911 system. The rules placed the burden of the identifying phone technology on the business with multiple buildings or greater than 7,000 square feet. MAIA, along with insurance carriers was able to improve insurance coverage for TNC drivers and passengers when personal autos are used for business purposes through the passage of model language that defines when either the insurance carrier or the TNC is responsible for insurance coverage and treats passengers similarly as though they were riding in a taxi or limousine.