The American Insurance Association (AIA) is urging Michigan’s House of Representatives to pass a bill that would change the way insurers are assessed payments to the state’s Second Injury Fund. The legislation passed the House Financial Services Committee. The AIA wants the measure to be approved by the full House before it adjourns for 2001.
Deirdre K. Manna, AIA assistant vice-president, Midwest region, said the bill, SB 718, is “an accounting change that will bring long-term stability to Michigan’s workers’ compensation insurance market.” It was sponsored by Sen. Bill Bullard (R-Highland) and unanimously passed the Senate in November.
It 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 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. This rule has significantly reduced both the statutory capital of Michigan insurers and the amount of business they can write in the state.
The AIA said SB 718 would change Michigan’s assessment from paid losses to premiums, thereby allowing insurers to continue writing workers compensation coverage in Michigan.
The bill is neutral for state revenue purposes, and would result in no reduction in benefits to injured Michigan workers.
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