Michigan Governor John Engler recently signed legislation that provides confidentiality protection for insurers that conduct voluntary self-assessments of their compliance with state insurance laws. According to the National Association of Independent Insurers (NAII), Michigan is the fifth state to sign such a law.
Senate Bill 674 provides confidentiality protection to documents created as part of the insurance compliance audit. These documents submitted to the Commissioner of the Office of Financial and Insurance Services may not be admitted as evidence in a civil, criminal or administrative proceeding.
“Self-audit privilege for the property and casualty industry is still relatively new,” said NAII counsel, Laura Kotelman. “Only Illinois, New Jersey, North Dakota, Oregon and now Michigan offer these protections to the industry.”
Kotelman noted that the law provides insurers with confidentiality protection from potential abuse of the privileged information through class action lawsuits seeking millions of dollars in punitive damages.
While only five states have adopted self-audit laws, a NAII working group is developing a set of principles that it will recommend be included in legislation in other states.