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Bill to exempt insurer loss-control services from anti-rebating rules draws industry support
Summary
House Bill 4071 would clarify that value-added, loss-mitigation devices and services are not "rebates" under Michigan law. Insurers and trade groups told the House Insurance Committee the change would allow carriers to offer sensors, private fire services and other loss-control items without running afoul of anti-rebating statutes.
House Bill 4071, introduced by Minority Vice Chair Bridal Carter with industry cosponsors, was presented as a statutory clarification to allow insurers to provide certain value-added loss-control services and items without violating state anti-rebating or anti-inducement laws.
Michael Stern, Vice President for State Government and Industry Affairs at Chubb Insurance, said HB 4071 would codify who may offer value-added services, and set criteria for those services so they are treated as policy-related loss mitigation rather than an inducement to buy coverage. "These devices and services are a win-win for both insurers and insureds," Stern told the committee, citing water-detection sensors and wildfire-defense services as examples.
Stern said the bill is modeled on National Association of Insurance Commissioners (NAIC) updates and would not apply to health insurance. He and other witnesses said roughly 20 states have adopted similar reforms through statute or regulation. Committee members asked whether the services would be mandatory for consumers (no) and whether the value of the service must be proportional to premium (no fixed ratio was proposed). Witnesses said the offerings are voluntary and intended to reduce claims over time, which could lead to lower rates later.
Industry groups including the Insurance Alliance of Michigan, American Council of Life Insurers, NAIFA Michigan and others filed support cards; Michael Stern and others testified. The bill's sponsors said they are working with the Department of Insurance and Financial Services on a technical substitute.
No committee roll-call vote occurred on HB 4071 during the hearing.
