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Committee reviews bill to allow insurers to offer loss-prevention services without rebating penalties
Summary
House Bill 4071 would codify criteria allowing insurers and producers to provide value-added loss-control services — like water sensors or wildfire-defense services — without being treated as unlawful rebates or inducements. Industry witnesses said the change would align Michigan law with NAIC model language and reforms adopted in other states.
The Michigan House Insurance Committee heard testimony on House Bill 4071 on March 5, a measure intended to clarify Michigan’s anti-rebating and anti-inducement provisions so that insurers and producers may provide certain value-added loss-prevention services without being treated as prohibited rebates.
Sponsor testimony said the proposal follows a National Association of Insurance Commissioners (NAIC) model update and recent state actions. “HB 4071 would codify who could offer value-added services and items and codify criteria for such services and items,” Michael Stern, vice president of state government and industry affairs for Chubb Insurance’s Midwest region, told the committee. He said the bill would apply to property-and-casualty and life insurers but is not intended to include health insurance companies.
Witnesses described examples of value-added services insurers currently make available or pilot: wildfire defense services, water-detection sensors and automatic shutoff valves. Sponsors argued those services are integrally related to predicting and preventing losses under a policy and therefore should not be treated the same as inducements offered to attract a customer.
Stern told members roughly 20 states have enacted similar value-added reforms through legislation or regulation; he said those reforms can speed product introduction, increase consumer choices and help avoid claims. Committee members asked whether the services would be voluntary for customers (Stern: yes) and whether a ratio ties value added services to premium amount (Stern: no fixed ratio; reasonableness and policy context apply).
Industry groups including Chubb, the Insurance Alliance of Michigan and several trade associations registered support and a number of supporter cards were read into the record. Committee testimony noted Department of Insurance and Financial Services technical work on a substitute and that the bill had passed the House in an earlier form last session with wide support.
No vote was recorded during the hearing; the bill remained in committee for further consideration.
