Bill Summary – FastDemocracy

Legislative Analysis
                                                                                  Phone: (517) 373-8080
INSURANCE APPLICANT GIFTS
                                                                                  http://www.house.mi.gov/hfa
House Bill 5694 (H-2) as passed by the House                                      Analysis available at
Sponsor: Rep. Brenda Carter                                                       http://www.legislature.mi.gov
Committee: Insurance and Financial Services
Complete to 6-28-24
SUMMARY:
        House Bill 5694 would amend the Insurance Code to modify the restrictions on gifts and other
        benefits that can be given to applicants for insurance by an insurance provider.
        Currently, the act allows life insurers or insurance producers to give applicants for an insurance
        policy merchandise with an invoice value up to $5. Property-casualty insurers or insurance
        producers are allowed to give applicants an article of merchandise with a cost of up to $50 per
        calendar year. Other than these exceptions, insurers are generally prohibited from offering
        something of value to induce consumers to apply for an insurance policy. However, something
        of value can be provided if it is specified in the insurance contract. 1
        The bill would also allow a life or property and casualty insurer offering insurance products to
        offer or provide value-added products or services, for free or at a discounted price, if the
        product or service relates to the insurance coverage and is primarily designed to satisfy one or
        more of the following objectives:
            • Provide loss mitigation or loss control.
            • Reduce claim costs or claim settlement costs.
            • Provide education about liability risks or risk of loss to persons or property.
            • Monitor or assess risk, identify sources of risk, or develop strategies for eliminating or
                reducing risk.
            • Enhance health.
            • Enhance financial wellness through items such as education or financial planning
                services.
            • Provide post-loss services.
            • Incentivize behavioral changes to improve the health or reduce the risk of death or
                disability of a customer.
            • Assist in the administration of the employee or retiree benefit insurance coverage.
        The cost of the product or service would need to be reasonable in comparison to that customer's
        premiums or insurance coverage for the policy class. In addition, the insurer or insurance
        producer would be required to provide the customer with contact information to assist them
        with questions regarding the product or service.
        Finally, the bill would allow the director of the Department of Insurance and Financial Services
        (DIFS) to adopt rules under the Administrative Procedures Act to implement the legislation to
1
 Offering a gift or service is permitted if it is not contingent on the purchase of a policy:
https://www.michigan.gov/difs/news-and-outreach/faq/insurance/ins-compensation-and-rebating/rebating
House Fiscal Agency                                                                                Page 1 of 2
       ensure consumer protection, including rules, consistent with applicable law, that address
       consumer data protections, privacy and consumer disclosure, and unfair discrimination.
       MCL 500.2025
BRIEF DISCUSSION:
       According to committee testimony, the bill is based on a National Association of Insurance
       Commissioners (NAIC) model law that has already been adopted in several other states.
       Supporters of the bill argue that it will enable insurance companies to offer certain services to
       current customers that benefit both the insurer and the consumer. Some examples provided
       include health screenings and fire prevention services.
       Some raised concerns that some of the information obtained from these services, such as health
       screenings, could be used against the consumer in the future.
FISCAL IMPACT:
       House Bill 5694 would not have any appreciable fiscal impact on the Department of Insurance
       and Financial Services or on other units of state or local government.
POSITIONS:
       Representatives of the following entities testified in support of the bill (5-16-24):
          • John Hancock
          • Chubb Insurance
       The following entities indicated support for the bill (5-16-24):
          • Insurance Alliance of Michigan
          • Life Insurance Association of Michigan
          • National Association of Mutual Insurance Companies
                                                           Legislative Analyst:    Alex Stegbauer
                                                                Fiscal Analyst:    Marcus Coffin
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency                                     HB 5694 (H-2) as passed by the House   Page 2 of 2
Statutes affected: 
Substitute (H-1): 500.2025
Substitute (H-2): 500.2025
House Introduced Bill: 500.2025
As Passed by the House: 500.2025