The bill amends the Michigan Insurance Code of 1956 to enhance consumer protections against unfair practices in the insurance industry. It redefines unfair competition and deceptive practices to include actions during claims handling, not just during sales and advertising. A new section (2005b) is added to extend the applicability of the uniform trade practices act to all insurance policies issued in the state, ensuring consistent standards across all related conduct. The bill also modifies requirements for timely payment of insurance claims, establishing clear timelines for processing and payment, and outlining the responsibilities of health plans and providers in this process.

Additionally, the bill introduces specific requirements for insurers, such as adopting written standards for claims processing and providing timely explanations for claim denials. It allows individuals harmed by unfair practices to file civil actions against insurers for damages, including the total amount owed under the policy and legal costs. A rebuttable presumption of bad faith is established for insurers who violate these provisions, enabling recovery for emotional distress and punitive damages in cases of willful misconduct. The bill emphasizes that these new provisions do not absolve insurers from their existing legal responsibilities, reinforcing the cumulative nature of the duties outlined.

Statutes affected:
Senate Introduced Bill: 500.2005