Mich. Admin. Code R. 257.537 - Excess insurance; conditions for compliance

Current through Vol. 22-05, April 1, 2022

Rule 7. The director shall not recognize a contract or policy of excess insurance in considering the ability of an applicant to fulfill its financial obligations under the no-fault law or the financial responsibility law contained in chapter V of the Michigan vehicle code, unless the contract or policy is in compliance with all of the following requirements:

(a) Is issued by a casualty insurance company.
(b) Is not cancelable or nonrenewable, unless the party that desires to cancel or not renew the policy gives written notice, by registered or certified mail, to the other party to the policy and to the director not less than 30 days before termination of the policy.
(c) Does not contain policy coverage exceptions or exclusions, or any other policy provisions that are not in compliance with the no-fault law, the Michigan vehicle code, and these rules.
(d) Does not contain a commutation clause, unless the clause provides that a commutation does not relieve an underwriter of further liability either in respect to claims and expenses unknown at the time of the commutation or in respect to any claim that is apparently closed at the time of initial commutation and that is subsequently reopened by, or through, a competent authority. The clause must, in addition, provide for both of the following:
(i) If the underwriter proposes to settle its liability for future claims with respect to accidents that occur during the term of the policy by the payment of a lump sum to the self-insurer, to be fixed as provided in the commutation clause of the policy, then not less than 30 days' prior notice of the commutation must be given to the director by the underwriter or its agent by certified mail.
(ii) If any commutation is effected, then the director may direct that the sum be placed in trust for the benefit of all claimants who are entitled to future payments of compensation.
(e) Contains a clause that provides that if a self-insurer becomes insolvent and is unable to pay claims, the excess insurer shall make, directly to claimants or their authorized representatives, such payments as would have been made by the excess carrier to the self-insurer after it has been determined that the retention level has been reached on the excess insurance contract.


Mich. Admin. Code R. 257.537
1993 AACS; 2018 MR 5, Eff. 3/15/2018

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