Insurance: other; requirement to file a fraud report; provide for. Amends 1956 PA 218 (MCL 500.100 - 500.8302) by adding sec. 4506.
Summary
HB4718 amends Michigan’s Insurance Code to require insurers to file a fraud report with the Director of the Department of Insurance and Financial Services after completing a good-faith investigation when they reasonably believe or know a fraudulent insurance act has occurred. The report must cover fraud involving a Michigan policyholder or a claim submitted through the assigned claims plan, and must include information requested by the director plus any additional facts relevant to the suspected fraud and the parties involved. The director is authorized to review the report, conduct further investigation as needed, and refer the matter to the insurer, an authorized agency, the county prosecutor, or the attorney general if appropriate.
The bill also clarifies when a report is not required: if further investigation shows the suspected conduct was not fraudulent, or if the insurer lacks reasonable grounds to believe fraud occurred. It preserves existing obligations to report suspected violations of law to authorized agencies and requires those agencies to cooperate with the director’s investigation by providing documents and evidence on request. The bill defines “insurer” broadly to include traditional insurers, the Michigan Automobile Insurance Placement Facility, and entities administering assigned claims on its behalf.
Impact
The bill adds a new fraud-reporting duty to the Insurance Code, creating a formal reporting channel for suspected insurance fraud involving Michigan policyholders and assigned claims. It expands the administrative role of the Department of Insurance and Financial Services director in receiving, reviewing, and potentially referring fraud reports, while also imposing cooperation duties on authorized agencies. Affected parties include insurers, the Michigan Automobile Insurance Placement Facility, assigned claims administrators, and state enforcement entities such as prosecutors and the attorney general.
Sentiment
The voting history suggests strong bipartisan support for the bill. It was reported from committee unanimously and later passed the House with an overwhelming 102-1 vote, indicating broad agreement that the measure is a reasonable anti-fraud and enforcement tool. The immediate-effect vote also suggests lawmakers viewed the issue as timely and important.
Contention
There is little evidence of substantive controversy in the available record, and no committee transcript excerpts were provided showing opposition. The main policy balance in the bill is between strengthening fraud detection and avoiding unnecessary reporting burdens on insurers; this is reflected in the exceptions for cases where further investigation dispels suspicion or where there are no reasonable grounds to believe fraud occurred. Any potential concern would likely center on administrative burden, reporting thresholds, and coordination between insurers, the director, and law-enforcement agencies, but the recorded votes indicate these issues did not generate significant resistance.