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HOUSE BILL NO. 6097
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 640 (MCL 500.640), as amended by 2010 PA 338.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 640. (1) Except as otherwise provided in subsections (2) 1
to (5), an An insurer transacting business in this state shall not 2
expose itself to any loss on any 1 risk or hazard in an amount 3
exceeding 10% of its paid-up capital and surplus. However, no any 4
portion of a risk or hazard that has been reinsured by an insurer 5
licensed to do insurance business in this state shall must not be 6
June 16, 2026, Introduced by Rep. Harris and referred to Committee on Insurance.
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included in determining the limitation of risk prescribed in this 1
subsection. 2
(2) An insurer transacting business in this state that has 3
obtained a certificate of authority authorizing the transaction of 4
title insurance in this state before the effective date of the 5
amendatory act that added this subsection shall not expose itself 6
to any loss on any 1 title insurance risk or hazard in an amount 7
exceeding 50% of its paid-up capital and surplus. However, no 8
portion of a title insurance risk or hazard that has been reinsured 9
by an insurer licensed to do title insurance business in this state 10
shall be included in determining the limitation of risk prescribed 11
in this subsection. 12
(3) An insurer transacting business in this state that obtains 13
a certificate of authority authorizing the transaction of title 14
insurance in this state on or after the effective date of the 15
amendatory act that added this subsection shall not expose itself 16
to any loss on any 1 title insurance risk or hazard in an amount 17
exceeding 10% of its paid-up capital and surplus unless the title 18
insurer meets all of the following: 19
(a) Has a most recent A.M. best financial rating of at least 20
an A- or has a comparable rating as assigned by a nationally 21
recognized statistical rating organization approved by the 22
commissioner. 23
(b) Has been licensed and operating in this or another state 24
for at least 5 years and has reported a net income for at least 3 25
of the last 5 years. 26
(c) Has capital that exceeds 2 times the minimum paid-up 27
capital and surplus requirements in Michigan. 28
(4) No portion of a title insurance risk or hazard that has 29
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been reinsured by an insurer licensed to do title insurance 1
business in this state shall be included in determining the 10% 2
limitation of risk prescribed in subsection (3). An insurer 3
described in subsection (3)(a) to (c) shall not expose itself to 4
any loss on any 1 title insurance risk or hazard in an amount 5
exceeding 50% of its paid-up capital and surplus. 6
(5) Upon application by a title insurer, the commissioner may 7
waive the 10% limitation of risk prescribed in subsection (3) for a 8
particular risk or hazard for good cause shown and so long as the 9
net retained liability for that particular risk or hazard does not 10
exceed 50% of the insurer's paid-up capital and surplus. 11
(6) As used in this section, section. This section does not 12
apply to an insurer transacting "title insurance" and "title 13
insurer" mean those terms as that term is defined in section 7301. 14