Bill
HB 6106
HB 6106 tightens Michigan captive insurers’ reporting and fees by requiring annual audited financials, actuarial opinions, timely reports, interim inquiries, and a new tiered renew
Status and procedural history
- Bill: HB 6106 (amends MCL 500.4621 and 500.4625).
- Introduced: Nov. 13, 2024 (Rep. Mai Xiong, with multiple co‑sponsors).
- Passed House: Dec. 12, 2024 (Roll Call #460 — Yeas 95, Nays 14); given immediate effect by the House.
- Referred/transmitted to executive and other committees: referred to Committee on Insurance & Financial Services; later recorded as referred to Committee on Government Operations; entry on Jan. 22, 2025 shows referral to Joint Committee on Human Services. (Record shows House passage; Senate consideration pending.)
Purpose
- To tighten and modernize financial reporting, audit, fee, and related administrative requirements for captive insurance companies operating under Michigan’s Insurance Code (chapter 46). The amendments aim to ensure timely, audited, and verifiable financial information is available to the Department of Insurance and Financial Services (DIFS) and to set/update renewal fee timing and amounts.
Key provisions and changes
Amendments to section 4621 (annual reports, audits, inquiries)
- Annual financial report: captive insurers must submit a report of financial condition verified by oath of two executive officers not later than 60 days after the captive’s fiscal year end. Reporting may use GAAP, IFRS (with director approval), or statutory accounting principles as approved by the director.
- Actuarial opinion: captive insurers must annually submit the opinion of a “qualified actuary” (member of the American Academy of Actuaries or Society of Actuaries, plus any director criteria) on adequacy of reserves, in a director‑prescribed form.
- Audited financial statements: captives must file audited financial statements prepared by an independent public accountant not later than five months after fiscal year end. The auditor must be a CPA or accounting firm in good standing with the AICPA and in each state where licensed.
- Director inquiries and interim reporting: the DIFS director may address inquiries about activities/conditions; the captive must reply in writing within 30 days. The director may require interim reports and prescribe format/content.
- Penalties: failure to file a required report or to reply within 30 days results in civil penalties of $1,000–$5,000 per occurrence plus $50 per day of continued noncompliance; continued noncompliance can trigger statutory proceedings under section 4637.
Amendments to section 4625 (applicability, exams, fees)
- Exemptions and applicability: clarifies which provisions of the Insurance Code apply to captives; director may exempt special purpose captives on a case‑by‑case basis.
- Exam expenses: costs of captive examinations are payable by the captive and deposited into the captive insurance regulatory and supervision fund.
- Renewal fee timing: annual renewal fee is due not later than 90 days after the captive’s fiscal year end (replacing a prior March 1 schedule).
- Renewal fee schedule (based on annual premiums):
- < $5,000,000: $5,000
- $5M–<$10M: $10,000
- $10M–<$15M: $15,000
- $15M–<$25M: $25,000
- $25M–<$40M: $40,000
- $40M–<$55M: $50,000
- $55M–<$75M: $75,000
- ≥ $75M: $100,000
- Administrative fees: $15 for certification of documents; $25 payable to the Attorney General for review of amendments to organizational documents.
Who is affected
- Primary: captive insurance companies (pure, branch, sponsored, and special purpose captives) that operate under Michigan law.
- Secondary: independent auditors/CPAs, qualified actuaries, DIFS (director and staff), and insureds/reinsured parties relying on captive financial strength. Captives may incur increased compliance costs (audits, actuarial work, timelier reporting) but regulators gain more timely, audited information.
Potential impacts
- Regulatory: improved timeliness and quality of financial data available to the director; clearer authority for interim inquiries and exemptions for special purpose captives.
- Industry: increased administrative/compliance burden and associated costs (audit and actuarial requirements, earlier fee payments), but more predictable fee schedule and explicit auditor qualifications.
- Enforcement: new specified civil penalties and daily accrual for failure to report or respond.
Sections amended
- MCL 500.4621 and MCL 500.4625 (Insurance Code of 1956, chapter 46 — captive insurance provisions).
Compiled from official sources — confirm details with the bill’s official record.
Sign in to ask a question.
