WeVote
Log In

Bill

Bill

HB 5385

Insurance: other; captive insurance company limited certificate of authority; modify. Amends sec. 4603 of 1956 PA 218 (MCL 500.4603).

2025-2026 Regular Session Introduced by Joe Aragona and 1 co-sponsor

HB 5385 changes Michigan captive insurance rules: lowers filing fee to $5,000, tightens records, extends certificate term to 90 days after fiscal year, increases DIFS oversight.

bill electronically reproduced 12/16/2025
#insurance:other
0
WeVote Research Nonpartisan
Bill Summary · HB 5385

HB 5385 — Summary (Introduced December 16, 2025)

Sponsor: Rep. Joseph A. Aragona
Committee: Insurance
Companion: SB 616

Purpose

Amend Section 4603 of Michigan’s Insurance Code to modify formation, recordkeeping, scope of coverage, fee/timeliness, and oversight requirements for captive insurance companies operating under Chapter 46 (limited certificates of authority).

Key provisions

  • Scope of permitted business

    • A captive may apply for a limited certificate to write any insurance authorized by Chapter 46 except: first-dollar workers’ compensation insurance, long‑term care, critical care, personal automobile, homeowners insurance, or any component of these coverages.
    • Clarifies the types of risks each captive form may insure (pure, association, industrial insured, special purpose), and that special purpose captives may provide insurance/reinsurance as approved by the director.
    • Reaffirms captive limitation on acceptance/cession of reinsurance to section 4641 rules.

  • Application, organizational documents, and approval process

    • Requires submission of standard organizational information (incorporators, principal office, corporate purpose, directors/managers, capitalization, etc.).
    • Organizational documents must be submitted to the Attorney General for examination and certification; the applicant pays the AG examination fee under section 240(2).
    • Director may require additional documentation (business plan, capitalization evidence, biographical affidavits, loss prevention info, participant contracts for sponsored captives, etc.).
    • Director issues a limited certificate if applicant complies with chapter standards and promotes the general good of the state.

  • Financial records and recordkeeping

    • All financial records (including those for protected cells) must be available for inspection by the director.
    • The original records may be maintained outside Michigan if the captive’s management adopts a plan and the director approves; originals may be photographed, reproduced on film, or stored/reproduced electronically.

  • Fees and certificate term

    • Lowers the (previously stated) nonrefundable application fee for a limited certificate from $10,000 to $5,000 (consistent with related bills in the package).
    • A certificate of authority is valid until 90 days after the captive’s fiscal year ends (text ties renewal/validity to fiscal-year timing).

  • Other governance items

    • Organizational documents may include director exculpation clauses for monetary damages for breach of fiduciary duty, subject to enumerated exceptions (loyalty breaches, bad‑faith/intentional misconduct, improper personal benefit).
    • Specifies minimum incorporator/resident requirements, quorum rules (no fewer than one-third of directors/managers), share minimum value ($1.00), and related corporate details.

Who is affected

  • Businesses forming captive insurance companies in Michigan (pure, association, industrial, special purpose, sponsored captives).
  • Sponsors and participants of sponsored captives (documentation and contracts required).
  • Department of Insurance and Financial Services (DIFS) — expanded discretion over approval, recordkeeping plans, and review responsibilities.
  • Attorney General’s office — reviews organizational documents for compliance.

Procedure / timeline

  • Bill introduced 12/16/2025 and referred to the House Insurance Committee. Companion SB 616 filed in the Senate.
  • If enacted, changes take effect as amendments to MCL 500.4603 and would apply to future applicants and existing captives as specified in statute and any implementing rules.

Notes / context

  • HB 5385 is part of a broader package (HBs 5380–5386) updating Michigan’s captive insurance framework (definitions, SPFC filing dates/fees, participant scope, sponsored captive sponsor rules).
  • Some provisions cross-reference other sections (e.g., reinsurance rules in section 4641). For programmatic or compliance changes, consult the full bill text and DIFS guidance if enacted.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.