Section 500.116 - Additional definitions. - Michigan Statutes

THE INSURANCE CODE OF 1956 (EXCERPT)
Act 218 of 1956

500.116 Additional definitions.

Sec. 116.

As used in this act:

(a) “Abuse of discretion” means not in the reasonable exercise of discretion.

(b) “Hazardous to policyholders, creditors, and the public” means that an insurer, with respect to the financial condition of its business, is not safe, reliable, and entitled to public confidence.

(c) “In the reasonable exercise of discretion” means that an order, decision, determination, finding, ruling, opinion, action, or inaction was based upon facts reasonably found to exist and was not inconsistent with generally acceptable standards and practices of those knowledgeable in the field in question.

(d) “Safe, reliable, and entitled to public confidence” means that an insurer meets all of the following:

(i) With respect to its financial standards and conduct and discharge of its obligations to policyholders and creditors, has complied and continues to comply with the specific requirements of this act and, if relevant, the insurance codes or acts of its state of domicile and other states in which it is authorized to conduct an insurance business.

(ii) Has made and continues to make reasonable financial provisions and apply sound insurance principles so as to provide reasonable margins of financial safety with respect to the insurance and other obligations it has assumed and continues to assume such that the insurer will be able to discharge those obligations under any reasonable conditions and contingencies taking into account without limitation reasonably anticipated contingencies, including those affecting changes in the projections of liabilities, fluctuations in value of assets, alterations in projections as to when obligations may become due, and expected and unexpected new claims with respect to obligations.

History: Add. 1992, Act 182, Imd. Eff. Oct. 1, 1992
Popular Name: Act 218
Popular Name: Essential Insurance