Michigan Office of Administrative Hearings and Rules  
611 W. Ottawa Street  
Lansing, MI 48909  
Phone: 517-335-8658 Fax: 517-335-9512  
AGENCY REPORT TO THE  
JOINT COMMITEE ON ADMNINISTRATIVE RULES (JCAR)  
1. Agency Information  
Agency name:  
Insurance and Financial Services  
Division/Bureau/Office:  
Insurance  
Name of person completing this form:  
Julie Agueros  
Phone number of person completing this form:  
517-894-3713  
E-mail of person completing this form:  
Name of Department Regulatory Affairs Officer reviewing this form:  
Sarah Wohlford  
2. Rule Set Information  
MOAHR assigned rule set number:  
2020-132 IF  
Title of proposed rule set:  
Credit for Reinsurance  
3. Purpose for the proposed rules and background:  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 2  
These rules were promulgated in 1996, following the enactment of Chapter 11 of the Insurance Code  
of 1956 (Code), MCL 500.1101 to 500.1127, to regulate reinsurance, which occurs when an insurer  
cedes a portion of its risk to another insurer that assumes the risk. See, generally, 1994 PA 226.  
These rules were amended in 2011 and 2019, following changes the National Association of  
Insurance Commissioners (NAIC) made to its model law and regulation and legislative amendments  
to the Code designed to bring Michigan into compliance with the NAIC model law and regulation.  
See 2018 PA 91. Specifically, these rules and Sections 1103, 1105, and 1106 of the Code, MCL  
500.1103, 500.1105, and 500.1106, establish requirements for insurers to take credit, i.e., as an asset  
or reduction from liability, for reinsurance ceded to an assuming insurer. Section 1103 allows credit  
for reinsurance if ceded to an assuming insurer that meets any of subsections (2) through (6) of MCL  
500.1103. The NAIC has made additional changes to its model law and regulation to facilitate the  
consistency of state law with the “covered agreement” entered by the United States on September 22,  
2017, authorized under 31 USC 314. The changes to the NAIC models necessitate corresponding  
legislative amendments and amendments to these rules to provide for additional categories of  
assuming insurers that will provide the ceding insurer credit for the cession. The legislative  
amendments are contained within Senate Bill 1015’20 (PA 328 of 2020), which was signed by  
Governor Whitmer on December 29, 2020. These proposed rules would implement those legislative  
amendments.  
4. Summary of proposed rules:  
These rules are promulgated under Chapter 11 of the Insurance Code of 1956 to regulate reinsurance,  
which occurs when an insurer cedes a portion of its risk to another insurer that assumes the risk.  
These rules are based on the model law and regulation promulgated by the National Association of  
Insurance Commissioners (NAIC). The NAIC has made changes to its model law and regulation to  
facilitate the consistency of state law with the “covered agreements” entered by the United States,  
authorized under 31 USC 313-314. The changes to the NAIC models necessitate corresponding  
legislative amendments and amendments to these rules to provide credit for a cession to a reinsurer in  
a “reciprocal jurisdiction.” The legislative amendments are contained within Senate Bill 1015’20 (PA  
328 of 2020). The proposed rules would implement those legislative amendments.  
5. List names of newspapers in which the notice of public hearing was published and  
publication dates:  
Oakland Press, March 8, 2021; Lansing State Journal, March 8, 2021; Escanaba Daily Press, March  
8, 2021  
6. Date of publication of rules and notice of public hearing in Michigan Register:  
3/15/2021  
7. Date, time, and location of public hearing:  
3/23/2021 10:00 AM at This public hearing will be held virtually via Microsoft Teams to receive  
public comments while complying with measures designed to help prevent the spread of Coronavirus  
8. Provide the link the agency used to post the regulatory impact statement and cost-benefit  
analysis on its website:  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 3  
9. List of the name and title of agency representative(s) attending public hearing:  
Sarah Wohlford, Senior Deputy Director; Julie Agueros, Staff Attorney  
10. Persons submitting comments of support:  
Sabrina Miesowitz on behalf of Underwriters at Lloyd’s, London (written); Ken Ross on behalf of  
John Hancock (hearing)  
11. Persons submitting comments of opposition:  
There were no comments of opposition.  
12. Identify any changes made to the proposed rules based on comments received during the  
public comment period:  
Name &  
Organization public hearing  
Comments made at Written  
Comments  
Agency Rationale Rule number  
for change  
& citation  
changed  
1
13.Date report completed:  
3/26/2021  
MCL 24.242 and 24.245  
;