HOUSE BILL No. 4874


     June 5, 1997, Introduced by Reps. Llewellyn and Fitzgerald and referred to the Committee on Insurance.


        A bill to amend 1956 PA 218, entitled

   "The insurance code of 1956,"

   by amending sections 2119 and 2120 (MCL 500.2119 and 500.2120),

   section 2119 as amended by 1980 PA 461 and section 2120 as

   amended by 1984 PA 350.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         Sec. 2119.  (1) Each insurer subject to this chapter shall

 2    put in writing all underwriting rules used by the insurer.  An

 3    insurer shall not transact automobile or home insurance inconsis-

 4    tently with its underwriting rules.

 5         (2) An insurer shall apply its underwriting rules uniformly

 6    and without exception throughout this state, so that every appli-

 7    cant or insured conforming with the underwriting rules will be

 8    insured or renewed, and so that every applicant or insured not

 9    conforming with the underwriting rules will be refused insurance


   00076'97                                                 DKH
                                              2

 1    or nonrenewed, when the information becomes available to the

 2    insurer.

 3          (3) Affiliated insurers shall not adopt underwriting rules

 4     for automobile insurance contracts providing identical coverages

 5     which would permit a person to be insured, for automobile insur-

 6     ance, with more than 1 of the affiliated insurers, unless the

 7     affiliated insurers use identical rates and rating plans and have

 8     adopted identical underwriting rules in compliance with this

 9     section. 

10         (3)  (4)  An insurer with more than 1 rating plan for auto-

11    mobile insurance contracts providing identical coverages shall

12    not adopt underwriting rules  which  THAT would permit a person

13    to be insured, for automobile insurance, under more than 1 of the

14    rating plans.

15         (4)  (5)  An insurer may establish underwriting rules for

16    new applicants  which  THAT are different than for renewals of

17    existing insureds only if the applicants or existing insureds are

18    not eligible persons.  Underwriting rules pertaining to renewals

19    of existing insureds who are not eligible persons may be based on

20    a contractual obligation of the insurer not to cancel or

21    nonrenew.

22         (5)  (6)  For informational purposes, an insurer shall file

23    with the commissioner its underwriting rules prior to their use

24    in this state.  All filed underwriting rules shall be available

25    for public inspection.  If the commissioner finds that an under-

26    writing rule is inconsistent with the provisions of this chapter,

27    the commissioner, after a hearing held pursuant to  Act No. 306



   00076'97
                                   3

 1    of the Public Acts of 1969, as amended  THE ADMINISTRATIVE

 2    PROCEDURES ACT OF 1969, 1969 PA 306, MCL 24.201 TO 24.328, shall

 3    by order prohibit further use of that underwriting rule.

 4         (6)  (7)  This section  shall  DOES not prohibit an insurer

 5    from insuring persons who are not eligible persons pursuant to

 6    underwriting rules established under this section and sections

 7    2117, 2118, and 2120.

 8         Sec. 2120.  (1) Affiliated insurers  may establish under-

 9     writing rules so that each affiliate will provide automobile

10     insurance only to certain eligible persons.  This subsection

11     shall apply only if an eligible person can obtain automobile

12     insurance from 1 of the affiliates.  The  SHALL HAVE underwriting

13    rules  shall be  THAT ARE in compliance with this section, sec-

14    tion 2118, and section 2119.

15         (2) An insurer may establish separate rating plans so that

16    certain eligible persons are provided automobile insurance under

17    1 rating plan and other eligible persons are provided automobile

18    insurance under another rating plan.  This subsection shall apply

19    only if all eligible persons can obtain automobile insurance

20    under a rating plan of the insurer.  Underwriting rules consis-

21    tent with this section, section 2118, and section 2119 shall be

22    established to define the rating plan applicable to each eligible

23    person.

24         (3) Underwriting rules under this section shall be based

25    only on the following:

26         (a) With respect to a vehicle insured or to be insured,

27    substantial modifications from the vehicle's original



   00076'97
                                   4

 1    manufactured state for purposes of increasing the speed or

 2    acceleration capabilities of the vehicle.

 3         (b) Failure of the person to provide proof that insurance

 4    required by section 3101 was maintained in force with respect to

 5    any vehicle owned and operated by the person or by a member of

 6    the household of the person during the 6-month period immediately

 7    preceding application or renewal of the policy.  Such  THIS

 8    proof shall take the form of a certification by the person that

 9    the required insurance was maintained in force for the 6-month

10    period with respect to  such  THE vehicle.

11         (c) For purposes of insuring persons who have refused a

12    deductible lawfully required under section 2118(2)(h), the claim

13    experience of the person with respect to comprehensive coverage.

14         (d) Refusal of the person to pay a minimum deposit required

15    under section 2118(2)(g).

16         (e) A person's insurance eligibility point accumulation

17    under section 2103(1)(h), or the total insurance eligibility

18    point accumulation of all persons who account for 10% or more of

19    the use of 1 or more vehicles insured or to be insured under the

20    policy.

21         (f) The type of vehicle insured or to be insured as provided

22    in section 2118(2)(e).













   00076'97          Final page.                            DKH