January 24, 2006, Introduced by Senators CLARK-COLEMAN, SCOTT, JACOBS, BRATER, PRUSI, SCHAUER, BASHAM, THOMAS, CHERRY, OLSHOVE, EMERSON, LELAND and CLARKE and referred to the Committee on Banking and Financial Institutions.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 2930 and 2930a (MCL 500.2930 and 500.2930a),
as amended by 2002 PA 492.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2930. (1) The premium for basic property insurance of any
risk by the pool shall be equal to the rate for identical insurance
established by a licensed rating organization for identical
insurance within this state plus a uniform surcharge approved by
the commissioner.
(2) The pool shall incorporate in each rating plan for basic
property insurance the following discounts:
(a) Senior citizen discount in conformity with section 2111d.
(b) Discount for being claim free in the immediately preceding
3 years.
(c) Security system discount.
(d) Deadbolt lock discount.
(e) Fire extinguisher discount.
(f) Any other discount required or authorized by the
commissioner by order or rule.
(3) (2)
The pool shall establish rates for any basic
property insurance that is without rates established by a licensed
rating organization or that the pool, with the approval of the
commissioner, determines should be otherwise rated in order to
better effectuate the purposes of this chapter. The pool shall file
with the commissioner for his or her approval each rate and each
policy form to be issued by it. The pool, acting as agent for
participating members, shall file policy forms for basic property
insurance to be issued by participating members under the
provisions of this chapter. Rates and policy forms shall be filed
in accordance with this chapter as the commissioner designates.
Sec.
2930a. (1) Except as otherwise provided in subsection
(4)(c),
rates The rate charged in each territory by the pool for
home insurance shall be equal to the weighted statewide average of
the
10 voluntary market insurer groups companies with the largest
premium volume in this state. Rating territories for home insurance
established by the pool shall be the same as those utilized by the
largest number of insurers by premium volume writing home insurance
in
this state. Any change in the rates for an HO-2 HO-3
form
replacement cost policy by those insurers that would produce a
change
in excess of 5% in the HO-2 HO-3 pool rates for any
territory shall be reflected as soon as reasonably practicable in
the
HO-2 HO-3 pool rates.
HO-2 HO-3
pool rates shall be
reviewed at least annually, but shall not be revised more often
than quarterly.
(2) The pool shall incorporate in each rating plan for home
insurance the following discounts:
(a) Senior citizen discount in conformity with section 2111d.
(b) Discount for being claim free in the immediately preceding
3 years.
(c) Security system discount.
(d) Deadbolt lock discount.
(e) Fire extinguisher discount.
(f) Any other discount required or authorized by the
commissioner by order or rule.
(3) (2)
In addition to the provisions of subsection (1), the
premium established for the repair cost policy offered by the pool
shall not exceed the premium for an amount of insurance equal to
80% of the replacement cost of the property under the replacement
cost
policy of the pool equivalent to the HO-2 HO-3
form
replacement cost policy filed and in effect in this state for a
licensed rating organization. Premiums for dwellings with identical
replacement costs shall vary on a schedule determined by the pool
in accordance with the insured value of the dwelling.
(4) (3)
The pool or any other association or organization
designated by the pool shall develop statistical plans, rating
rules, classifications, territory rating plans, and manuals of
classification for home insurance issued on behalf of the pool
consistent with this section.
(5) (4)
The pool shall offer at least the following home
insurance policy forms:
(a)
An HO-2 HO-3 form replacement cost policy equivalent to
the
HO-2 HO-3 form replacement cost policy filed and in effect in
this state for a licensed rating organization.
(b) A repair cost policy providing the deductibles, terms and
conditions, perils insured against, and types and amounts of
coverage equivalent to those provided by the HO-2 replacement cost
policy filed and in effect for a licensed rating organization.
(c)
An HO-3 form replacement cost policy equivalent to the HO-
3
form replacement cost policy filed and in effect in this state
for
a licensed rating organization. The rates established by the
pool
for the HO-3 form replacement cost policy offered pursuant to
this
subdivision shall be calculated to generate a total premium
sufficient
to cover the expected losses and expenses of the pool
related
to the HO-3 replacement cost policy that the pool will
likely
incur during the period for which the premium is applicable.
The
premium shall include an amount to cover incurred but not
reported
losses for the period and shall be adjusted for any excess
or
deficient premiums from previous periods. Excesses or
deficiencies
from previous periods shall be fully adjusted in a
single
period or over several periods in a manner provided for in
the
plan of operation. Rates established by the pool under this
subdivision
shall not be based upon the weighted average
methodology
provided for in subsection (1).
(6) (5)
Rates and policy forms shall be filed in accordance
with such provisions of this chapter as the commissioner
designates.
(6)
The commissioner shall report in writing to the senate and
house
of representatives standing committees on insurance issues by
July 1, 2005 on the effect in chapter 29 that the amendatory act
that
added this subsection has had on home insurance premiums in
this
state.