May 21, 2015, Introduced by Senator YOUNG and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 2021, 2105, 2106, 2108, 2109, 2110, 2111,
2114, 2118, 2120, 2127, 2236, 2400, 2406, 2430, 2436, 2438, 2458,
2462, 2472, 2600, 2606, 2608, 2616, 2628, 2630, 2636, 2652, 2654,
2664, 2930, 3020, 3321, and 3340 (MCL 500.2021, 500.2105, 500.2106,
500.2108, 500.2109, 500.2110, 500.2111, 500.2114, 500.2118,
500.2120, 500.2127, 500.2236, 500.2400, 500.2406, 500.2430,
500.2436, 500.2438, 500.2458, 500.2462, 500.2472, 500.2600,
500.2606, 500.2608, 500.2616, 500.2628, 500.2630, 500.2636,
500.2652, 500.2654, 500.2664, 500.2930, 500.3020, 500.3321, and
500.3340), section 2021 as added and section 2436 as amended by
1982 PA 7, section 2111 as amended by 2012 PA 441, sections 2118
and 2120 as amended by 2007 PA 35, section 2236 as amended by 2014
PA 140, section 2400 as amended by 1982 PA 8, section 2406 as
amended by 1993 PA 200, section 2458 as amended by 1988 PA 262,
section 2930 as amended by 2002 PA 492, section 3020 as amended by
2006 PA 106, and section 3340 as amended by 1986 PA 10, and by
adding sections 2026a, 2094, 2103a, 2106a, 2107a, 2109a, 2109b,
2111c, 2128, 2128a, 2128b, 2128c, 2128d, 2128e, 2128f, and 3105a;
and to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2021. An unfair method of competition and an unfair or
deceptive act or practice in the business of insurance includes
failure
by a rating organization and an insurer which makes its own
rates,
within a reasonable time after
receiving written request
therefor
for the information and upon payment of such a reasonable
charge
as it may make, to furnish to any an insured affected by a
rate
made by it, or to the insured's authorized representative, of
such
insured, all pertinent information
to such the rate.
Sec. 2026a. (1) It is an unfair method of competition and an
unfair or deceptive act or practice in the business of insurance
for a private passenger nonfleet automobile insurer or the
insurer's agent to solicit, offer, pay, or receive a kickback or
bribe in connection with the process of adjusting, resolving,
denying, or litigating a claim for automotive repair.
(2) An insurer or an insurer's agent who violates this section
is guilty of a felony punishable by imprisonment for not less than
1 year or more than 5 years, or a fine of not more than $50,000.00,
or both, and in addition, the insurer is subject to the certificate
of authority revocation proceedings of this chapter.
Sec. 2094. An individual threatened with injury or injured
directly or indirectly by a private passenger nonfleet automobile
insurer's violation of any provision of this chapter may bring an
action for appropriate injunctive or other equitable relief against
immediate irreparable harm, actual damages sustained by reason of a
violation of this chapter, and, as determined by the court,
interest on the damages from the date of the complaint, taxable
costs, and reasonable attorney's fees. This remedy is in addition
to any other remedy and penalty provisions provided by this
chapter.
Sec. 2103a. As used in this chapter:
(a) "Group automobile insurance" means automobile insurance
covering not less than 25 eligible employees or members, with or
without their eligible dependents, written under a master policy
issued to and endorsed by a governmental corporation, unit, agency,
or department, or to a corporation, partnership, individual
employer, or an association, upon application of an executive
officer or trustee of the association having a constitution or
bylaws, and formed in good faith for purposes other than that of
obtaining insurance.
(b) "Total return rating" means the consideration of total
revenue and available assets of the insurer, including, but not
limited to, investment income, capital and surplus, underwriting
and operating profits, premium revenue, and all other reserves.
Sec.
2105. (1) No A policy of automobile insurance or home
insurance shall not be offered, bound, made, issued, delivered, or
renewed in this state on and after January 1, 1981, except in
conformity
with this chapter. This chapter shall does not apply to
policies of automobile insurance or home insurance offered, bound,
made, issued, delivered or renewed in this state before January 1,
1981.
(2)
This chapter shall does not apply to insurance written on
a
group, franchise, blanket policy, or similar basis which that
offers
home insurance or automobile insurance to all members of the
group, franchise plan, or blanket coverage who are eligible
persons.
Sec. 2106. Except as specifically provided in this chapter,
the
provisions of chapter 24 and
chapter 26 shall do not apply to
automobile insurance and home insurance. An insurer may use rates
for
automobile insurance or home insurance as soon as those rates
are filed. An insurer shall not use rates for automobile insurance
until those rates have been approved by the director. To the extent
that
other provisions of this code act
are inconsistent with the
provisions
of this chapter, this chapter shall
govern governs with
respect to automobile insurance and home insurance.
Sec. 2106a. To be authorized to write group automobile
insurance in this state, an insurer shall offer the group coverage
to every eligible person in the group in a uniform manner and shall
follow the rate-making, underwriting, and other applicable
provisions of this act.
Sec. 2107a. (1) By not later than 1 year after the effective
date of this section and annually thereafter, each insurer subject
to this chapter shall file base rates for automobile insurance and
shall make filings that conform to this act as amended by the
amendatory act that added this section.
(2) The director shall review a filing submitted under
subsection (1) and shall approve or disapprove the filing within 60
days after its submission.
(3) A filing approved under subsection (2) may not be revised
for 12 months after the effective date of the filing unless either
of the following applies:
(a) The revision lowers the price of the coverage.
(b) The revision is in response to a ruling or decision by the
director, the court, or a hearing officer.
(4) A rule change or other change filed with the director that
results in a change in the cost of coverage is considered a
revision in a rate filing under this section.
(5) If a filing is disapproved under subsection (2), the
insurer, within 30 days after the order of disapproval, shall make
a revised filing with the director. The revised filing is subject
to review under this chapter in the same manner as an original
filing made under this chapter.
Sec.
2108. (1) On Except as
otherwise provided in section
2107a,
on the effective date thereof, of the manual, plan, or
modification,
each insurer shall file with the commissioner
director every manual of classification, every manual of rules and
rates, every rating plan, and every modification of a manual of
classification,
manual of rules and rates, or a rating plan which
that it proposes to use for automobile insurance and home
insurance.
Each filing shall must state the character and extent of
the coverage contemplated. Each insurer subject to this chapter who
maintains rates in any part of this state shall at all times
maintain rates in effect for all eligible persons meeting the
underwriting criteria of the insurer.
(2)
An Except for filings
concerning rates, an insurer may
satisfy
its obligation to make filings under subsection (1) by
becoming a member of, or a subscriber to, a licensed rating
organization
licensed under chapter 24 or chapter 26 which that
makes
those filings, and by filing with the commissioner director a
copy
of its authorization of the rating organization to make those
filings
on its behalf. Nothing contained in this This chapter shall
be
construed as requiring any does
not require an insurer to become
a member of or a subscriber to any rating organization. Insurers
may file and use deviations from filings made on their behalf,
which
and those deviations shall be are subject
to the provisions
of
this chapter.
(3)
Each filing shall under
this section must be accompanied
by a certification by or on behalf of the insurer that, to the best
of its information and belief, the filing conforms to the
requirements of this chapter.
(4)
Each filing shall under
this section must include
information that supports the filing with respect to the
requirements of section 2109 or 2109a, as applicable. The
information may include 1 or more of the following:
(a)
The experience or judgment of the insurer or rating
organization
making the filing.
(b)
The interpretation of the insurer or rating organization
of any statistical data it relies upon.
(c)
The experience of other insurers. or rating organizations.
(d) Any other relevant information.
(5) A filing under this section and any accompanying
information
shall be are open to public inspection upon filing.
(6) An insurer shall not make, issue, or renew a contract or
policy
except in accordance with filings which that are in effect
for
the insurer pursuant to under
this chapter.
Sec.
2109. (1) All rates for automobile insurance and home
insurance
shall must be made in accordance with the following
provisions:
(a)
Rates shall must not be excessive. , inadequate, or
unfairly
discriminatory. A rate shall is not
be held to be
excessive unless the rate is unreasonably high for the insurance
coverage provided and a reasonable degree of competition does not
exist for the insurance to which the rate is applicable.
(b)
Rates must not be inadequate. A rate shall is not be held
to
be inadequate unless the rate is
unreasonably low for the
insurance coverage provided and the continued use of the rate
endangers the solvency of the insurer; or unless the rate is
unreasonably low for the insurance provided and the use of the rate
has or will have the effect of destroying competition among
insurers, creating a monopoly, or causing a kind of insurance to be
unavailable to a significant number of applicants who are in good
faith entitled to procure that insurance through ordinary methods.
(c) Rates must not be unfairly discriminatory. A rate for a
coverage is unfairly discriminatory in relation to another rate for
the same coverage if the differential between the rates is not
reasonably justified by differences in losses, expenses, or both,
or by differences in the uncertainty of loss, for the individuals
or
risks to which the rates apply. A reasonable justification shall
must be supported by a reasonable classification system; by sound
actuarial
principles when if applicable; and by actual and credible
loss
and expense statistics or, in the case of for new coverages
and classifications, by reasonably anticipated loss and expense
experience. A rate is not unfairly discriminatory because it
reflects differences in expenses for individuals or risks with
similar anticipated losses, or because it reflects differences in
losses for individuals or risks with similar expenses.
(2) A determination concerning the existence of a reasonable
degree
of competition with respect to subsection (1)(a) shall must
take into account a reasonable spectrum of relevant economic tests,
including the number of insurers actively engaged in writing the
insurance
in question, the present availability of such the
insurance compared to its availability in comparable past periods,
the
underwriting return of that the
insurance over a period of time
sufficient to assure reliability in relation to the risk associated
with
that the insurance, and the difficulty encountered by new
insurers in entering the market in order to compete for the writing
of
that the insurance.
Sec. 2109a. (1) The director shall review all rates for
automobile insurance by examining the insurer's data filed under
section 2128. The review must be made in accordance with total
return rating and the following provisions:
(a) Rates must not be excessive, inadequate, or unfairly
discriminatory. The director shall not approve a rate unless it is
actuarially justified based upon the data filed under section 2128.
(b) A rate is not inadequate unless the rate, after
consideration of investment income and surplus, is unreasonably low
for the insurance coverage provided and is insufficient to sustain
projected losses and expenses; or unless the rate is unreasonably
low for the insurance provided and the use of the rate has or will
have the effect of destroying competition among insurers, creating
a monopoly, or causing a kind of insurance to be unavailable to a
significant number of applicants who are in good faith entitled to
procure that insurance through ordinary methods.
(c) A rate for a coverage is unfairly discriminatory in
relation to another rate for the same coverage if the differential
between the rates is not reasonably justified by differences in
losses, expenses, or both, or by differences in the uncertainty of
loss, for the individuals or risks to which the rates apply. A
reasonable justification must be supported by a reasonable
classification system; by sound actuarial principles if applicable;
and by actual and credible loss and expense statistics or, for new
coverages and classifications, by reasonably anticipated loss and
expense experience. A rate is not unfairly discriminatory because
it reflects differences in expenses for individuals or risks with
similar anticipated losses, or because it reflects differences in
losses for individuals or risks with similar expenses.
(2) The director shall not approve a rate increase for
automobile insurance unless the director determines that the data
filed under section 2128 justify a rate increase. The director
shall not approve a rate increase by examining actuarial data from
a line other than the insurer's automobile insurance line or if the
insurer fails to file the data required by section 2128. The
director shall not approve a rate increase if the director finds
the insurer's administrative expenses to be excessive.
(3) Each insurer shall submit annually to the director a
complete breakdown of litigation costs associated with first and
third party automobile insurance claims that have been received or
are in the process of being litigated and of amounts reserved to be
used for those expenses. The director shall not approve a rate if
the administrative costs associated with the litigation of first
party claims exceed 1% of the administrative costs associated with
the litigation of third party claims. Each automobile insurance
insurer's total administrative expenses must be allocated to each
territory according to the insurer's proportionate share of premium
written in the territory. Each premium charged within each
territory must contain an equal share of the administrative expense
for the territory. Rates must be filed and charged under this
section so that each automobile insurance premium includes an equal
share of each insurer's overall administrative expense.
Sec. 2109b. (1) If the director determines that any person or
organization has violated the automobile rate-making or
underwriting provisions of this chapter, the director may issue a
cease and desist order and order the person or organization to pay
a civil fine of not more than $500.00 for each violation and a
civil fine of not more than $5,000.00 for each willful violation. A
default in the payment of a civil fine under this section may be
remedied by any means authorized under the revised judicature act
of 1961, 1961 PA 236, MCL 600.101 to 600.9947. A civil fine
collected under this subsection must be used for the operation of
the automobile insurance data collection agency created in section
2128e.
(2) If the director finds that a violation of the automobile
rate-making or underwriting provisions of this chapter has occurred
and that the violation has resulted in an increase in automobile
insurance premiums or a decrease in benefits, the director shall
order the insurer to return the premium or the amount of benefits
that should have been paid and an interest charge of 12% per annum
to be applied from the time the premium was collected or the
benefit was due or would have been due to the consumer.
(3) The director may suspend the license of an insurer that
fails to comply with the director's order to correct a violation of
this chapter.
Sec. 2110. (1) In developing and evaluating rates pursuant to
the
standards prescribed in section sections
2109 and 2109a, due
consideration
shall must be given to past and prospective loss
experience
within and outside this state; , to
catastrophe hazards,
if any; to a reasonable margin for underwriting profit and
contingencies; to dividends, savings, or unabsorbed premium
deposits allowed or returned by insurers to their policyholders,
members, or subscribers; to past and prospective expenses, both
countrywide and those specially applicable to this state exclusive
of
assessments under this code; act;
to assessments under this
code;
act; to underwriting practice and judgment; and to all
other
relevant factors within and outside this state.
(2) The systems of expense provisions included in the rates
for use by any insurer or group of insurers may differ from those
of other insurers or groups of insurers to reflect the requirements
of the operating methods of the insurer or group with respect to
any kind of insurance, or with respect to any subdivision or
combination
thereof of any kind of
insurance for which subdivision
or combination separate expense provisions are applicable.
(3) Risks may be grouped by classifications for the
establishment of rates and minimum premiums. The classifications
may measure differences in losses, expenses, or both.
Sec. 2111. (1) Notwithstanding any provision of this act or
this chapter to the contrary, classifications and territorial base
rates
used by an insurer in this state with respect to automobile
insurance
or home insurance shall and classifications used by an
insurer in this state with respect to automobile insurance must
conform to the applicable requirements of this section.
(2) Classifications established under this section for
automobile
insurance shall must be based only on 1 or more of the
following factors, which shall be applied by an insurer on a
uniform basis throughout this state:
(a) With respect to all automobile insurance coverages:
(i) Either the age of the driver; the length of driving
experience; or the number of years licensed to operate a motor
vehicle.
(ii) Driver primacy, based on the proportionate use of each
vehicle insured under the policy by individual drivers insured or
to be insured under the policy.
(iii) Average miles driven weekly, annually, or both.
(iv) Type of use, such as business, farm, or pleasure use.
(v) Vehicle characteristics, features, and options, such as
engine displacement, ability of the vehicle and its equipment to
protect passengers from injury, and other similar items, including
vehicle make and model.
(vi) Daily or weekly commuting mileage.
(vii) Number of cars insured by the insurer or number of
licensed operators in the household. However, number of licensed
operators
shall may not be used as an indirect measure of marital
status.
(viii) Amount of insurance.
(b) In addition to the factors prescribed in subdivision (a),
with respect to personal protection insurance coverage:
(i) Earned income.
(ii) Number of dependents of income earners insured under the
policy.
(iii) Coordination of benefits.
(iv) Use of a safety belt.
(v) The waiver of coverage for work loss benefits under
section 3107.
(c) In addition to the factors prescribed in subdivision (a),
with respect to collision and comprehensive coverages:
(i) The anticipated cost of vehicle repairs or replacement,
which may be measured by age, price, cost new, or value of the
insured automobile, and other factors directly relating to that
anticipated cost.
(ii) Vehicle make and model.
(iii) Vehicle design characteristics related to vehicle
damageability.
(iv) Vehicle characteristics relating to automobile theft
prevention devices.
(d) With respect to all automobile insurance coverage other
than comprehensive, successful completion by the individual driver
or drivers insured under the policy of an accident prevention
education course that meets the following criteria:
(i) The course shall include includes a
minimum of 8 hours of
classroom instruction.
(ii) The course shall include, includes, but is not be limited
to, a review of all of the following:
(A) The effects of aging on driving behavior.
(B) The shapes, colors, and types of road signs.
(C) The effects of alcohol and medication on driving.
(D) The laws relating to the proper use of a motor vehicle.
(E) Accident prevention measures.
(F) The benefits of safety belts and child restraints.
(G) Major driving hazards.
(H) Interaction with other highway users, such as
motorcyclists, bicyclists, and pedestrians.
(3) Each insurer shall establish a secondary or merit rating
plan for automobile insurance, other than comprehensive coverage. A
secondary
or merit rating plan required under this subsection shall
must provide for premium surcharges for any or all coverages for
automobile insurance, other than comprehensive coverage, based upon
any or all of the following, when that information becomes
available to the insurer:
(a) Substantially at-fault accidents.
(b) Convictions for, determinations of responsibility for
civil infractions for, or findings of responsibility in probate
court for civil infractions for violations under chapter VI of the
Michigan vehicle code, 1949 PA 300, MCL 257.601 to 257.750.
However,
an insured shall must not be merit rated for a civil
infraction under chapter VI of the Michigan vehicle code, 1949 PA
300, MCL 257.601 to 257.750, for a period of time longer than that
for which the secretary of state's office carries points for that
infraction on the insured's motor vehicle record.
(4) An insurer shall not establish or maintain rates or rating
classifications for automobile insurance based on sex or marital
status.
(5) Notwithstanding other provisions of this chapter,
automobile
insurance risks may shall be grouped by territory as
prescribed by the director. The director shall establish uniform
territorial rating to be used by all automobile insurance insurers
doing business in this state. Territorial boundaries must be based
on objective criteria, including traffic patterns, and be related
to the driving environment including, but not limited to, density
of traffic, regularity of traffic flow, traffic route size, and
types of roadway. A territory must not include less than 1 county
but may include more than 1 county. An insurer shall not charge a
territorial base rate for an automobile insurance policy unless the
territorial rating scheme used by the insurer has been approved by
the director. An insurer shall establish 1 actuarially sound base
rate for each prescribed territory, which base rate must be
approved by the director under this chapter.
(6) This section does not limit insurers or rating
organizations from establishing and maintaining statistical
reporting territories. This section does not prohibit an insurer
from establishing or maintaining, for automobile insurance, a
premium discount plan for senior citizens in this state who are 65
years of age or older, if the plan is uniformly applied by the
insurer throughout this state. If an insurer has not established
and maintained a premium discount plan for senior citizens, the
insurer shall offer reduced premium rates to senior citizens in
this state who are 65 years of age or older and who drive less than
3,000 miles per year, regardless of statistical data.
(7) Classifications established under this section for home
insurance other than inland marine insurance provided by policy
floaters
or endorsements shall must
be based only on 1 or more of
the following factors:
(a) Amount and types of coverage.
(b) Security and safety devices, including locks, smoke
detectors, and similar, related devices.
(c) Repairable structural defects reasonably related to risk.
(d) Fire protection class.
(e) Construction of structure, based on structure size,
building material components, and number of units.
(f) Loss experience of the insured, based on prior claims
attributable to factors under the control of the insured that have
been paid by an insurer. An insured's failure, after written notice
from the insurer, to correct a physical condition that presents a
risk
of repeated loss shall be considered is a factor under the
control of the insured for purposes of this subdivision.
(g) Use of smoking materials within the structure.
(h) Distance of the structure from a fire hydrant.
(i) Availability of law enforcement or crime prevention
services.
(8) Notwithstanding other provisions of this chapter, home
insurance risks may be grouped by territory.
(9) An insurer may use factors in addition to those permitted
by this section for insurance if the plan is consistent with the
purposes of this act and reflects reasonably anticipated reductions
or increases in losses or expenses.
Sec. 2111c. (1) By not later than 1 year after the effective
date of this section, each automobile insurance insurer shall file
base rates for automobile insurance that conform to this act as
amended by the 2015 amendatory act that added this section and, for
each uniform territory, reflect a reduction that is at least an
overall 20% reduction from the aggregate rates previously charged
in the territory by the 10 automobile insurance insurers that have
the greatest market share in the state based on rates in effect as
of May 1, 2014. The director shall require a rate reduction to this
level unless the insurer, after conforming fully with this act, can
demonstrate that a different rate level is actuarially essential
under section 2109a.
(2) By not later than 1 year after the effective date of this
section, each automobile insurance insurer who did not write
automobile insurance in this state on May 1, 2014 shall file base
rates for automobile insurance that do not exceed the weighted
average of the base rates filed on May 1, 2014 by the 10 largest
automobile insurance insurers by market share.
(3) Assessments for the Michigan catastrophic claims
association, automobile theft prevention authority, and the
Michigan automobile insurance placement facility must not be
considered in achieving the reduction required by subsections (1)
and (2).
Sec.
2114. (1) A person or organization aggrieved with respect
to
any filing which that is in effect and which that affects
the
person
or organization may make written application to the
commissioner
director for a hearing on the filing. However, the
insurer
or rating organization which that
made the filing shall not
be
authorized to proceed under this
subsection. The application
shall
must specify the grounds to be relied upon by the
applicant.
If
the commissioner director finds that the application is made in
good faith, that the applicant would be so aggrieved if the grounds
specified are established, or that the grounds specified otherwise
justify
holding a hearing, the commissioner, director, not more
than 30 days after receipt of the application, shall hold a hearing
in
accordance with Act No. 306 of the Public Acts of 1969, as
amended,
the administrative procedures
act of 1969, 1969 PA 306,
MCL 24.201 to 24.328, upon not less than 10 days' written notice to
the
applicant, the insurer, and the rating organization which that
made the filing.
(2) If after a hearing initiated under subsection (1) or upon
the
commissioner's director's own motion pursuant to Act No. 306 of
the
Public Acts of 1969, as amended, the
administrative procedures
act
of 1969, 1969 PA 306, MCL 24.201 to 24.328, the commissioner
director finds that a filing does not meet the requirements of
sections
2109, and 2109a,
or 2111, as applicable, the commissioner
director shall issue an order stating the specific reasons for that
finding. The order shall state when, within a reasonable time after
issuance
of the order, the filing shall will
be considered no
longer
effective. A The director
shall send a copy of the order
shall
be sent to the applicant, if any,
and to each insurer and
rating
organization subject to the order. The order shall does not
affect a contract or policy made or issued before the date the
filing
becomes ineffective, as indicated in the commissioner's
director's order.
Sec. 2118. (1) As a condition of maintaining its certificate
of authority, an insurer shall not refuse to insure, refuse to
continue to insure, or limit coverage available to an eligible
person for automobile insurance, except in accordance with
underwriting
rules established pursuant to under
this section and
sections 2119 and 2120.
(2) The underwriting rules that an insurer may establish for
automobile
insurance shall must be based only on the following:
(a) Criteria identical to the standards set forth in section
2103(1).
(b) The insurance eligibility point accumulation in excess of
the amounts established by section 2103(1) of a member of the
household of the eligible person insured or to be insured, if the
member of the household usually accounts for 10% or more of the use
of a vehicle insured or to be insured. For purposes of this
subdivision, a person who is the principal driver for 1 automobile
insurance
policy shall be is rebuttably presumed not to usually
account for more than 10% of the use of other vehicles of the
household not insured under the policy of that person.
(c) With respect to a vehicle insured or to be insured,
substantial modifications from the vehicle's original manufactured
state for purposes of increasing the speed or acceleration
capabilities of the vehicle.
(d)
Except as otherwise provided in section 2116a, failure by
the
person to provide proof that insurance required by section 3101
was
maintained in force with respect to any vehicle that was both
owned
by the person and driven or moved by the person or by a
member
of the household of the person during the 6-month period
immediately
preceding application. Such proof shall take the form
of
a certification by the person on a form provided by the insurer
that
the vehicle was not driven or moved without maintaining the
insurance
required by section 3101 during the 6-month period
immediately
preceding application.
(d) (e)
Type The type of vehicle insured or to be insured,
based on 1 of the following, without regard to the age of the
vehicle:
(i) The vehicle is of limited production or of custom
manufacture.
(ii) The insurer does not have a rate lawfully in effect for
the type of vehicle.
(iii) The vehicle represents exposure to extraordinary expense
for repair or replacement under comprehensive or collision
coverage.
(e) (f) Use of a vehicle insured or to be insured for
transportation of passengers for hire, for rental purposes, or for
commercial
purposes. Rules under this subdivision shall must not
be
based on the use of a vehicle for volunteer or charitable purposes
or for which reimbursement for normal operating expenses is
received.
(f) (g)
Payment of a minimum deposit at the
time of
application or renewal, not to exceed the smallest deposit required
under an extended payment or premium finance plan customarily used
by the insurer.
(g) (h)
For purposes of requiring
comprehensive deductibles of
not more than $150.00, or of refusing to insure if the person
refuses to accept a required deductible, the claim experience of
the person with respect to comprehensive coverage.
(h) (i)
Total abstinence from the
consumption of alcoholic
beverages
except if such unless the beverages are consumed as part
of
a religious ceremony. However, an insurer shall not utilize use
an underwriting rule based on this subdivision unless the insurer
has been authorized to transact automobile insurance in this state
prior
to before January 1, 1981, and has consistently utilized used
such an underwriting rule as part of the insurer's automobile
insurance underwriting since being authorized to transact
automobile insurance in this state.
(i) (j)
One or more incidents involving a
threat, harassment,
or physical assault by the insured or applicant for insurance on an
employee
of an insurer, employee,
agent, producer, or agent
employee of a producer while acting within the scope of his or her
employment, so
long as if a report of the incident was filed with
an appropriate law enforcement agency.
Sec. 2120. (1) Affiliated insurers may establish underwriting
rules so that each affiliate will provide automobile insurance only
to certain eligible persons. This subsection shall apply only if an
eligible person can obtain automobile insurance from 1 of the
affiliates.
The underwriting rules shall be in compliance must
comply with this section and sections 2118 and 2119.
(2) An insurer may establish separate rating plans so that
certain eligible persons are provided automobile insurance under 1
rating plan and other eligible persons are provided automobile
insurance
under another rating plan. This subsection shall apply
applies only if all eligible persons can obtain automobile
insurance under a rating plan of the insurer. Underwriting rules
consistent
with this section and sections 2118 and 2119 shall must
be established to define the rating plan applicable to each
eligible person.
(3)
Underwriting rules under this section shall must be
based
only on the following:
(a) With respect to a vehicle insured or to be insured,
substantial modifications from the vehicle's original manufactured
state for purposes of increasing the speed or acceleration
capabilities of the vehicle.
(b)
Except as otherwise provided in section 2116a, failure of
the
person to provide proof that insurance required by section 3101
was
maintained in force with respect to any vehicle owned and
operated
by the person or by a member of the household of the
person
during the 6-month period immediately preceding application
or
renewal of the policy. Such proof shall take the form of a
certification
by the person that the required insurance was
maintained
in force for the 6-month period with respect to such
vehicle.
(b) (c)
For purposes of insuring persons who
have refused a
deductible
lawfully required under section 2118(2)(h), 2118(2)(g),
the claim experience of the person with respect to comprehensive
coverage.
(c) (d)
Refusal of the person to pay a
minimum deposit
required
under section 2118(2)(g).2118(2)(f).
(d) (e)
A person's insurance eligibility
point accumulation
under section 2103(1)(h), or the total insurance eligibility point
accumulation of all persons who account for 10% or more of the use
of 1 or more vehicles insured or to be insured under the policy.
(e) (f)
The type of vehicle insured or to
be insured as
provided
in section 2118(2)(e).2118(2)(d).
Sec.
2127. The commissioner director
may by rule prospectively
require insurers, rating organizations, and advisory organizations
to
collect and report data only to the extent necessary to monitor
and evaluate the automobile and home insurance markets in this
state.
The commissioner director shall authorize the use of
sampling techniques in each instance where sampling is practicable
and consistent with the purposes for which the data are to be
collected and reported. Rules promulgated under this section are in
addition to, and do not replace, the reporting requirements in
section 2128.
Sec. 2128. On or before April 1 of each year, each insurer who
issues automobile insurance in this state shall file with the
director and with the automobile insurance data collection agency
created in section 2128e on forms prescribed by the automobile
insurance data collection agency, the following automobile
insurance data, by territory, for the prior calendar year:
(a) With respect to personal protection insurance coverage:
(i) The number of claims for personal protection insurance
benefits for which payment is made.
(ii) The number of claims for personal protection insurance
benefits that are closed without payment.
(iii) The number of claims for personal protection insurance
benefits that involve some form of litigation and are closed
without payment.
(iv) The number of claims for personal protection insurance
benefits that involve litigation and for which payment is made
after litigation commences, including the length of time between
the filing of the claim and the first payment.
(v) The amount of interest charges paid on claims for personal
protection insurance benefits and the number of cases for which
interest charges have been paid.
(vi) The litigation costs for claims for personal protection
insurance benefits.
(vii) The number of cases going to verdict and the amount of
the verdict in those cases in which an award is made.
(viii) The number of verdicts of no cause of action.
(ix) The number of cases in which attorney fees are paid, the
total amount of attorney fees paid, and the amount of attorney fees
paid for each case in which fees were paid.
(b) With respect to property protection insurance coverage:
(i) The number of third party automobile bodily injury tort
claims closed by payment to the claimant before the commencement of
litigation and a breakdown of how many of these claims were death
threshold claims, serious impairment of body function threshold
claims, and permanent serious disfigurement threshold claims.
(ii) The number of third party automobile bodily injury tort
claim lawsuits filed, and a breakdown of how many were filed for
death threshold claims, serious impairment of body function
threshold claims, and permanent serious disfigurement threshold
claims.
(iii) The number of third party automobile bodily injury tort
claims closed by payment to the claimant after the commencement of
litigation and a breakdown of how many of these claims were death
threshold claims, serious impairment of body function threshold
claims, and permanent serious disfigurement threshold claims.
(iv) The dollar amount paid to claimants to settle third party
automobile bodily injury tort claims before and after litigation
had been commenced and a breakdown of the dollar amounts paid for
death threshold claims, serious impairment of body function
threshold claims, and permanent serious disfigurement threshold
claims.
(v) The number and dollar amount paid or reserved for all
bodily injury claims set up or opened, indicating the number and
dollar amount of reserves for claims remaining open at the end of
the reporting period.
Sec. 2128a. Each automobile insurance insurer writing
automobile insurance in this state shall file annually on or before
April 1 with the director a certified audit of the insurer's books
and records prepared by an independent certified public accountant.
Sec. 2128b. (1) On or before January 15, 2017 and every 2
years thereafter, the director shall issue a preliminary report
detailing the state of competition or availability in the
automobile insurance market on a statewide basis and delineating
specific classifications, kinds or types of insurance, if any, as
to which competition or availability does not exist and shall hold
a public hearing on the report. The report must be based on
relevant economic tests, including, but not limited to, those in
subsection (3). The findings in the report must not be based on any
single measure of competition, but appropriate weight must be given
to all measures of competition. The report must include a
certification of whether competition or availability exists. A
person who disagrees with the report and findings of the director
may request a contested hearing under the administrative procedures
act of 1969, 1969 PA 306, MCL 24.201 to 24.328, within 60 days
after issuance of the preliminary report.
(2) On or before August 1, 2017 and every 2 years thereafter,
the director shall issue a final report that must include a final
certification of whether a reasonable degree of competition or
availability exists in the automobile insurance market on a
statewide basis and, if competition or availability does not exist,
a plan to create competition or availability. The final report and
certification must be supported by substantial evidence.
(3) For purposes of determining whether competition or
availability exists in the automobile insurance market, the
director shall consider all of the following:
(a) The extent to which any insurer controls the automobile
insurance market or any portion of that market. With respect to
competition on a statewide basis, the director shall not consider
an insurer to control the automobile insurance market unless it has
more than a 15% market share.
(b) Whether the total number of insurers writing automobile
insurance in this state is sufficient to provide multiple options
and adequate service to individuals.
(c) The disparity among automobile insurance rates and
classifications to the extent that the classifications result in
rate differentials.
(d) The availability of automobile insurance to individuals in
all geographic areas of this state.
(e) The residual market share.
(f) The overall rate level.
(g) Any other factors the director considers relevant.
(4) A plan to create competition or availability must only
relate to those geographic areas, classifications, or kinds or
types of risks where or as to which competition or availability has
been certified not to exist. The plan may include methods designed
to create competition or availability as the director considers
necessary, and may provide for the director to do 1 or more of the
following:
(a) Authorize, by order, joint underwriting activities in a
manner specified in the director's order.
(b) Modify the rate approval process in a manner to increase
competition or availability while at the same time providing for
reasonably timely rate approvals. Modifications under this
subdivision do not affect the requirements of sections 2106 and
2107a.
(c) Order excess profits regulation. Excess profits regulation
authorized by this subdivision must be based on rules promulgated
under the administrative procedures act of 1969, 1969 PA 306, MCL
24.201 to 24.328. Excess profits must include both underwriting
profits and all after-tax investment or investment profit or loss
from unearned premiums and loss reserves attributable to automobile
insurance. The director, pursuant to excess profits regulation, may
establish forms for the reporting of financial data by the insurer.
(d) Establish and require automobile insurance rates, by
order, that insurers must use as a condition of maintaining their
certificate of authority. The order setting the rates must take
effect not less than 90 days or more than 150 days after the order
is issued.
(e) Establish and implement a plan to assist in informing
consumers of how to obtain automobile insurance at the most
favorable rates and how to obtain benefits for which they are
eligible. The plan may include the use of toll-free telephone
numbers for use by automobile insurance consumers and may provide
for the distribution of information to local units of government.
(5) The reports and certifications required under subsections
(1) and (2) must be forwarded to the governor, the clerk of the
house, the secretary of the senate, and all the members of the
house of representatives and senate standing committees on
insurance issues.
Sec. 2128c. (1) Each insurer writing 7% or more of the
automobile insurance in this state shall geographically market
automobile insurance proportionate to the number of registered
vehicles in each area of this state. Beginning 1 year after the
effective date of this section, each insurer writing 7% or more of
the automobile insurance in this state shall submit annually to the
director a marketing plan indicating the number of producers that
market for the insurer and the location of their offices. The
director shall determine the adequacy of each insurer's marketing
plan and approve or disapprove the plan within 30 days after the
director's receipt of the plan.
(2) If the director, after reviewing an automobile insurer's
marketing plan, finds the plan is not in compliance with subsection
(1), the director shall notify the insurer in writing of the
insurer's failure to comply with the law, shall recommend revisions
to the insurer's plan, and shall require that a revised plan be
resubmitted within 30 days. The director shall approve or
disapprove an insurer's revisions to the plan within 30 days after
the director's receipt of the revised plan.
(3) If the director finds that an automobile insurance insurer
has willfully violated this section, the director may suspend or
revoke the insurer's license to do business and may order the
insurer to pay a civil fine of not more than $10,000.00 for each
violation.
(4) If the director finds that an automobile insurance insurer
has failed to file a marketing plan complying with this section,
has failed to revise a plan pursuant to the director's finding, or
has consistently failed to submit an acceptable marketing plan, the
director may suspend or revoke the insurer's license to do business
and may order the insurer to pay a civil fine of not more than
$2,000.00 for each occurrence.
(5) The director shall notify each automobile insurance
insurer licensed in this state of the marketing plan filing
requirement.
Sec. 2128d. (1) If the director finds, after a hearing held
under the administrative procedures act of 1969, 1969 PA 306, MCL
24.201 to 24.328, that access to a reasonably competitive and
convenient automobile insurance market in this state is lacking for
certain consumers, the director may order the Michigan automobile
insurance placement facility to develop a market access plan,
subject to the director's approval, to assure that those consumers
have reasonable and convenient access to the Michigan automobile
insurance placement facility and competitive insurance markets in
this state.
(2) If a market access plan under subsection (1) is not
submitted within 30 days after the date of the director's order, or
if the plan does not meet the director's approval, the director
shall develop a market access plan and order its implementation by
the Michigan automobile insurance placement facility until a plan
established by the Michigan automobile insurance placement facility
is approved by the director.
Sec. 2128e. (1) There is created an automobile insurance data
collection agency to administer the automobile insurance data
collection requirements of this act. The governing board of the
automobile insurance data collection agency is composed of the
director and 8 members appointed by the director as follows:
(a) Two persons who represent a private automobile insurance
insurer that does not hold more than 15% of the state's overall
market share at the time its representative serves on the board.
(b) Two persons who represent the general public of this
state.
(c) One person who is a licensed medical professional in this
state and who does not own any portion of an automobile insurance
insurer or manage directly or indirectly an automobile insurance
insurer's affairs.
(d) One person who is a licensed attorney in this state, who
does not own any portion of an automobile insurance insurer or
manage directly or indirectly an automobile insurance insurer's
affairs, and who has at least 5 years of experience in automobile
accident related litigation.
(e) One person who is an independent insurance agent.
(f) One person who has at least 10 years of data processing
experience in a combination of hardware acquisition and software
development.
(2) A member of the governing board of the automobile
insurance data collection agency shall serve for a term of 2 years.
(3) The automobile insurance data collection agency, under the
direction and control of the director and subject to the director's
approval, shall do all of the following:
(a) Prescribe rate filing forms and data collection forms and
establish uniform data reporting requirements necessary to satisfy
this chapter.
(b) Analyze reported data, analyze automobile insurance
insurers' rate-making data, and report these findings to the
director, and collect and analyze other pertinent data at the
director's request.
(c) Prepare reports on automobile insurance as requested by
the director.
(d) Establish uniform classification symbols or other uniform
designations for use by automobile insurance insurers to establish
risk associated with each type of vehicle to be insured.
(e) In a uniform manner, gather all data necessary to
accomplish total return rate-making. Information must be gathered
that enables the director to assess an insurer's actual loss
experience, level of profit, interest income, method for assessing
anticipated losses, particular application of loss trend factors,
pure premium, frequency of losses based on the number of vehicles
insured, and the loss costs and frequency of losses associated with
the component parts of each aspect of coverage, including, but not
limited to, medical, wage-loss, replacement services, survivors
benefits, death benefit, collision coverage, comprehensive coverage
with theft reported as a separate component, bodily injury or
liability coverage reported by policy limits, property protection,
and all other benefits being marketed by the insurer.
(f) Gather detailed data about insurers' administrative
expenses and their relationship to the premium charged, including
costs for each type of litigation associated with automobile
insurance claims resolution, salaries, fringe benefits,
commissions, and costs associated with overhead and other fixed
costs.
(g) Require each insurer to list the items that are used to
compose a base rate and require each insurer to explain the
applications of base rates.
(h) Establish forms to enable the collection of data
sufficient to permit the director to determine that all aspects of
automobile insurance rate-making are actuarially sound and that
automobile insurance rates are not excessive or discriminatory.
(i) Require the reporting of all automobile insurance claims
costs and the frequency of each type of loss and provide the
director with this data.
(j) Collect all automobile insurance rate-making data and
evaluate this data by determining its actuarial soundness and by
making comparisons based on statewide uniform rating territories as
established by this act.
(k) Ensure that all necessary data are collected and analyzed
in a manner that complies with this chapter.
(l) Subject to the approval of the director, designate 1
advisory organization to implement the agency's data collection
plan and the compilation of rate-making and other financial data
from automobile insurance insurers. The designated advisory
organization shall report its findings to the automobile insurance
data collection agency, which shall report to the director.
(m) Report to the director any known violation of this act.
(n) Complete any other task required to satisfy this act as
requested by the director.
(4) The director shall make recommendations to the legislature
annually regarding the adequacy of statutory underwriting and rate-
making provisions based on the information gathered and analyzed by
the automobile insurance data collection agency and any other
information that the director considers appropriate.
Sec. 2128f. (1) By April 1, 2016, and by each April 1
thereafter, each insurer engaged in writing insurance coverages
that provide the security required by section 3101(1) in this
state, as a condition of its authority to transact insurance in
this state, shall pay to the automobile insurance data collection
agency an assessment equal to $1.00 multiplied by the insurer's
total earned car years of insurance providing the security required
by section 3101(1) written in this state during the immediately
preceding calendar year.
(2) Money received under subsection (1), and all other money
received by the automobile insurance data collection agency, must
be segregated and placed in a fund to be known as the data
collection fund. The automobile insurance data collection agency
shall administer the data collection fund.
(3) The automobile insurance data collection agency shall use
money in the data collection fund to pay the costs of
administration of the agency. Money in the fund is not state money.
Sec. 2236. (1) A basic insurance policy form or annuity
contract form shall not be issued or delivered to any person in
this state, and an insurance or annuity application form if a
written application is required and is to be made a part of the
policy or contract, a printed rider or indorsement form or form of
renewal certificate, and a group certificate in connection with the
policy or contract, shall not be issued or delivered to a person in
this state, until a copy of the form is filed with the department
of
insurance and financial services and approved by the director of
the
department of insurance and financial services as conforming
with
to the requirements of this act and not inconsistent
with the
law.
Failure of the director of the department of insurance and
financial
services to act within 30 days
after submittal
constitutes approval. A form described in this section, except a
policy of disability insurance as defined in section 3400, must be
plainly printed with type size not less than 8-point unless the
director
of the department of insurance and financial services
determines that portions of the form printed with type less than 8-
point is not deceptive or misleading.
(2)
An Except for filings
concerning rates, an insurer may
satisfy its obligations to make form filings by becoming a member
of, or a subscriber to, a rating organization licensed under
section 2436 or 2630 that makes those filings and by filing with
the
director of the department of insurance and financial services
a copy of its authorization of the rating organization to make the
filings on its behalf. Every member of or subscriber to a rating
organization shall adhere to the form filings made on its behalf by
the organization except that an insurer may file with the director
of
the department of insurance and financial services a substitute
form, and thereafter if a subsequent form filing by the rating
organization affects the use of the substitute form, the insurer
shall
review its use and notify the director of the department of
insurance
and financial services whether to
withdraw its substitute
form.
(3)
Beginning January 1, 1992, the The
director of the
department
of insurance and financial services shall
not approve a
form filed under this section providing for or relating to an
insurance policy or an annuity contract for personal, family, or
household purposes if the form fails to obtain the following
readability score or meet the other requirements of this
subsection, as applicable:
(a) The readability score must not be less than 45, as
determined by the method provided in subdivisions (b) and (c).
(b) The readability score shall be determined as follows:
(i) For a form containing not more than 10,000 words, the
entire form shall be analyzed. For a form containing more than
10,000 words, not less than two 200-word samples per page shall be
analyzed instead of the entire form. The samples must be separated
by at least 20 printed lines.
(ii) Count the number of words and sentences in the form or
samples and divide the total number of words by the total number of
sentences. Multiply this quotient by a factor of 1.015.
(iii) Count the total number of syllables in the form or samples
and divide the total number of syllables by the total number of
words. Multiply this quotient by a factor of 84.6. As used in this
subparagraph, "syllable" means a unit of spoken language consisting
of 1 or more letters of a word as indicated by an accepted
dictionary. If the dictionary shows 2 or more equally acceptable
pronunciations of a word, the pronunciation containing fewer
syllables may be used.
(iv) Add the figures obtained in subparagraphs (ii) and (iii) and
subtract this sum from 206.835. The figure obtained equals the
readability score for the form.
(c) For the purposes of subdivision (b)(ii) and (iii), the
following procedures shall be used:
(i) A contraction, hyphenated word, or numbers and letters when
separated by spaces is counted as 1 word.
(ii) A unit of words ending with a period, semicolon, or colon,
but excluding headings and captions, is counted as 1 sentence.
(d) In determining the readability score, the method provided
in subdivisions (b) and (c):
(i) Shall be applied to an insurance policy form or an annuity
contract, together with a rider or indorsement form usually
associated with the insurance policy form or annuity contract.
(ii) Shall not be applied to words or phrases that are defined
in an insurance policy form, an annuity contract, or riders,
indorsements, or group certificates under an insurance policy form
or annuity contract.
(iii) Shall not be applied to language specifically agreed upon
through collective bargaining or required by a collective
bargaining agreement.
(iv) Shall not be applied to language that is prescribed by
state or federal statute or by rules or regulations promulgated
under a state or federal statute.
(e) The form must contain both of the following:
(i) Topical captions.
(ii) An identification of exclusions.
(f) Each insurance policy and annuity contract that has more
than 3,000 words printed on not more than 3 pages of text or that
has more than 3 pages of text regardless of the number of words
must contain a table of contents. This subdivision does not apply
to indorsements.
(g) Each rider or indorsement form that changes coverage must
do all of the following:
(i) Contain a properly descriptive title.
(ii) Reproduce either the entire paragraph or the provision as
changed.
(iii) Be accompanied by an explanation of the change.
(h)
If a computer system approved by the director of the
department
of insurance and financial services calculates
the
readability score of a form as being in compliance with this
subsection, the form is considered in compliance with the
readability score requirements of this subsection.
(i) A variable life product or variable annuity product
approved
by the United States securities and exchange commission
Securities and Exchange Commission for sale in this state is
compliant with this section.
(4)
After January 1, 1992, any Any
change or addition to a
policy or annuity contract form for personal, family, or household
purposes, whether by indorsement, rider, or otherwise, or a change
or addition to a rider or indorsement form to the policy or annuity
contract form, which policy or annuity contract form has not been
previously
approved under subsection (3), shall must be submitted
for approval under subsection (3).
(5)
Upon written notice to the insurer, the director of the
department
of insurance and financial services may
disapprove,
withdraw approval or prohibit the issuance, advertising, or
delivery of any form to any person in this state if the form
violates this act, contains inconsistent, ambiguous, or misleading
clauses, or contains exceptions and conditions that unreasonably or
deceptively affect the risk purported to be assumed in the general
coverage of the policy. The notice must specify the objectionable
provisions
or conditions and state the reasons for the director of
the
department of insurance and financial services' director's
decision. If the form is legally in use by the insurer in this
state,
the notice must give the effective date of the director of
the
department of insurance and financial services' director's
disapproval,
which shall not be less than must
be within 30 days
after the mailing or delivery of the notice to the insurer. If the
form is not legally in use, disapproval is effective immediately.
(6) If a form is disapproved or approval is withdrawn under
this act, the insurer is entitled upon demand to a hearing before
the
director of the department of insurance and financial services
or
a deputy director of the department of insurance and financial
services
within 30 days after the notice of
disapproval or of
withdrawal
of approval. After the hearing, the director of the
department
of insurance and financial services shall
make findings
of fact and law, and either affirm, modify, or withdraw his or her
original order or decision.
(7) Any issuance, use, or delivery by an insurer of any form
without
the prior approval of the director of the department of
insurance
and financial services as required
by subsection (1) or
after withdrawal of approval as provided by subsection (5) is a
separate
violation for which the director of the department of
insurance
and financial services may order
the imposition of a
civil penalty of $25.00 for each offense, but not to exceed the
maximum penalty of $500.00 for any 1 series of offenses relating to
any 1 basic policy form, which penalty may be recovered by the
attorney general as provided in section 230.
(8) The filing requirements of this section do not apply to
any of the following:
(a) Insurance against loss of or damage to any of the
following:
(i) Imports, exports, or domestic shipments.
(ii) Bridges, tunnels, or other instrumentalities of
transportation and communication.
(iii) Aircraft and attached equipment.
(iv) Vessels and watercraft under construction or owned by or
used in a business or having a straight-line hull length of more
than 24 feet.
(b) Insurance against loss resulting from liability, other
than worker's compensation or employers' liability arising out of
the ownership, maintenance, or use of any of the following:
(i) Imports, exports, or domestic shipments.
(ii) Aircraft and attached equipment.
(iii) Vessels and watercraft under construction or owned by or
used in a business or having a straight-line hull length of more
than 24 feet.
(c) Surety bonds other than fidelity bonds.
(d) Policies, riders, indorsements, or forms of unique
character designed for and used with relation to insurance upon a
particular subject, or that relate to the manner of distribution of
benefits or to the reservation of rights and benefits under life or
disability insurance policies and are used at the request of the
individual policyholder, contract holder, or certificate holder.
Beginning
September 1, 1968, the The director of the department of
insurance
and financial services by order may
exempt from the
filing requirements of this section and sections 2242, 3606, and
4430
for so as long as he or she considers proper any insurance
document or form, except that portion of the document or form that
establishes a relationship between group disability insurance and
personal protection insurance benefits subject to exclusions or
deductibles under section 3109a, as specified in the order to which
this section is not practicably applied, or the filing and approval
of which are considered unnecessary for the protection of the
public. Insurance documents or forms providing medical payments or
income replacement benefits, except that portion of the document or
form that establishes a relationship between group disability
insurance and personal protection insurance benefits subject to
exclusions or deductibles under section 3109a, exempt by order of
the
director of the department of insurance and financial services
from the filing requirements of this section and sections 2242 and
3606
are considered approved by the director of the department of
insurance
and financial services for purposes
of section 3430.
(e) Insurance that meets both of the following:
(i) Is sold to an exempt commercial policyholder.
(ii) Contains a prominent disclaimer that states "This policy
is exempt from the filing requirements of section 2236 of the
insurance code of 1956, 1956 PA 218, MCL 500.2236." or words that
are substantially similar.
(9) As used in this section and sections 2401 and 2601,
"exempt commercial policyholder" means an insured that purchases
the insurance for other than personal, family, or household
purposes.
(10)
Every order made by the director of the department of
insurance
and financial services under the
provisions of this
section is subject to court review as provided in section 244.
Sec.
2400. (1) Except with respect to worker's compensation
insurance,
the The purpose of this chapter is to promote the public
welfare
by regulating insurance rates to the end that they shall
not
be are not excessive, inadequate, or unfairly discriminatory,
and
to authorize and regulate cooperative action among insurers in
rate-making
and in other matters within the scope of the insurance
code.
this act. Nothing in this chapter is intended (1) to
prohibit
or
discourage reasonable competition.
, or (2) to prohibit, or
encourage
except to the extent necessary to accomplish the
aforementioned
purpose, uniformity in insurance rates, rating
systems,
rating plans, or practices.
(2)
With respect to worker's compensation insurance, the The
purposes
of this chapter are :also
include the following:
(a)
To protect Protecting policyholders and the public against
the adverse effects of excessive, inadequate, or unfairly
discriminatory rates.
(b)
To promote Promoting price competition among insurers
writing
worker's compensation insurance so
as to encourage rates
which
that will result in the lowest possible rates consistent
with
the
benefits established in the
worker's disability compensation
act
of 1969, Act No. 317 of the Public Acts of 1969, as amended,
being
sections 418.101 to 418.941 of the Michigan Compiled Laws,
provided and with maintaining the solvency of insurers.
(c)
To provide Providing regulatory controls and other
activity in the absence of competition.
(d)
To improve Improving the availability, fairness, and
reliability
of worker's compensation insurance.
(2) Antitrust provisions in this chapter are not exclusive and
other provisions provided by law may apply.
(3) This chapter shall be liberally interpreted to carry into
effect the provisions of this section.
Sec. 2406. (1) Except for worker's compensation insurance,
every
each insurer shall file with the commissioner director every
manual of classification, every manual of rules and rates, every
rating plan, and every modification of any of the foregoing that it
proposes
to use. Every such In its filing,
each insurer shall state
the
proposed effective date thereof of
the filing and shall
indicate the character and extent of the coverage contemplated. If
a filing is not accompanied by the information upon which the
insurer
supports the filing, and the commissioner director does not
have sufficient information to determine whether the filing meets
the
requirements of this chapter, the commissioner director shall
within
10 days of after the filing give written notice to the
insurer
to furnish the information upon which it that supports the
filing. The information furnished in support of a filing may
include
the experience or judgment of the insurer or rating
organization
making the filing, its
interpretation of any
statistical data it relies upon, the experience of other insurers,
or
rating organizations, or any other
relevant factors. A The
department
shall make a filing and any supporting
information shall
be
open to public inspection after the
filing becomes effective.
(2) Except for worker's compensation insurance and for filings
concerning rates, an insurer may satisfy its obligation to make
such
filings by becoming a member of, or
a subscriber to, a
licensed
rating organization that makes such filings, and by filing
with
the commissioner director a copy of its authorization of the
rating
organization to make such filings on its behalf. Nothing
contained
in this This chapter shall be construed as requiring does
not require any insurer to become a member of or a subscriber to
any rating organization.
(3) For worker's compensation insurance in this state, the
insurer
shall file with the commissioner director all rates and
rating
systems. Every insurer that insures worker's compensation in
this
state on the effective date of this subsection shall file the
rates
not later than the effective date of this subsection.
(4)
Except as provided in subsection (3) and as otherwise
provided in this subsection, the rates and rating systems for
worker's
compensation insurance shall must
be filed not later than
the
date the rates and rating systems are to be effective. However,
if
the insurer providing worker's compensation insurance is
controlled
by a nonprofit health care corporation formed pursuant
to
the nonprofit health care corporation reform act, Act No. 350 of
the
Public Acts of 1980, being sections 550.1101 to 550.1704 of the
Michigan
Compiled Laws, the rates and rating systems that it
proposes
to use shall be filed with the commissioner not less than
45
days before the effective date of the filing. These filings
shall
be are considered to meet the requirements of this chapter
unless
and until the commissioner director
disapproves a filing
pursuant
to under section 2418 or 2420.
(5)
Each filing under subsections (3) and (4) shall must be
accompanied by a certification by the insurer that, to the best of
its
information and belief, the filing conforms to the requirements
of
this chapter.
(6) As a condition of maintaining its certificate of
authority, an insurer shall not do any of the following:
(a) Have any rates filed on its behalf in this state by a
rating organization.
(b) Share information with any other insurer or rating
organization concerning establishing rates or rating systems.
(c) Agree with any other insurer or rating organization to
adhere to or use any rate, rating plan, rating schedule, rating
rule, or underwriting rule in this state.
(d) Make available to any other insurer or rating organization
information on actuarial projections, trending factors, profits, or
expenses except loss adjustment expenses.
Sec.
2430. (1) In lieu Instead of the filing requirements of
this
chapter and as an alternative method of filing, any an insurer
or
rating organization may file with
the commissioner any director
a
manual of classification, rules or
rates, any a rating plan, and
every
modification of any of the foregoing which that it
proposes
to
use. , the The
filing to must indicate
the character and extent
of the coverage contemplated. Instead of the filing requirements of
this chapter and as an alternative method of filing, a rating
organization may file with the director for an insurer a manual of
classification, rules, and every modification of any of the
foregoing. The filing must indicate the character and extent of the
coverage
contemplated. Every such filing
under this section shall
must
state the effective date thereof,
shall of the filing, must
take
effect on said that date, shall must not be subject to any
waiting
period requirements, and shall be deemed is considered to
meet
the requirements of section 2403 (1) (d) (rate standards). A
2403(1)(d). The department shall make a filing and any supporting
information
shall be open to public inspection, if the filing is
not disapproved.
(2)
At any time within 15 30 days from and after the date of
any
such a filing
under subsection (1), the commissioner
director
may
give written notice to the insurer or rating organization
making
such the filing
or on whose behalf the filing was made,
specifying
in what respect and to what extent he contends such the
director
finds that the filing fails to comply
with the
requirements
of section 2403(1)(d) and fixing a
date for hearing
not
less than 10 days from after
the date of mailing of such the
notice.
At such the hearing, the factors specified in section
2406(1)
shall must be considered. If the commissioner director
after
hearing finds that the filing does not comply with the
provisions
of this chapter, he the director may issue his an order
determining
wherein in what respect and to what extent such the
filing
is deemed to be improper and fixing a date, thereafter,
within
a reasonable time, after which such the filing shall is no
longer
be effective. Any An
order of disapproval under this section
must
be entered within 30 days of after
the date of the filing
affected.
(3)
In the event that no If a notice of hearing shall be is
not
issued within 15 30 days
from after the date of any such a
filing under subsection (1), the filing shall be deemed is
considered
to be approved. If such the filing
shall be is
disapproved,
the insuring provisions of any a
contract or policy
issued
prior to before the time the order becomes effective shall
are
not be affected. But However, if
the commissioner director
disapproves
such a filing as not being in compliance with section
2403
(1) (d) (rate standards), he 2403(1)(d),
the director may
order an adjustment of the premium to be made with the policyholder
either by refund or collection of additional premium, if the amount
is substantial and equals or exceeds the cost of making the
adjustment.
The commissioner
(4)
At any time, the director may thereafter
review any such a
filing
in the manner provided in sections 2418 and 2420. , but if
so
reviewed, no However, if the director
disapproves a filing
pursuant to that review beyond the thirtieth day after the date of
filing,
the director shall not order an adjustment
of premium. may
be
ordered. Sections 2406 (2) (filing may be made by rating
organization),
2408 (1) (commissioner shall review filing as soon
as
reasonably possible), and 2412 (insurer must adhere to filing)
shall
be
(5) Sections 2406(2), 2408(1), and 2412 are applicable to
filings made under this section.
Sec. 2436. (1) A corporation, an association, a partnership,
or
an individual, whether located within in or outside of this
state,
may make application to apply
with the commissioner director
for
a license as a rating organization to make rates and insurance
contract
forms for the kinds of insurance or subdivisions thereof,
of insurance, except for worker's compensation insurance, as are
specified
in its application. and The
corporation, association,
partnership, or individual shall file with the application all of
the following:
(a) A copy of its constitution, its articles of agreement or
association,
or its certificate of incorporation
, and of its
bylaws and rules governing the conduct of its business.
(b) A list of its members and subscribers.
(c) The name and address of a resident of this state upon whom
notices
or orders of the commissioner director
or process affecting
the rating organization may be served.
(d) A statement of its qualifications as a rating
organization.
(2)
If the commissioner director
finds that the applicant is
competent, trustworthy, and otherwise qualified to act as a rating
organization and that its constitution, articles of agreement or
association,
or certificate of incorporation , and
its bylaws and
rules governing the conduct of its business conform to the
requirements
of law, he or she the director
shall issue a license
specifying
the kinds of insurance or subdivisions thereof of
insurance for which the applicant is authorized to act as a rating
organization.
Every application shall be granted or denied in whole
or
in part by the commissioner The
director, within 60 days of
after
the date of its filing, with
the commissioner.shall grant
or
deny the application in whole or in part.
(3)
The fee for the a license shall be under this section is
$25.00,
which shall be fee is in lieu of all other fees, licenses,
or
taxes imposed by the this state or any political subdivision of
the
this state.
(4)
Licenses issued pursuant to under
this section shall
remain in force for 3 years from the date of issuance unless
suspended
or revoked by the commissioner, director,
after hearing
upon
notice, pursuant to section 2478, in the event if the
rating
organization ceases to meet the requirements of this section.
(5)
Every A rating organization shall notify the commissioner
director
promptly of every a change
in any of the following:
(a) Its constitution, its articles of agreement or
association,
or its certificate of incorporation
, and its bylaws
and rules governing the conduct of its business.
(b) Its list of members and subscribers.
(c) The name and address of the resident of this state
designated
by it upon whom notices or orders of the commissioner
director or process affecting the rating organization may be
served.
Sec. 2438. (1) Subject to reasonable rules and regulations
which
have been approved by the commissioner
as reasonable, each
director,
a rating organization shall permit any
an insurer, not a
member,
to be a subscriber to its rating services for any kind of
insurance
or subdivision thereof of
insurance for which it is
authorized
licensed to act as a rating organization. Notice of
proposed
changes in such the rules and regulations shall must be
given to subscribers. Each rating organization shall furnish its
rating
services without discrimination to
its members and
subscribers.
(2)
The At the request of a
subscriber or insurer, the
director
shall review the reasonableness of any
a rule or
regulation
in its the rule's or
regulation's application to
subscribers , or the refusal of any a rating
organization to admit
an
insurer as a subscriber , shall, at the request of any
subscriber
or any such insurer, be reviewed by the commissioner at
a
hearing held upon at least 10 days' written notice to such the
rating
organization and to such the
requesting subscriber or
insurer.
If the commissioner director
finds that such the rule
or
regulation
is unreasonable in its application to subscribers, he
the
director shall order that such the rule
or regulation shall is
not
be applicable to subscribers.
(3) If the rating organization fails to grant or reject an
insurer's application for subscribership within 30 days after it
was
made, the insurer may request a review by the commissioner
director as if the application had been rejected. If the
commissioner
director finds that the insurer has been refused
admittance to the rating organization as a subscriber without
justification,
he the director shall order the rating organization
to
admit the insurer as a subscriber. If he the director finds that
the
action of the rating organization was justified, he the
director
shall make an order affirming
its action affirmed.
Sec.
2458. Every rating organization and every Each insurer,
which
makes its own rates shall, within a
reasonable time after
receiving
written request therefor for
the information and upon
payment
of such a reasonable charge, as it may make, shall
furnish
to
any an insured affected by a rate made by it, the insurer, or to
the
insured's authorized representative, of
the insured, all
pertinent
information as to the rate. Every rating organization and
every
Each insurer which makes its own rates shall
provide within
this
state reasonable means whereby any for a person aggrieved by
the
application of its the
insurer's rating system may to be
heard,
in person or by his or her authorized representative, on his or her
written request to review the manner in which the rating system has
been applied in connection with the insurance afforded to him or
her.
If the rating organization or insurer fails to grant or reject
the request within 30 days after it is made, the applicant may
proceed in the same manner as if his or her application had been
rejected.
Any A party affected by the action of the rating
organization
or insurer on the request
may appeal, within 30 days
after
written notice of the action, appeal to the commissioner,
director, who, after a hearing held upon not less than 10 days'
written
notice to the appellant and to the rating organization or
insurer, may affirm or reverse the action. A person who requests a
hearing
before the commissioner pursuant to director under this
section may be represented at the hearing by an attorney. A person,
other than an individual, that requests a hearing before the
commissioner
pursuant to director under this section may also be
represented by an officer or employee of that person. An individual
who
requests a hearing before the commissioner pursuant to director
under this section may also be represented by a relative of the
individual.
Sec.
2462. (1) Every A group, association, or other
organization
of insurers, whether located within in or outside of
this
state, which that assists insurers which make their own
filings
or rating organizations in rate
making, by the collection
and
furnishing of loss or expense statistics, or by the submission
of
recommendations, but which that does
not make filings under this
chapter, shall be known as an advisory organization.
(2)
Every Each advisory organization shall file with the
commissioner:director all of the following:
(a) A copy of its constitution, its articles of agreement or
association, or
its certificate of incorporation and of its bylaws,
rules, and
regulations governing its activities.
,
(b)
A list of its members. ,
(c) The name and address of a resident of this state upon whom
notices
or orders of the commissioner director
or process issued at
his
the director's direction may be served. ,
and
(d)
An agreement that the commissioner director may examine
such
the advisory organization in accordance with the
provisions of
under section 2468.
(3)
If, after a hearing, the commissioner director finds that
the
furnishing of such information or assistance involves any act
or
practice which that is unfair or unreasonable or otherwise
inconsistent
with the provisions of this chapter, he the director
may
issue a written order specifying in what respects such the act
or practice is unfair or unreasonable or otherwise inconsistent
with
the provisions of this chapter, and requiring the
discontinuance
of such the act or practice.
(4)
No An insurer which makes its own filings nor any
rating
organization
shall not support
its filings by statistics or adopt
rate
making recommendations, furnished
to it by an advisory
organization
which that has not complied with this section or with
an
order of the commissioner director
involving such the statistics
or
recommendations issued under
subsection (3). of this section. If
the
commissioner director finds such the insurer or rating
organization
to be is in violation of this subsection, he
the
director
may issue an order requiring the
discontinuance of such
the violation.
Sec.
2472. (1) The commissioner director
shall promulgate
reasonable rules and statistical plans, reasonably adapted to each
of
the rating systems on file with him, which the director. The
director
may be modified modify the rules and plans from time to
time. and
which Each insurer shall be used thereafter use the rules
and
plans after promulgation to the extent
applicable to its the
insurer's
particular rating system or systems, by
each insurer in
the recording and reporting of its loss and countrywide expense
experience, in order that the experience of all insurers may be
made
available at least annually in such the form and detail as
may
be
that is necessary to aid him the director in determining whether
rating systems comply with the standards set forth in section 2403.
Such
The rules and plans may also provide for the recording
and
reporting
of expense experience items which that are specially
specifically applicable to this state and are not susceptible of
determination by a prorating of countrywide expense experience. In
promulgating
such rules and plans under
this section, the
commissioner
director shall give due consideration to the rating
systems
on file with him the director
and, in order that such the
rules and plans may be as uniform as is practicable among the
several states, to the rules and to the form of the plans used for
such
rating systems in other states. No
The director shall not
require
an insurer shall be required to
record or report its loss
experience on a classification basis that is inconsistent with the
rating
system filed by it. and no The director shall not require an
insurer
shall be required to record or report its loss or expense
experience on any basis or statistical plan that differs from that
which is regularly employed and maintained in the usual course of
such
the insurer's business, or to any rating organization or
agency
of which it is not a member or subscriber. The commissioner
director may designate 1 or more rating organizations or other
agencies
to assist him in the gathering such of and making
compilations
of experience and making
compilations thereof, and
such
under this section. The director
shall make compilations shall
be
made of experience under
this section available, subject to
reasonable
rules promulgated by the commissioner, director, to
insurers and rating organizations.
(2) Reasonable rules and plans may be promulgated by the
commissioner
director for the interchange of data necessary for the
application of rating plans.
(3) In order to further uniform administration of rate
regulatory
laws, the commissioner director
and every each insurer
and
rating organization may exchange
information and experience
data
with insurance supervisory officials
, insurers and rating
organizations
in other states and may consult
with them with
respect
to rate making and the application of rating systems. In
addition, each insurer and each rating organization may exchange
historical loss data.
Sec. 2600. (1) The purpose of this chapter is to promote the
public
welfare by regulating insurance rates to the end so that
they
shall are not be excessive, inadequate, or
unfairly
discriminatory,
and to authorize and regulate cooperative action
among insurers in rate making and in other matters within the scope
of
the insurance code this
act. Nothing in this chapter is
intended
(1)
to prohibit or discourage
reasonable competition. , or (2) to
prohibit,
or encourage except to the extent necessary to accomplish
the
aforementioned purpose, uniformity in insurance rates, rating
systems,
rating plans or practices.
(2) Conformity with this chapter shall is not
be deemed to be
a
violation of section 2075. (compacts to restrain competition
prohibited).
Antitrust provisions are not
exclusive and other
provisions provided by law may apply.
(3) This chapter shall be liberally interpreted to carry this
section
into effect. the
provisions of this section.
Sec.
2606. (1) Every Each insurer shall file with the
commissioner,
director, except as to inland marine risks which that
by general custom of the business are not written according to
manual rates or rating plans, every manual, minimum, class rate,
rating schedule or rating plan, and every other rating rule, and
every
modification of any of the foregoing which that it
proposes
to
use. Every such In its filing,
each insurer shall state the
proposed
effective date thereof, of
the filing, and shall indicate
the character and extent of the coverage contemplated.
(2)
When If a filing is not accompanied by the information
upon
which the insurer supports such the
filing, and the
commissioner
director does not have sufficient information to
determine
whether such the filing meets the requirements of this
chapter,
he the director shall require such the insurer
to furnish
the
information upon which it supports such the filing and in such
event
the waiting period shall
commence as of commences on the date
such
the information is furnished. The information furnished
in
support
of a filing may include (a) the experience or judgment of
the
insurer or rating organization making the filing, (b) its
interpretation
of any statistical data it relies upon, (c) the
experience
of other insurers, or rating organizations, or (d) any
other relevant factors.
(3)
A The department shall
make a filing and any supporting
information shall be open to public inspection after the filing
becomes effective.
(4)
Specific inland marine rates on risks specially rated,
made
by a rating organization, shall be filed with the
commissioner.
(4) (5)
An Except for filings
concerning rates, an insurer may
satisfy
its obligation to make such filings by becoming a member
of,
or a subscriber to, a licensed rating organization which that
makes
such filings, and by filing with the commissioner director a
copy
of its authorization of the rating organization to make such
filings
on its behalf. Nothing contained in this This chapter shall
be
construed as requiring does
not require any insurer to become a
member of or a subscriber to any rating organization.
(5) As a condition of maintaining its certificate of
authority, an insurer shall not do any of the following:
(a) Have any rates filed on its behalf in this state by a
rating organization.
(b) Share information with any other insurer or rating
organization concerning establishing rates or rating systems.
(c) Agree with any other insurer or rating organization to
adhere to or use any rate, rating plan, rating schedule, rating
rule, or underwriting rule in this state.
(d) Make available to any other insurer or rating organization
information on actuarial projections, trending factors, profits, or
expenses except loss adjustment expenses.
Sec.
2608. (1) The commissioner director
shall review filings
as
soon as reasonably possible after they have been made in order
to
determine whether if they meet the requirements of this chapter.
(2)
Subject to the exception specified in subsection (3) of
this
section, each Each filing shall must be on file for a
waiting
period of 15 days before it becomes effective, which period may be
extended
by the commissioner director
for an additional period not
to
exceed 15 days if he the director
gives written notice within
such
the waiting period to the insurer or rating organization
which
that
made the filing that he the director needs such the additional
time
for the consideration of such the
filing. Upon written
application
by such the insurer or rating organization, the
commissioner
director may authorize a filing which he that the
director has reviewed to become effective before the expiration of
the
waiting period or any extension thereof of the waiting period.
A
filing shall be deemed is considered
to meet the requirements of
this
chapter unless disapproved by the commissioner director within
the
waiting period or any extension thereof.of the waiting period.
(3)
Specific inland marine rates on risks specially rated by a
rating
organization shall become effective when filed and shall be
deemed
to meet the requirements of this chapter until such time as
the
commissioner reviews the filing and so long thereafter as the
filing
remains in effect.
Sec.
2616. (1) If within the waiting period or any extension
thereof
of the waiting period as provided in section 2608(2), the
commissioner
director finds that a filing does not meet the
requirements
of this chapter, he the director
shall send to the
insurer
or rating organization which that
made such the filing ,
written
notice of disapproval of such the
filing specifying therein
in
what respects he respect
the director finds such the filing
fails to meet the requirements of this chapter and stating that
such
the filing shall will not become effective.
(2)
If within 30 days after a specific inland marine rate on a
risk
specially rated by a rating organization, subject to section
2608
(3) has become effective, the commissioner finds that such
filing
does not meet the requirements of this chapter, he shall
send
to the rating organization which made such filing written
notice
of disapproval of such filing specifying therein in what
respects
he finds that such filing fails to meet the requirements
of
this chapter and stating when, within a reasonable period
thereafter,
such filing shall be deemed no longer effective. Said
disapproval
shall not affect any contract made or issued prior to
the
expiration of the period set forth in said notice.
Sec.
2628. (1) In lieu Instead of the filing requirements of
this
chapter and as an alternative method of filing, any an insurer
or
rating organization may file with
the commissioner any director
a
manual of classification, rules or
rates, any a rating plan, and
every
any modification of any of the foregoing which that it
proposes
to use. , the The
filing to must indicate
the character
and extent of the coverage contemplated. Instead of the filing
requirements of this chapter and as an alternative method of
filing, a rating organization may file with the director for an
insurer a manual of classification, rules, and every modification
of any of the foregoing. The filing must indicate the character and
extent
of the coverage contemplated. Every such
filing under this
section
shall must state the effective date thereof, shall of the
filing,
must take effect on said that date,
shall must not be
subject
to any waiting period requirements, and shall be deemed is
considered
to meet the requirements of subdivision
(d) of
subsection
(1) of section 2603 (rate standards). A section
2603(1)(d). The department shall make a filing and any supporting
information
shall be open to public inspection, if the filing is
not disapproved.
(2)
At any time within 15 30 days from and after the date of
any
such a filing
under subsection (1), the commissioner
director
may
give written notice to the insurer or rating organization
making
such the filing or
on whose behalf the filing is made,
specifying
in what respect and to what extent he contends such the
director
finds that the filing fails to comply
with the
requirements
of subdivision (d) of subsection (1) of section 2603
section 2603(1)(d) and fixing a date for hearing not less than 10
days
from after the date of mailing of such the notice.
At such the
hearing the director shall consider the factors specified in
subsection
(2) of section 2606 shall be considered. section
2606(2).
If the commissioner director after
hearing finds that the
filing
does not comply with the provisions of this chapter, he the
director
may issue his an order
determining wherein in
what respect
and
to what extent such the filing is deemed to be improper and
fixing
a date, thereafter, within a reasonable time, after
which
such
the filing shall is no longer be effective.
Any An order of
disapproval
under this section must be entered within 30 days of
after the date of the filing affected.
(3)
In the event that no If a notice of hearing shall be is
not
issued within 15 30 days
from after the date of any such a
filing under subsection (1), the filing shall be deemed is
considered
to be approved. If such the filing
shall be is
disapproved,
the insuring provisions of any a
contract or policy
issued
prior to before the time the order becomes effective shall
are
not be affected. But However, if
the commissioner director
disapproves
such a filing as not being in compliance with
subdivision
(d) of subsection (1) of section 2603 (rate standards),
he
section 2603(1)(d), the director may order an adjustment of the
premium to be made with the policyholder either by refund or
collection of additional premium, if the amount is substantial and
equals
or exceeds the cost of making the adjustment. The
commissioner
(4)
At any time, the director may thereafter
review any such a
filing
in the manner provided in sections 2618 and 2620. , but if
so
reviewed, no However, if the director
disapproves a filing
pursuant to that review beyond the thirtieth day after the date of
filing,
the director shall not order an
adjustment of premium. may
be
ordered. Subsection (5) of section 2606 (filing may be made by
rating
organization), subsection (1) of section 2608 (commissioner
shall
review filing as soon as reasonably possible), and 2612
(insurer
must adhere to filing) shall be
(5) Sections 2606(4), 2608(1), and 2612 are applicable to
filings made under this section.
Sec. 2630. (1) A corporation, an unincorporated association, a
partnership, or an individual, whether located within or outside
this
state, may make application to apply
to the commissioner
director
for a license as a rating
organization to make rates and
insurance
contract forms for such the
kinds of insurance, or
subdivision
or of insurance, or class of risk, or a part or
combination
thereof as are specified in its application. and The
corporation, association, partnership, or individual shall file
therewith
with the application all of
the following:
(a) A copy of its constitution, its articles of agreement or
association, or
its certificate of incorporation , and of
its
bylaws and rules governing the conduct of its business.
(b) A list of its members and subscribers.
(c) The name and address of a resident of this state upon whom
notices
or orders of the commissioner director
or process affecting
such
the rating organization may be served.
(d) A statement of its qualifications as a rating
organization.
(2)
If the commissioner director
finds that the applicant is
competent, trustworthy, and otherwise qualified to act as a rating
organization and that its constitution, articles of agreement or
association, or
certificate of incorporation , and
its bylaws and
rules governing the conduct of its business conform to the
requirements
of law, he the director shall issue a license
specifying
the kinds of insurance, or subdivision or of insurance,
or class of risk, or part or combination thereof for which the
applicant
is authorized to act as a rating organization. Every such
application
shall be granted or denied in whole or in part by the
commissioner
The director, within 60 days of after the
date of its
filing, with
him shall grant or deny the
application in whole or in
part.
(3)
Licenses issued pursuant to this section shall remain in
effect for 3 years unless sooner suspended or revoked by the
commissioner.director.
(4)
The fee for the a license shall be under this section is
$25.00.
(5)
Licenses A license issued pursuant to under this
section
may
be suspended or revoked by the commissioner, director, after
hearing
upon notice, in the event if
the rating organization ceases
to meet the requirements of this section.
(6)
Every A rating organization shall notify the commissioner
director
promptly of every a change
in any of the following:
(a) its Its constitution, its
articles of agreement or
association,
or its certificate of incorporation
, and its bylaws
and
rules governing the conduct of its business. ,
(b) its Its list of members and
subscribers. and
(c) the The name and address of the
resident of this state
designated
by it upon whom notices or orders of the commissioner
director
or process affecting such the rating
organization may be
served.
Sec. 2636. (1) Subject to reasonable rules and regulations
which
have been approved by the commissioner
as reasonable, each
director,
a rating organization shall permit any
an insurer, not a
member,
to be a subscriber to its rating services for any kind of
insurance, subdivision of insurance, or class of risk, or a part or
combination thereof for which it is authorized to act as a rating
organization.
Notice of proposed changes in such the rules and
regulations
shall must be given to subscribers. Each rating
organization
shall furnish its rating services without
discrimination to its members and subscribers.
(2)
The At the request of a
subscriber or insurer, the
director
shall review the reasonableness of any
a rule or
regulation
in its the rule's or
regulation's application to
subscribers , or the refusal of any a rating
organization to admit
an
insurer as a subscriber , shall, at the request of any
subscriber
or any such insurer, be reviewed by the commissioner at
a
hearing held upon at least 10 days' written notice to such the
rating
organization and to such the
requesting subscriber or
insurer.
If the commissioner director
finds that such the rule
or
regulation
is unreasonable in its application to subscribers, he
the
director shall order that such the rule
or regulation shall is
not
be applicable to subscribers.
(3) If the rating organization fails to grant or reject an
insurer's application for subscribership within 30 days after it
was
made, the insurer may request a review by the commissioner
director as if the application had been rejected. If the
commissioner
director finds that the insurer has been refused
admittance to the rating organization as a subscriber without
justification,
he the director shall order the rating organization
to
admit the insurer as a subscriber. If he the director finds that
the
action of the rating organization was justified, he the
director
shall make an order affirming
its action affirmed.
Sec.
2652. Every rating organization and every insurer which
makes
its own rates shall, Each
insurer, within a reasonable time
after
receiving written request therefor for the information and
upon
payment of such a reasonable charge, as it may make, shall
furnish
to any an insured affected by a rate made by it the
insurer, or to the insured's
authorized representative, of
such
insured,
all pertinent information as to such
the rate. Every
rating
organization and every insurer which makes its own rates
Each
insurer shall provide within in this
state reasonable means
whereby
any for a person aggrieved by the application of its the
insurer's
rating system may to be
heard, in person or by his or her
authorized representative, on his or her written request to review
the
manner in which such the rating system has been applied in
connection
with the insurance afforded him
or her. If the rating
organization
or insurer fails to grant or reject
such the request
within 30 days after it is made, the applicant may proceed in the
same
manner as if his or her application had been rejected. Any A
party
affected by the action of such rating organization or such
the insurer on such the request
may appeal, within 30 days after
written
notice of such the action, appeal to the commissioner,
director, who, after a hearing held upon not less than 10 days'
written
notice to the appellant and to such rating organization or
the
insurer, may affirm or reverse such the action.
Sec.
2654. (1) Every A group, association, or other
organization
of insurers, whether located within in or outside of
this
state, which that assists insurers which make their own
filings
or rating organizations in rate
making, by the collection
and
furnishing of loss or expense statistics, or by the submission
of
recommendations, but which that does
not make filings under this
chapter, shall be known as an advisory organization.
(2)
Every Each advisory organization shall file with the
commissioner:director all of the following:
(a) A copy of its constitution, its articles of agreement or
association, or
its certificate of incorporation and of its bylaws,
rules, and
regulations governing its activities.
,
(b)
A list of its members. ,
(c) The name and address of a resident of this state upon whom
notices
or orders of the commissioner director
or process issued at
his
the director's direction may be served. ,
and
(d)
An agreement that the commissioner director may examine
such
the advisory organization in accordance with the
provisions of
under section 2662.
(3)
If, after a hearing, the commissioner director finds that
the
furnishing of such information or assistance involves any act
or
practice which that is unfair or unreasonable or otherwise
inconsistent
with the provisions of this chapter, he the director
may
issue a written order specifying in what respects such the act
or practice is unfair or unreasonable or otherwise inconsistent
with the provisions of this chapter, and requiring the
discontinuance
of such the act or practice.
(4)
No An insurer which makes its own filings nor any
rating
organization
shall not support
its filings by statistics or adopt
rate
making recommendations, furnished
to it by an advisory
organization
which that has not complied with this section or with
an
order of the commissioner director
involving such the statistics
or
recommendations issued under
subsection (3). of this section. If
the
commissioner director finds such the insurer or rating
organization
to be is in violation of this subsection, he
the
director may issue an order requiring the discontinuance of such
the violation.
Sec.
2664. (1) The commissioner director
shall promulgate
reasonable rules and statistical plans, reasonably adapted to each
of
the rating systems on file with him, which may be modified from
time
to time and which shall be used thereafter by each the
director. The director may modify the rules and plans from time to
time. Each insurer shall use the rules and plans after promulgation
to the extent applicable to the insurer's particular rating system
or systems in the recording and reporting of its loss and
countrywide
expense experience, in order so
that the experience of
all
insurers may be made available at least annually in such the
form
and detail as may be that
is necessary to aid him the director
in determining whether rating systems comply with the standards set
forth
in section 2603. Such The rules and plans may also provide
for
the recording and reporting of expense experience items which
that
are specially specifically applicable to this state and are
not susceptible of determination by a prorating of countrywide
expense
experience. In promulgating such rules and plans under this
section, the commissioner director shall
give due consideration to
the
rating systems on file with him the
director and, in order that
such
the rules and plans may be as uniform as is practicable
among
the several states, to the rules and to the form of the plans used
for
such rating systems in other states. No An insurer
shall not be
required to record or report its loss experience on a
classification basis that is inconsistent with the rating system
filed
by it. The commissioner director
may designate 1 or more
rating
organizations or other agencies to assist him in the
gathering
such of and making
compilations of experience and
making
compilations
thereof, and such under this
section. The director
shall
make compilations shall be made of experience under this
section available, subject to reasonable rules promulgated by the
commissioner,
director, to insurers and rating organizations.
(2) Reasonable rules and plans may be promulgated by the
commissioner
director for the interchange of data necessary for the
application of rating plans.
(3) In order to further uniform administration of rate
regulatory
laws, the commissioner director
and every each insurer
and
rating organization may exchange
information and experience
data
with insurance supervisory officials
, insurers and rating
organizations
in other states and may consult
with them with
respect
to rate making and the application of rating systems. In
addition, each insurer and each rating organization may exchange
historical loss data.
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 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 director 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 must be
filed
in accordance with this chapter as the commissioner director
designates.
Sec. 3020. (1) A policy of casualty insurance, except worker's
compensation and mortgage guaranty insurance, including all classes
of motor vehicle coverage, shall not be issued or delivered in this
state by an insurer authorized to do business in this state for
which a premium or advance assessment is charged, unless the policy
contains the following provisions:
(a) That the policy may be canceled at any time at the request
of the insured, in which case the insurer shall refund the excess
of paid premium or assessment above the pro rata rates for the
expired time, except as otherwise provided in subsections (2), (3),
and (4).
(b) Except as otherwise provided in subdivision (d), that the
policy may be canceled at any time by the insurer by mailing to the
insured at the insured's address last known to the insurer or an
authorized agent of the insurer, with postage fully prepaid, a not
less than 10 days' written notice of cancellation with or without
tender of the excess of paid premium or assessment above the pro
rata premium for the expired time.
(c) That the minimum earned premium on any policy canceled
pursuant to this subsection, other than automobile insurance as
defined
in section 2102(2)(a) and (b), shall must not be less than
the pro rata premium for the expired time or $25.00, whichever is
greater.
(d) That an insurer may refuse to renew a malpractice
insurance policy only by mailing to the insured at the insured's
address last known to the insurer or an authorized agent of the
insurer, with postage fully prepaid, a not less than 60 days'
written notice of refusal to renew. As used in this subdivision,
"malpractice insurance" means malpractice insurance as described in
section 624(1)(h).
(2)
An insurer may file a rule with the commissioner director
providing for a minimum retention of premium for automobile
insurance
as defined in section 2102(2)(a) and (b). The rule shall
must describe the circumstances under which the retention is
applied
and shall set forth the amount to be retained, which is
subject
to the approval of the commissioner. director. The rule
shall
must include, but need not be limited to, the following
provisions:
(a)
That a minimum retention shall will
be applied only when
if the amount exceeds the amount that would have been retained had
the policy been canceled on a pro rata basis.
(b) That a minimum retention does not apply to renewal
policies.
(c)
That a minimum retention does not apply when if a
policy
is canceled for the following reasons:
(i) The insured is no longer required to maintain security
pursuant to section 3101(1).
(ii) The insured has replaced the automobile insurance policy
being canceled with an automobile insurance policy from another
insurer and provides proof of the replacement coverage to the
canceling insurer.
(3) Notwithstanding subsection (1), an insurer may issue a
noncancelable, nonrefundable, 6-month prepaid automobile insurance
policy in order for an insured to meet the registration
requirements of section 227a of the Michigan vehicle code, 1949 PA
300, MCL 257.227a.
(4) An insurer may provide for a short rate premium for
insurance on a motorcycle, watercraft, off-road vehicle, or
snowmobile. As used in this subsection:
(a) "Motorcycle" means that term as defined in section 3101.
(b) "Off-road vehicle" means an ORV as defined in section
81101 of the natural resources and environmental protection act,
1994 PA 451, MCL 324.81101.
(c) "Snowmobile" means that term as defined in section 82101
of the natural resources and environmental protection act, 1994 PA
451, MCL 324.82101.
(d) "Watercraft" means that term as defined in section 80301
of the natural resources and environmental protection act, 1994 PA
451, MCL 324.80301.
(5) Cancellation is not effective until after the notice as
prescribed
in this section is has
expired, and the cancellation is
without prejudice to any claim originating before the cancellation.
The mailing of notice is prima facie proof of notice. Delivery of
written notice is equivalent to mailing.
(6) A notice of cancellation, including a cancellation notice
under
section 3224, shall must be accompanied by a statement that
the insured shall not operate or permit the operation of the
vehicle to which notice of cancellation is applicable, or operate
any other vehicle, unless the vehicle is insured as required by
law.
(7) An insurer who wishes to provide for a short rate premium
under
subsection (4) shall file with the commissioner pursuant to
director under chapter 24 or 26 a rule establishing a short rate
premium.
The rule shall must describe the circumstances under which
the
short rate is applied and shall set forth the amount or
percentage to be retained.
Sec. 3105a. An insurer liable to pay personal protection
insurance benefits under this chapter has a duty to deal fairly and
in good faith with its insured, any person entitled to receive
personal protection insurance benefits under a policy issued to its
insured, or any person entitled to receive personal protection
insurance benefits from the insurer under this chapter. The duty
imposed by this section is considered to involve matters of mental
concern and solicitude. A breach of the duty to deal fairly and in
good faith subjects the insurer to liability in tort for any
damages proximately arising from the breach and for punitive
damages.
Sec. 3321. The facility shall provide the following, with
respect to all automobiles not included in section 3320:
(a) Only the insurance required by law or required by the
commissioner
of insurance. director. The commissioner director may
only require insurance for which a rate has been filed by an
insurance
rating organization or insurer, and
which rate is in
effect
and which that the commissioner director finds,
after a
public hearing, to be reasonable, necessary, and in the public
interest. The temporary provision of insurance may be required
pending
the public hearing if the commissioner director determines
it necessary to do so.
(b) The equitable distribution of applicants to participating
members in accordance with the participation ratios defined in
section 3303.
Sec. 3340. (1) As agent for participating members, the
facility
shall file with the commissioner director every manual of
classification, every manual of rules and rates, every rating plan,
and every modification of a manual of classification, manual of
rules and rates, or rating plan proposed for use for private
passenger nonfleet automobile insurance placed through the
facility. The facility may incorporate by reference in its filings
other
material on file with the commissioner. director. The
classifications,
rules, and rates and any amendments thereof shall
be
to the classifications,
rules, and rates are subject to prior
written
approval by the commissioner. director.
Except as provided
in this chapter, rates filed by the facility for private passenger
nonfleet
automobile insurance shall must
be in accordance with
chapter 21 and rates by the facility for all other automobile
insurance
shall must be filed in accordance with chapter 24.
(2) Every participating member designated to act on behalf of
the
facility shall be is authorized to use the rates and rules
approved
by the commissioner director
for use by the facility on
business placed through the facility and shall not use other rates
for automobile insurance placed through the facility.
(3) Laws relating to rating organizations or advisory
organizations
shall not do apply to functions provided for under
this section.
(4) Private passenger nonfleet automobile rates for the
facility
shall must comply with the following requirements:
(a)
The territories for the facility shall be defined as those
of
the principal rating organization for the voluntary market.
(a) (b)
The base rates for the facility shall
must be derived
from
the weighted average of the base rates currently charged in
each
facility territory by the 5 largest
insurer groups, determined
by voluntary net direct automobile insurance car years written in
the
this state for the calendar year ending December 31 of
the
second prior year as reported to the statistical agent.
(c)
The base rates as determined in subdivision (b) in each
facility
territory shall be modified as follows:
(i) One hundred percent of the weighted average in
each
territory
in the highest rated territory or territories in the
state
within a single political subdivision.
(ii) From 105% to 125% of the weighted average for all
other
facility
territories, with the highest rated such territories
receiving
the lowest surcharge and increasing to the highest
surcharge
in the lowest rated facility territories in 5 percentage
point
increments. In no event, however, shall any such rate exceed
the
rate established in subdivision (i).
(b) (d)
The facility shall adjust its rates
at least once each
year or whenever changes in private competitive insurance market
rate levels would produce a change in excess of 5% in the facility
rate. for
any facility territory. However, the
facility shall not
make
changes shall not be made more
often than quarterly.
(c) (e)
In the event that If underwriting losses and
administrative expenses resulting from the operation of the
facility
at rates established pursuant to under this subsection
would exceed an amount equal to 5% of the net direct private
passenger nonfleet automobile premiums for this state, the facility
shall
proportionately increase the levels specified
in subdivision
(c)(i) and (ii) shall be proportionately increased in an amount to
produce underwriting losses and administrative expenses that do not
exceed 5%.
Enacting section 1. Sections 122, 2107, 2131, 2446, and 2640
of the insurance code of 1956, 1956 PA 218, MCL 500.122, 500.2107,
500.2131, 500.2446, and 500.2640, are repealed.
Enacting section 2. (1) The legislature finds that there
exists in this state an emergency for a significant number of
citizens who are obligated under law to purchase automobile
insurance that has become unaffordable and unavailable. A
substantial number of urban registered vehicles are now without
automobile insurance coverage. While a vehicle is often a necessity
for employment and other essential daily activities, citizens who
drive automobiles without insurance coverage violate criminal law
regardless of the fact that for a substantial number of those
citizens it is impossible to obtain automobile insurance due to the
unaffordability and the unequal availability of that insurance. The
affordability and equal availability of automobile insurance is
essential to the preservation of the state's interest in providing
that its citizens obtain automobile insurance coverage under the
state's compulsory automobile insurance laws. In many areas of the
state, insurers are charging in a subjective and discriminatory
manner unreasonable amounts for coverage. In addition, the
automobile insurance market structure has not resulted in promoting
reasonable competition among insurers, and this has further
contributed to the unaffordability and unavailability of automobile
insurance.
(2) It is the purpose of this amendatory act to preserve the
state's interest in providing its citizens with automobile
insurance coverage by relieving the emergency condition of
unaffordable and unequally available automobile insurance; to
provide more stringent regulation of automobile insurance rate-
making and underwriting and to eliminate and prevent arbitrary and
discriminatory practices in automobile insurance marketing, rate-
making, and underwriting; to monitor the level of competition in
the automobile insurance market and to enable corrective measures
when necessary to create a healthy, competitive market for
automobile insurance; to examine loss prevention systems, controls,
and costs; to ensure that automobile insurance prices reflect the
actual costs of claims and reasonable expenses; and to eliminate
injustices that have resulted from the compulsory automobile
insurance system.