Bill Text: MI HB4651 | 2019-2020 | 100th Legislature | Introduced

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Bill Title: Insurance; no-fault; excessive rates; eliminate exception for existence of reasonable competition, require rates to be filed and approved before use, and make other changes. Amends secs. 2106, 2108, 2109 & 2114 of 1956 PA 218 (MCL 500.2106 et seq.) & adds sec. 213.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Introduced - Dead) 2019-05-22 - Bill Electronically Reproduced 05/21/2019 [HB4651 Detail]

Download: Michigan-2019-HB4651-Introduced.html

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HOUSE BILL No. 4651

 

 

May 21, 2019, Introduced by Reps. Robinson, Gay-Dagnogo, Guerra, Jones, Tyrone Carter and Bolden and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 2106, 2108, 2109, and 2114 (MCL 500.2106,

 

500.2108, 500.2109, and 500.2114), section 2108 as amended by 2015

 

PA 141, and by adding section 213.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 213. (1) As soon as practicable after the effective date

 

of this section, the director shall employ 14 actuaries who are

 

qualified to carry out this section, and shall maintain the

 

actuaries, or their successors, as employees of the department.

 

     (2) The actuaries employed under this section shall review

 

rate and other filings made by automobile insurers under chapters

 

21, 24, and 26, to determine whether the filings comply with the

 

requirements of those chapters, with particular emphasis on whether

the filings contain rates that are excessive as described in

 

section 2109.

 

     Sec. 2106. (1) 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.

 

     (2) An insurer shall file and use rates for automobile

 

insurance in accordance with sections 2406 and 2408.

 

     (3) An insurer may use rates for automobile insurance or home

 

insurance as soon as those rates are filed.

 

     (4) 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. 2108. (1) On the effective date of a manual of

 

classification, manual of rules and rates, rating plan, or

 

modification of a manual of classification, manual of rules and

 

rates, or rating plan that an insurer proposes to use for

 

automobile insurance or home insurance, the insurer shall file the

 

manual or plan with the director. For automobile insurance, an

 

insurer shall file a manual or plan described in this subsection in

 

accordance with sections 2406 and 2408. Each filing under this

 

subsection must state the character and extent of the coverage

 

contemplated. An insurer that is subject to this chapter and that

 

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 insurer may satisfy its obligation to make filings

under subsection (1) by becoming a member of, or a subscriber to, a

 

rating organization licensed under chapter 24 or chapter 26 that

 

makes the filings, and by filing with the director a copy of its

 

authorization of the rating organization to make the filings on its

 

behalf. This chapter does not require an insurer to become a member

 

of or a subscriber to a rating organization. An insurer may file

 

and use deviations from filings made on its behalf. The deviations

 

are subject to this chapter.

 

     (3) A filing under this section must be accompanied by a

 

certification by or on behalf of the insurer that, to the best of

 

the insurer's information and belief, the filing conforms to the

 

requirements of this chapter.

 

     (4) A filing under this section must include information that

 

supports the filing with respect to the requirements of section

 

2109. 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 on.

 

     (c) The experience of other insurers or rating organizations.

 

     (d) Any other relevant information.

 

     (5) Except as otherwise provided in this subsection, the

 

department shall make a filing under this section and any

 

accompanying information open to public inspection on filing. An

 

insurer or a rating organization filing on the insurer's behalf may

 

designate information included in the filing or any accompanying

 

information as a trade secret. The insurer or the rating

organization filing on behalf of the insurer shall demonstrate to

 

the director that the designated information is a trade secret. If

 

the director determines that the information is a trade secret, the

 

information is not subject to public inspection and is exempt from

 

the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246.

 

As used in this subsection, "trade secret" means that term as

 

defined in section 2 of the uniform trade secrets act, 1998 PA 448,

 

MCL 445.1902. However, trade secret does not include filings and

 

information accompanying filings under this section that were

 

subject to public inspection before the effective date of the

 

amendatory act that added this sentence.January 11, 2016.

 

     (6) An insurer shall not make, issue, or renew a contract or

 

policy except in accordance with filings that are in effect for the

 

insurer 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 must 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) A rate shall must 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) 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

 

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 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 insurance

 

compared to its availability in comparable past periods, the

 

underwriting return of that insurance over a period of time

 

sufficient to assure reliability in relation to the risk associated

 

with that insurance, and the difficulty encountered by new insurers

in entering the market in order to compete for the writing of that

 

insurance.

 

     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 may

 

not be authorized to proceed under this subsection. The director

 

may also commence a contested case regarding a filing under this

 

subsection. An application shall by an aggrieved person under this

 

subsection must specify the grounds to be relied upon on 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 the administrative procedures act of 1969, as amended, upon

 

1969 PA 306, MCL 24.201 to 24.328, on not less than 10 days'

 

written notice to the applicant, the insurer, and the any rating

 

organization which that made the filing. If the director commences

 

a contested case regarding a filing under this subsection, the

 

director shall hold a hearing as provided in this subsection.

 

     (2) If after a hearing initiated under subsection (1) or upon

 

on the commissioner's director's own motion pursuant to Act No. 306

 

of the Public Acts under the administrative procedures act of 1969,

 

as amended, 1969 PA 306, MCL 24.201 to 24.328, the commissioner

director finds that a filing does not meet any of the requirements

 

of sections 2109 and 2111, this chapter or chapter 24, the

 

commissioner director shall issue an order stating the specific

 

reasons for that the finding. The order shall must state when,

 

within a reasonable time after issuance of the order, the filing

 

shall be considered will no longer be effective. A copy of the

 

order shall must be sent to the applicant, if any, and to each

 

insurer and rating organization subject to the order. The An order

 

shall issued under this subsection 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.