Bill Text: MI HB5000 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Insurance; no-fault; rates; prohibit rates based on credit history, education, occupation, or residency. Amends secs. 2027, 2111 & 2151 of 1956 PA 218 (MCL 500.2027 et seq.) & adds sec. 2027a.

Spectrum: Partisan Bill (Democrat 17-0)

Status: (Introduced - Dead) 2013-09-25 - Printed Bill Filed 09/25/2013 [HB5000 Detail]

Download: Michigan-2013-HB5000-Introduced.html

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HOUSE BILL No. 5000

 

September 24, 2013, Introduced by Reps. Talabi, Durhal, Schor, Banks, Robinson, Knezek, Stanley, LaVoy, Santana, Singh, Nathan, Dillon, Kosowski, Roberts, Tlaib, Lipton and Oakes and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 2027, 2111, and 2151 (MCL 500.2027, 500.2111,

 

and 500.2151), section 2027 as amended by 1998 PA 26, section 2111

 

as amended by 2012 PA 441, and section 2151 as added by 2012 PA

 

165, and by adding section 2027a.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2027. Unfair methods of competition and unfair or

 

deceptive acts or practices in the business of insurance include:

 

     (a) Refusing to insure, or refusing to continue to insure, or

 

limiting the amount of coverage available to an individual or risk

 

because of any of the following:

 

     (i) Race, color, creed, marital status, sex, or national

 

origin, except that marital status may be used to classify

 

individuals or risks for the purpose of insuring family units.

 

     (ii) The residence, age, disability, or lawful occupation of

 

the individual or the location of the risk, unless there is a

 

reasonable relationship between the residence, age, disability, or

 

lawful occupation of the individual or the location of the risk and

 

the extent of the risk or the coverage issued or to be issued, but

 

subject to subparagraph (iii) and section 2027a. This section shall

 

does not prohibit an insurer from specializing in or limiting its

 

transactions of insurance to certain occupational groups, types, or

 

risks as approved by the commissioner of insurance. director. The

 

commissioner director shall approve the specialization for an

 

insurer licensed to do business in this state and whose articles of

 

incorporation contained a provision on July 1, 1976, requiring that

 

specialization.

 

     (iii) For property insurance, the location of the risk, unless

 

there is a statistically significant relationship between the

 

location of the risk and a risk of loss due to fire within the area

 

in which the insured property is located. As used in this

 

subparagraph, "area" means a single zip code number under the

 

zoning improvement plan of the United States postal service.

 

     (b) Refusing to insure or refusing to continue to insure an

 

individual or risk solely because the insured or applicant was

 

previously denied insurance coverage by an insurer.

 

     (c) Charging a different rate for the same coverage based on

 

sex, marital status, age, residence, location of risk, disability,

 

or lawful occupation of the risk unless the rate differential is

 

based on sound actuarial principles, a reasonable classification

 

system, and is related to the actual and credible loss statistics

 

or, for new coverages, reasonably anticipated experience, in the

 

case of new coverages. This but subject to section 2027a. Except as

 

provided in section 2027a, this subdivision shall does not apply if

 

the rate has previously been approved by the commissioner.director.

 

     Sec. 2027a. (1) It is an unfair method of competition and an

 

unfair or deceptive act or practice in the business of insurance

 

for an automobile insurer to refuse to insure, refuse to continue

 

to insure, limit the amount of coverage available, or charge a

 

different rate or premium for the same coverage based on any of the

 

following for an insured or applicant:

 

     (a) Employment.

 

     (b) Trade.

 

     (c) Business.

 

     (d) Occupation.

 

     (e) Profession.

 

     (f) Education level.

 

     (g) Credit history or lack of credit history.

 

     (2) Subsection (1)(a) to (f) does not prohibit a discount

 

based on expense savings related to group, blanket, or franchise

 

automobile insurance.

 

     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 conform to the applicable

 

requirements of this section.

 

     (2) Classifications established under this section for

 

automobile insurance shall 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 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.

 

     (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 a minimum of 8 hours of classroom

 

instruction.

 

     (ii) The course shall include, but 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

 

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 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 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, An

 

insurer shall not establish or maintain rates or rating

 

classifications for automobile insurance risks may be grouped by

 

based on the territory in which the insured resides or works.

 

     (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 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 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. 2151. As used in this chapter:

 

     (a) "Adverse action" means an increase in any charge for, or a

 

reduction or other adverse or unfavorable change in the terms of

 

coverage or amount of, any personal insurance, existing or applied

 

for.

 

     (b) "Consumer reporting agency" means any person which, that,

 

for monetary fees or dues or on a cooperative nonprofit basis,

 

regularly engages in whole or in part in the practice of assembling

 

or evaluating consumer credit information or other information on

 

consumers for the purpose of furnishing consumer reports to third

 

parties.

 

     (c) "Credit information" means any credit-related information

 

derived from a credit report, found on a credit report itself, or

 

provided on an application for personal insurance. Information that

 

is not credit-related shall is not be considered credit

 

information, regardless of whether it is contained in a credit

 

report or in an application, or is used to calculate an insurance

 

score.

 

     (d) "Credit report" means any written, oral, or other

 

communication of information by a consumer reporting agency bearing

 

on a consumer's credit worthiness, credit standing, or credit

 

capacity that is used or expected to be used or collected in whole

 

or in part for the purpose of serving as a factor in the rating of

 

personal insurance.

 

     (e) "Insurance score" means a number or rating that is derived

 

from an algorithm, computer application, model, or other process

 

that is based in whole or in part on credit information for the

 

purposes of predicting the future insurance loss exposure of an

 

individual applicant or insured.

 

     (f) "Personal insurance" means property/casualty insurance

 

written for personal, family, or household use, including

 

automobile, home, motorcycle, mobile home, noncommercial dwelling

 

fire, boat, personal watercraft, snowmobile, and recreational

 

vehicle, whether written on an individual, group, franchise,

 

blanket policy, or similar basis. Personal insurance does not

 

include automobile insurance.