Bill Text: MI HB5111 | 2017-2018 | 99th Legislature | Introduced

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Bill Title: Insurance; no-fault; rates based on certain discriminatory factors; prohibit. Amends secs. 2105, 2110a, 2111, 2118 & 2151 of 1956 PA 218 (MCL 500.2105 et seq.) & adds secs. 2110c & 2111b.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2017-10-17 - Bill Electronically Reproduced 10/12/2017 [HB5111 Detail]

Download: Michigan-2017-HB5111-Introduced.html

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HOUSE BILL No. 5111

 

 

October 12, 2017, Introduced by Reps. Gay-Dagnogo, Wittenberg, Byrd, Scott, Green, Yanez, Zemke, Sowerby, Chirkun, Geiss, Ellison, Sneller, Faris, Pagan, Chang, Camilleri, Sabo, Moss, LaGrand, Brinks, Liberati, Howrylak, Love, Lasinski, Yaroch, Hammoud, Robinson, Rabhi, Hertel, Peterson and Jones and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 2105, 2110a, 2111, 2118, and 2151 (MCL

 

500.2105, 500.2110a, 500.2111, 500.2118, and 500.2151), sections

 

2110a and 2111 as amended by 2012 PA 441, section 2118 as amended

 

by 2007 PA 35, and section 2151 as added by 2012 PA 165, and by

 

adding sections 2110c and 2111b.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2105. (1) No A policy of automobile insurance or home

 

insurance shall must not be offered, bound, made, issued, delivered

 

or renewed in this state on and after January 1, 1981, except in

 

conformity with unless the policy conforms to this chapter. This

 

chapter shall 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. However, section 2111 applies to automobile insurance

 

written on a group, franchise, blanket policy, or similar basis.

 

     Sec. 2110a. (1) If uniformly applied to all its insureds, an

 

insurer may use factors in addition to those permitted by section

 

2111 for insurance if the plan is consistent with the purposes of

 

this act and reflects reasonably anticipated reductions or

 

increases in losses or expenses.

 

     (2) This section does not affect benefits or obligations

 

required under chapter 31.

 

     (3) This section does not authorize an insurer to offer or

 

prohibit an insurer from offering premium discount plans concerning

 

any of the following:

 

     (a) Health care services, health care providers, or health

 

care facilities.

 

     (b) Automobile repair providers.

 

     (c) Materials used in the repair of an automobile.

 

     (4) This section does not authorize an insurer to use a factor

 

in establishing or maintaining rates or rating classifications if

 

use of the factor is expressly prohibited by this act.

 

     Sec. 2110c. (1) An insurer shall not refuse to issue or renew

 

an automobile insurance policy based in whole or in part on any of

 

the underwriting and rating factors that are prohibited under

 

section 2111b, or use the factors to determine the terms of

coverage or placement in a particular affiliate within a group of

 

insurers. This subsection does not prohibit an insurer from

 

refusing to issue or renew an automobile insurance policy to an

 

individual who is not an eligible person under section 2103(1)(f).

 

     (2) A classification plan, rating plan, rating tier placement

 

factor, scoring model, rule, rate, premium, or any other method of

 

establishing the premium to be paid by an automobile insurance

 

policyholder or covered driver, and the modification of any such

 

plan, factor, model, rule, rate, premium, or method, based in whole

 

or in part on any of the underwriting and rating factors that are

 

prohibited under section 2111b, is unfairly discriminatory for

 

purposes of section 2109(1)(c).

 

     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 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 the insurer shall be applied by an insurer

 

apply 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, the insurer shall not

 

use the 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, solely for purposes of determining the risk

 

of loss related to wage loss benefits.

 

     (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 must include a minimum of 8 hours of

 

classroom instruction.

 

     (ii) The course shall must 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 An 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 on 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.a factor that is prohibited under section 2111b.

 

     (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 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. This subsection does not permit

 

an insurer to use a factor if the use of the factor is expressly

 

prohibited by this act.

 

     Sec. 2111b. An insurer shall not use any of the following

 

factors in underwriting or establishing rates for automobile

 

insurance:

 

     (a) Sex.

 

     (b) Marital status.

 

     (c) Race.

 

     (d) Creed.

 

     (e) National origin.

 

     (f) Religion.

 

     (g) Age. This subdivision does not prohibit an insurer from

 

offering a premium discount plan on the basis of age that is

 

expressly allowed under this act.

 

     (h) Employment or occupation.

 

     (i) Education level attained.

 

     (j) Home ownership.

 

     (k) Consumer credit information or credit score.

 

     (l) The absence of prior insurance.

 

     (m) Any measure of a consumer's price elasticity of demand.

 

     (n) Level of income or wealth. This subdivision does not

 

prohibit an insurer from basing a rating classification for

 

personal protection insurance coverage on earned income as provided

 

in section 2111(2)(b)(i).

     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 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 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 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

 

insurer employee, agent, or agent employee 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. 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.