Bill Text: MI HB6000 | 2021-2022 | 101st Legislature | Introduced
Bill Title: Insurance: no-fault; rate increase approval by department of insurance and financial services in a public hearing; require. Amends secs. 2106, 2108, 2109, 2110, 2115 & 2127 of 1956 PA 218 (MCL 500.2106 et seq.) & adds sec. 2109a.
Spectrum: Strong Partisan Bill (Democrat 30-2)
Status: (Introduced - Dead) 2022-04-13 - Bill Electronically Reproduced 04/12/2022 [HB6000 Detail]
Download: Michigan-2021-HB6000-Introduced.html
HOUSE BILL NO. 6000
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 2106, 2108, 2109, 2110, 2115, and 2127 (MCL 500.2106, 500.2108, 500.2109, 500.2110, 500.2115, and 500.2127), sections 2106 and 2108 as amended by 2019 PA 21 and section 2115 as amended by 1980 PA 461, and by adding section 2109a.
the people of the state of michigan enact:
Sec. 2106. (1) Except as specifically provided in this chapter, chapter 24 and chapter 26 do not apply to automobile insurance and home insurance.
(2) Subject to section 2108(6), an An insurer shall file rates with the department for approval in compliance with this act.
(3) An insurer may use rates for home insurance as soon as those rates are filed.
(4) To the extent that other provisions of this act are inconsistent with this chapter, this chapter 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 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 subsection (6). section 2109a. 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 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 on.
(c) The experience of other insurers or rating organizations.
(d) Any other relevant information.
(5) Except For home insurance, 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 disclosure under 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 January 11, 2016.
(6) For automobile insurance, an insurer shall file a manual or plan in accordance with chapter 24, except that the manual or plan must remain on file for a waiting period of 90 days before it becomes effective, which period may not be extended by the director, and the waiting period applies regardless of whether supporting information is required by the director under section 2406(1). Upon written application by the insurer, the director may authorize a filing that he or she has reviewed to become effective before expiration of the waiting period.
(6) (7) 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.
(7) (8) A filing under this chapter must specify that the insurer will not refuse to insure, refuse to continue to insure, or limit the amount of coverage available because of the location of the risk, and that the insurer recognizes those practices to constitute redlining. An insurer shall not engage in redlining as described in this subsection.
Sec. 2109. (1) All rates for automobile insurance and home insurance shall and, subject to section 2109a, automobile insurance 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 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 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. 2109a. (1) The director shall not approve a rate for automobile insurance or allow an automobile insurance rate to remain in effect if the rate is excessive, inadequate, unfairly discriminatory, or otherwise in violation of this chapter. In considering whether a rate for automobile insurance is excessive, inadequate, or unfairly discriminatory, all of the following apply:
(a) The director shall not give consideration to the degree of competition.
(b) The director shall consider whether the rate mathematically reflects the insurance company's investment income.
(c) The director shall not approve a rate that provides the insurer with a profit that exceeds 8%.
(2) Before September 2, 2022, the director shall review the rates for automobile insurance in effect on the effective date of this section to determine whether the rates comply with this chapter. An insurer shall provide to the director any documents or information requested by the director to conduct the review required by this subsection. If the director determines that the rates do not comply with this chapter, the director shall commence a rate making proceeding under subsection (4).
(3) If, after the effective date of this section, an insurer wishes to change any rate for automobile insurance in effect on the effective date of this section or established by a previous rate making proceeding under this section, the insurer shall commence a proceeding for rate making under subsection (4).
(4) All of the following apply to a rate making proceeding under this section:
(a) The proceeding must be conducted as a contested case under chapter 4 of the administrative procedures act of 1969, 1969 PA 306, MCL 24.271 to 24.288.
(b) Any person may intervene in the proceeding as an interested party.
(c) Notwithstanding anything in this act to the contrary, all of the following must be made public as provided in subdivision (d):
(i) Notice that the contested case has been commenced.
(ii) A notice of a hearing in the contested case.
(iii) Any answer filed in the contested case.
(iv) All books, records, correspondence, or other documents relating to the rate making and in the control of the insurer or the department. A document to which this subdivision applies must be made public before any hearing in the contested case.
(d) To the extent possible, anything required to be made public under subdivision (c) must be made public as follows:
(i) By posting on the department website.
(ii) By email or mail through the United States Postal Service, as requested, by the department to any person that has requested that the department place them on a list to receive such notices and documents.
(iii) By notification to the media by the department.
(iv) By making written copies of the notices or documents available at the offices of the department.
(v) By posting on the insurer's website.
(vi) By email or mail through the United States Postal Service, as requested, by the insurer to persons insured under the insurer's automobile insurance policies.
(e) The insurer has the burden of proof.
Sec. 2110. (1) In developing and evaluating rates pursuant to under the standards prescribed in section 2109, due consideration shall must be given to past and prospective loss experience within in 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 in and outside this state.
(2) The In developing and evaluating rates under the standards prescribed in section 2109, 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 for which subdivision or combination separate expense provisions are applicable.
(3) Risks In developing and evaluating rates under the standards prescribed in section 2109, 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. 2115. (1) If as part of a decision in a proceeding under section 2114, or in a separate proceeding on the commissioner's director's own motion, held pursuant to Act No. 306 of the Public Acts of 1969, as amended, under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, the commissioner director finds that a reasonable degree of competition does not exist on a statewide basis with respect to automobile insurance or home insurance, the commissioner director shall by order require each insurer which that transacts that type of insurance in this state to comply with the provisions of chapter 24 or 26, as the case may be, applicable, with respect to that the insurance. which was the subject of the commissioner's finding. The order shall must take effect not less than 90 nor and not more than 150 days after the order is issued. On or after the effective date of an order issued under this subsection, none of the provisions of this chapter shall be applicable does not apply to the insurance which that was the subject of the order.
(2) After an order issued pursuant to under subsection (1) has been in effect for 1 year, if the commissioner director has reason to believe that there would be a reasonable degree of price competition for the type of insurance affected by the order, or if, upon on the petition of an insurer or a resident of this state, there is a showing that there is reason to believe that there would be a reasonable degree of price competition for that type of insurance, the commissioner director shall hold a hearing pursuant to Act No. 306 of the Public Acts of 1969, as amended, under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, to determine if a reasonable degree of price competition would exist if the order were no longer was not in effect. The hearing shall must be held upon on not less than 20 days' written notice to each insurer subject to the order and upon on not less than 20 days' notice in not less fewer than 3 newspapers of general circulation within in this state.
(3) If the commissioner director finds after the a hearing under subsection (2) that a reasonable degree of price competition would exist, the commissioner director shall by order state when, not less than 90 nor and not more than 150 days after issuance of a new order, the preceding order will no longer not be effective. On and after the effective date of an order issued under this subsection, the provisions of this chapter shall be applicable applies to the type of insurance which that was the subject of the order.
Sec. 2127. (1) 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.
(2) This section does not apply to rate making under section 2109a.
