Bill Text: MI SB0088 | 2019-2020 | 100th Legislature | Introduced

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Bill Title: Insurance: automobile; rates; require to be based on only certain factors. Amends secs. 2105, 2110a, 2111, 2111a & 2151 of 1956 PA 218 (MCL 500.2105 et seq.).

Spectrum: Moderate Partisan Bill (Democrat 8-2)

Status: (Introduced - Dead) 2019-02-06 - Referred To Committee On Insurance And Banking [SB0088 Detail]

Download: Michigan-2019-SB0088-Introduced.html

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SENATE BILL No. 88

 

 

February 6, 2019, Introduced by Senators CHANG, MOSS, WOJNO, GEISS, IRWIN, HERTEL, BULLOCK, LUCIDO and MCBROOM and referred to the Committee on Insurance and Banking.

 

 

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

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

 

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

 

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

 

2006 PA 610, and section 2151 as added by 2012 PA 165.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

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

 

insurance shall be offered, bound, made, issued, delivered, or

 

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

 

conformity must comply with 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 Except as provided in subsection (3), 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.

 

     (3) An insurer, including, but not limited to, an insurer that

 

writes insurance as described in subsection (2) and an insurer that

 

is exempted from any of the requirements of this chapter for any

 

reason, including an exemption under section 2129, shall not

 

establish or maintain rates or rating classifications for

 

automobile insurance based on any factors other than as required

 

under section 2111.

 

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

 

insurer may use factors in addition to those permitted by section

 

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

 

of this act and reflects reasonably anticipated reductions or

 

increases in losses or expenses. This section does not affect

 

benefits or obligations required under chapter 31. 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.

 

     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 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.

 

     (2) Rates and premiums for automobile insurance must be

 

determined by application of the following factors as provided in

 

subsection (3):

 

     (a) The insured's driving safety record.

     (b) The number of miles the insured drives annually.

 

     (c) The number of years of driving experience the insured has

 

had.

 

     (d) Any other factors that the director adopts by rule, as

 

provided in subsection (4).

 

     (3) In applying factors under subsection (2), an insurer shall

 

give the greatest weight to the factor in subsection (2)(a), the

 

second greatest weight to the factor in subsection (2)(b), the

 

third greatest weight to the factor in subsection (2)(c), and the

 

least weight to the factors allowed under the rules promulgated

 

under subsection (2)(d).

 

     (4) Subject to subsection (5), the factors adopted by the

 

director under subsection (2)(d) may include any factor that is

 

expressly allowed for establishing rates for automobile insurance

 

under another section of this chapter or any other factor that has

 

a substantial relationship to the risk of loss. The rules

 

promulgated under subsection (2)(d) must prescribe the method for

 

measuring the respective weight to be given to each factor in

 

determining automobile insurance rates and premiums.

 

     (5) (4) An insurer shall not establish or maintain determine

 

rates or rating classifications and premiums for automobile

 

insurance based in any way on sex the following:

 

     (a) Sex or marital status.

 

     (b) Credit information, as that term is defined in section

 

2151.

 

     (5) Notwithstanding other provisions of this chapter,

 

automobile insurance risks may be grouped by territory.

     (6) Notwithstanding any other provision of law to the

 

contrary, the use of any factor to determine rates and premiums for

 

automobile insurance other than a factor listed in subsection(2)(a)

 

to (c) or a factor contained in rules promulgated under subsection

 

(2)(d) is unfair discrimination for purposes of chapter 20.

 

     (7) (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 applied in accordance with

 

subsections (2) to (4) and 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.in accordance

 

with subsections (2) to (4).

 

     (8) (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.

 

     (9) (8) Notwithstanding other provisions of this chapter, home

 

insurance risks may be grouped by territory.

 

     (10) (9) An insurer may use factors in addition to those

 

permitted by this section for home insurance if the plan is

 

consistent with the purposes of this act and reflects reasonably

 

anticipated reductions or increases in losses or expenses.

 

     Sec. 2111a. (1) Notwithstanding If the discount is applied in

 

accordance with section 2111, an automobile insurer may offer a

 

premium discount to insureds 50 years of age and older who

 

successfully complete a traffic accident prevention course that an

 

the automobile insurer determines meets all of the criteria listed

 

in subsection (3).

 

     (2) An automobile insurer may provide the discount under

 

subsection (1) for 3 years after successful completion of an

 

initial or refresher traffic accident prevention course.

     (3) A To qualify under subsection (1), a traffic accident

 

prevention course shall provide for must meet all of the following

 

requirements:

 

     (a) For an initial traffic accident prevention course,

 

includes include not less than 8 hours of classroom instruction

 

taught by an instructor certified by the entity person offering the

 

course. For a refresher traffic accident prevention course,

 

includes include not less than 4 hours of classroom instruction

 

taught by an instructor certified by the entity person offering the

 

course.

 

     (b) Includes, Include, but is not be limited to, instruction

 

in all of the following areas:

 

     (i) The effects of aging on driving behavior.

 

     (ii) The shapes, colors, and types of road signs.

 

     (iii) The effects of alcohol and other drugs, including

 

medications, on older drivers.

 

     (iv) Laws relating to the proper use of a motor vehicle and

 

safe driving behavior.

 

     (v) Traffic crash avoidance and prevention measures.

 

     (vi) The benefits and proper use of motor vehicle occupant

 

protection systems.

 

     (vii) Major driving hazards and risk factors associated with

 

traffic crash prevention.

 

     (viii) Interaction with other highway users, such as emergency

 

vehicles, trucks, motorcyclists, bicyclists, and pedestrians.

 

     (c) Provides, upon Provide, on successful completion of the

 

course, a certificate of completion that may be used in applying

for an automobile insurance premium discount under subsection (1).

 

     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.