Bill Text: MI SB0722 | 2017-2018 | 99th Legislature | Introduced

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Bill Title: Insurance; no-fault; rates based on nondriving factors; prohibit, prohibit excessive rates, provide for a premium reduction, and make catastrophic claims association operations open to the public. Amends secs. 134, 2027, 2105, 2106, 2108, 2109, 2110a, 2111, 2151 & 3104 of 1956 PA 218 (MCL 500.134 et seq.) & adds secs. 2027a, 2108a, 3181 & 3182.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2017-12-12 - Referred To Committee On Insurance [SB0722 Detail]

Download: Michigan-2017-SB0722-Introduced.html

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SENATE BILL No. 722

 

 

December 12, 2017, Introduced by Senator YOUNG and referred to the Committee on Insurance.

 

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 134, 2027, 2105, 2106, 2108, 2109, 2110a,

 

2111, 2151, and 3104 (MCL 500.134, 500.2027, 500.2105, 500.2106,

 

500.2108, 500.2109, 500.2110a, 500.2111, 500.2151, and 500.3104),

 

section 134 as amended by 1990 PA 256, section 2027 as amended by

 

1998 PA 26, section 2108 as amended by 2015 PA 141, sections 2110a

 

and 2111 as amended by 2012 PA 441, section 2151 as added by 2012

 

PA 165, and section 3104 as amended by 2002 PA 662, and by adding

 

sections 2027a, 2108a, 3181, and 3182.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 134. (1) Every A certificate of authority or license in

 

force immediately prior to before January 1, 1957 and existing

 

under any act repealed by this act is valid until its original

 

expiration date, unless earlier terminated in accordance with this

 

act.

 

     (2) Any A plan of operation adopted by an association or

 

facility, and any premium or assessment levied against an insurer

 

member of that association or facility, is hereby validated valid

 

retroactively to the date of its original adoption or levy and

 

shall continue continues in force and effect according to the terms

 

of the plan of operation, premium, or assessment until otherwise

 

changed by the commissioner director or the board of directors of

 

the association or facility pursuant to this act.

 

     (3) An association or facility or the board of directors of

 

the association or facility is not a state agency and the money of

 

an association or facility is not state money.

 

     (4) A Except as otherwise provided in section 3104, a record

 

of an association or facility shall be exempted is exempt from

 

disclosure pursuant to under section 13 of the freedom of

 

information act, Act No. 442 of the Public Acts of 1976, being

 

section 15.243 of the Michigan Compiled Laws 1976 PA 442, MCL

 

15.243.

 

     (5) Any premium or assessment levied by an association or

 

facility, or any premium or assessment of a similar association or

 

facility formed under a law in force outside this state, is not a

 

burden or special burden for purposes of a calculation under

 

section 476a, and any premium or assessment paid to an association

 

or facility shall must not be included in determining the aggregate

 

amount a foreign insurer pays to the commissioner department of

 

treasury under section 476a.

     (6) As used in this section, "association or facility" means

 

an association of insurers created under this act and any other

 

association or facility formed under this act as a nonprofit

 

organization of insurer members, including, but not limited to, the

 

following:

 

     (a) The Michigan worker's compensation placement facility

 

created under chapter 23.

 

     (b) The Michigan basic property insurance association created

 

under section chapter 29.

 

     (c) The catastrophic claims association created under chapter

 

31.

 

     (d) The Michigan automobile insurance placement facility

 

created under chapter 33.

 

     (e) The Michigan life and health insurance guaranty

 

association created under chapter 77.

 

     (f) The property and casualty guaranty association created

 

under chapter 79.

 

     (g) The assigned claims facility created under section 3171.

 

     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.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. 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.

 

     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 unless the policy conforms 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 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.

 

     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 may use rates for automobile insurance or home

 

insurance as soon as those the rates are filed. However, if the

 

rate is an increase from an automobile insurance rate in effect on

 

the effective date of the amendatory act that added section 2108a,

 

the insurer may only use the rate as provided in section 2108a.

 

     (3) 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 and, with the exception of establishing rates, automobile

 

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. However, if the 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 would result in an increase from an

 

automobile insurance rate in effect on the effective date of the

 

amendatory act that added section 2108a, the insurer shall file the

 

manual or plan with the director before it takes effect.

     (2) Each filing under this subsection (1) 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.

 

     (3) (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.

 

     (4) (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.

 

     (5) (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.

 

     (6) (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.

 

     (7) (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. 2108a. (1) The director shall review a manual or plan

 

filed under section 2108(1) that would result in an increase from

 

an automobile insurance rate in effect on the effective date of the

 

amendatory act that added this section and the accompanying

 

supporting information as soon as reasonably possible after it is

 

filed to determine whether the manual or plan meets the

requirements of this chapter.

 

     (2) If the director determines that a manual or plan described

 

in subsection (1) does not meet the requirements of this chapter,

 

he or she shall send to the insurer or rating organization that

 

filed the manual or plan a written notice of disapproval specifying

 

in what respects the manual or plan fails to meet the requirements

 

of this chapter and stating that the rates in the manual or plan

 

will not be effective and that the insurer shall not use the rates.

 

     (3) If the director approves a manual or plan described in

 

subsection (1), the manual or plan with accompanying supporting

 

information is considered to meet the requirements of this chapter

 

and a rate in the manual or plan is effective and may be used by

 

the insurer.

 

     (4) An insurer or ratings organization may seek relief from a

 

decision by the director under this section as provided in section

 

2482.

 

     Sec. 2109. (1) All rates for automobile insurance and home

 

insurance shall to which this chapter applies must be made in

 

accordance with the following: provisions:

 

     (a) Rates shall A rate 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 To

 

be held reasonable under this subdivision, a justification shall

 

must be supported by a reasonable classification system; by sound

 

actuarial principles when if 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 under this

 

subdivision 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 under 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 the insurance over a period of time

 

sufficient to assure reliability in relation to the risk associated

 

with that the insurance, and the difficulty encountered by new

 

insurers in entering the market in order to compete for the writing

 

of that the insurance.

 

     (3) All rates for automobile insurance to which this chapter

 

applies must be made in accordance with the following:

 

     (a) A rate must not be excessive. A rate is excessive if it is

 

likely to produce a profit that is unreasonably high in relation to

 

the risk involved or if the cost of the insurance is unreasonably

 

high in relation to services rendered.

 

     (b) A rate must not be inadequate. A rate is inadequate if

 

either of the following applies:

 

     (i) The rate is clearly insufficient, when combined with the

 

investment income attributable to the rate, to sustain projected

 

losses and expense.

 

     (ii) As to the premium charged to a risk, discounts or credits

 

are allowed that exceed a reasonable reflection of expense savings

 

and reasonably expected loss experience from the risk.

 

     (c) A rate must not be unfairly discriminatory. A rate is

 

unfairly discriminatory as to a risk if the application of premium

 

discounts, credits, or surcharges to the risk does not bear a

 

reasonable relationship to the expected loss and expense

 

experience.

 

     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. 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 shall must 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 must 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 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 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.

 

     (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) An insurer shall not establish or maintain rates or rating

 

classifications for automobile insurance based on a factor listed

 

in section 2027a.

 

     (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 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.

 

     (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 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 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. 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.

 

     Sec. 3104. (1) An The catastrophic claims association is

 

created as an unincorporated, nonprofit association. to be known as

 

the catastrophic claims association, hereinafter referred to as the

 

association, is created. Each insurer engaged in writing insurance

 

coverages that provide the security required by section 3101(1)

 

within in this state, as a condition of its authority to transact

 

insurance in this state, shall be a member of the association and

 

shall be is bound by the plan of operation of the association. Each

 

An insurer engaged in writing insurance coverages that provide the

security required by section 3103(1) within in this state, as a

 

condition of its authority to transact insurance in this state,

 

shall be is considered to be a member of the association, but only

 

for purposes of premiums under subsection (7)(d). Except as

 

expressly provided in this section, the association is not subject

 

to any laws of this state with respect to insurers, but in all

 

other respects the association is subject to the laws of this state

 

to the extent that the association would be if it were an insurer

 

organized and subsisting under chapter 50.

 

     (2) The association shall provide and each member shall accept

 

indemnification for 100% of the amount of ultimate loss sustained

 

under personal protection insurance coverages in excess of the

 

following amounts in each loss occurrence:

 

     (a) For a motor vehicle accident policy issued or renewed

 

before July 1, 2002, $250,000.00.

 

     (b) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2002 to June 30, 2003, $300,000.00.

 

     (c) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2003 to June 30, 2004, $325,000.00.

 

     (d) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2004 to June 30, 2005, $350,000.00.

 

     (e) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2005 to June 30, 2006, $375,000.00.

 

     (f) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2006 to June 30, 2007, $400,000.00.

 

     (g) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2007 to June 30, 2008, $420,000.00.

     (h) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2008 to June 30, 2009, $440,000.00.

 

     (i) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2009 to June 30, 2010, $460,000.00.

 

     (j) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2010 to June 30, 2011, $480,000.00.

 

     (k) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2011 to June 30, 2013, $500,000.00.

 

     (l) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2013 to June 30, 2015, $530,000.00.

 

     (m) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2015 to June 30, 2017, $545,000.00.

 

     (n) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2017 to June 30, 2019, $555,000.00.

 

Beginning July 1, 2013, 2019, this $500,000.00 $555,000.00 amount

 

shall must be increased biennially on July 1 of each odd-numbered

 

year, for policies issued or renewed before July 1 of the following

 

odd-numbered year, by the lesser of 6% or the consumer price index,

 

and rounded to the nearest $5,000.00. This The association shall

 

calculate this biennial adjustment shall be calculated by the

 

association by January 1 of the year of its July 1 effective date.

 

     (3) An insurer may withdraw from the association only upon on

 

ceasing to write insurance that provides the security required by

 

section 3101(1) in this state.

 

     (4) An insurer whose membership in the association has been

 

terminated by withdrawal shall continue continues to be bound by

 

the plan of operation, and upon on withdrawal, all unpaid premiums

that have been charged to the withdrawing member are payable as of

 

the effective date of the withdrawal.

 

     (5) An unsatisfied net liability to the association of an

 

insolvent member shall must be assumed by and apportioned among the

 

remaining members of the association as provided in the plan of

 

operation. The association has all rights allowed by law on behalf

 

of the remaining members against the estate or funds of the

 

insolvent member for sums money due the association.

 

     (6) If a member has been merged or consolidated into another

 

insurer or another insurer has reinsured a member's entire business

 

that provides the security required by section 3101(1) in this

 

state, the member and successors in interest of the member remain

 

liable for the member's obligations.

 

     (7) The association shall do all of the following on behalf of

 

the members of the association:

 

     (a) Assume 100% of all liability as provided in subsection

 

(2).

 

     (b) Establish procedures by which members shall must promptly

 

report to the association each claim that, on the basis of the

 

injuries or damages sustained, may reasonably be anticipated to

 

involve the association if the member is ultimately held legally

 

liable for the injuries or damages. Solely for the purpose of

 

reporting claims, the member shall in all instances consider itself

 

legally liable for the injuries or damages. The member shall also

 

advise the association of subsequent developments likely to

 

materially affect the interest of the association in the claim.

 

     (c) Maintain relevant loss and expense data relative to all

liabilities of the association and require each member to furnish

 

statistics, in connection with liabilities of the association, at

 

the times and in the form and detail as may be required by the plan

 

of operation.

 

     (d) In a manner provided for in the plan of operation,

 

calculate and charge to members of the association a total premium

 

sufficient to cover the expected losses and expenses of the

 

association that the association will likely incur during the

 

period for which the premium is applicable. The premium shall must

 

include an amount to cover incurred but not reported losses for the

 

period and may be adjusted for any excess or deficient premiums

 

from previous periods. Excesses or deficiencies from previous

 

periods may be fully adjusted in a single period or may be adjusted

 

over several periods in a manner provided for in the plan of

 

operation. Each member shall must be charged an amount equal to

 

that member's total written car years of insurance providing the

 

security required by section 3101(1) or 3103(1), or both, written

 

in this state during the period to which the premium applies,

 

multiplied by the average premium per car. The average premium per

 

car shall be is the total premium calculated divided by the total

 

written car years of insurance providing the security required by

 

section 3101(1) or 3103(1) written in this state of all members

 

during the period to which the premium applies. A member shall must

 

be charged a premium for a historic vehicle that is insured with

 

the member of 20% of the premium charged for a car insured with the

 

member. As used in this subdivision:

 

     (i) "Car" includes a motorcycle but does not include a

historic vehicle.

 

     (ii) "Historic vehicle" means a vehicle that is a registered

 

historic vehicle under section 803a or 803p of the Michigan vehicle

 

code, 1949 PA 300, MCL 257.803a and 257.803p.

 

     (e) Require and accept the payment of premiums from members of

 

the association as provided for in the plan of operation. The

 

association shall do either of the following:

 

     (i) Require payment of the premium in full within 45 days

 

after the premium charge.

 

     (ii) Require payment of the premiums to be made periodically

 

to cover the actual cash obligations of the association.

 

     (f) Receive and distribute all sums money required by the

 

operation of the association.

 

     (g) Establish procedures for reviewing claims procedures and

 

practices of members of the association. If the claims procedures

 

or practices of a member are considered inadequate to properly

 

service the liabilities of the association, the association may

 

undertake or may contract with another person, including another

 

member, to adjust or assist in the adjustment of claims for the

 

member on claims that create a potential liability to the

 

association and may charge the cost of the adjustment to the

 

member.

 

     (8) In addition to other powers granted to it by this section,

 

the association may do all of the following:

 

     (a) Sue and be sued in the name of the association. A judgment

 

against the association shall does not create any direct liability

 

against the individual members of the association. The association

may provide for the indemnification of its members, members of the

 

board of directors of the association, and officers, employees, and

 

other persons lawfully acting on behalf of the association.

 

     (b) Reinsure all or any portion of its potential liability

 

with reinsurers licensed to transact insurance in this state or

 

approved by the commissioner.director of the department.

 

     (c) Provide for appropriate housing, equipment, and personnel

 

as may be necessary to assure the efficient operation of the

 

association.

 

     (d) Pursuant to the plan of operation, adopt reasonable rules

 

for the administration of the association, enforce those rules, and

 

delegate authority, as the board considers necessary to assure the

 

proper administration and operation of the association consistent

 

with the plan of operation.

 

     (e) Contract for goods and services, including independent

 

claims management, actuarial, investment, and legal services, from

 

others within in or without outside of this state to assure the

 

efficient operation of the association.

 

     (f) Hear and determine complaints of a company or other

 

interested party concerning the operation of the association.

 

     (g) Perform other acts not specifically enumerated in this

 

section that are necessary or proper to accomplish the purposes of

 

the association and that are not inconsistent with this section or

 

the plan of operation.

 

     (9) A board of directors is created , hereinafter referred to

 

as the board, which shall be responsible for the operation of and

 

shall operate the association consistent with the plan of operation

and this section.

 

     (10) The plan of operation shall must provide for all of the

 

following:

 

     (a) The establishment of necessary facilities.

 

     (b) The management and operation of the association.

 

     (c) Procedures to be utilized in charging premiums, including

 

adjustments from excess or deficient premiums from prior periods.

 

     (d) Procedures governing the actual payment of premiums to the

 

association.

 

     (e) Reimbursement of each member of the board by the

 

association for actual and necessary expenses incurred on

 

association business.

 

     (f) The investment policy of the association.

 

     (g) Any other matters required by or necessary to effectively

 

implement this section.

 

     (11) Each The board shall must include members that would

 

contribute a total of not less than 40% of the total premium

 

calculated pursuant to subsection (7)(d). Each director shall be is

 

entitled to 1 vote. The initial term of office of a director shall

 

be is 2 years.

 

     (12) As part of the plan of operation, the board shall adopt

 

rules providing for the composition and term of successor boards to

 

the initial board and the terms of board members, consistent with

 

the membership composition requirements in subsections (11) and

 

(13). Terms of the directors shall must be staggered so that the

 

terms of all the directors do not expire at the same time and so

 

that a director does not serve a term of more than 4 years.

     (13) The board shall must consist of 5 directors , and the

 

commissioner director of the department, who shall be serve as an

 

ex officio, nonvoting member of the board. without vote.

 

     (14) Each director The director of the department shall be

 

appointed by the commissioner and appoint the directors. A director

 

shall serve until that member's his or her successor is selected

 

and qualified. The board shall elect the chairperson of the board.

 

shall be elected by the board. A The director of the department

 

shall fill any vacancy on the board shall be filled by the

 

commissioner consistent with as provided in the plan of operation.

 

     (15) After the board is appointed, the The board shall meet as

 

often as the chairperson, the commissioner, director of the

 

department, or the plan of operation shall require, requires, or at

 

the request of any 3 members of the board. The chairperson shall

 

retain the right to may vote on all issues. Four members of the

 

board constitute a quorum.

 

     (16) An The board shall furnish to each member an annual

 

report of the operations of the association in a form and detail as

 

may be determined by the board. shall be furnished to each member.

 

     (17) Not more than 60 days after the initial organizational

 

meeting of the board, the board shall submit to the commissioner

 

for approval a proposed plan of operation consistent with the

 

objectives and provisions of this section, which shall provide for

 

the economical, fair, and nondiscriminatory administration of the

 

association and for the prompt and efficient provision of

 

indemnity. If a plan is not submitted within this 60-day period,

 

then the commissioner, after consultation with the board, shall

formulate and place into effect a plan consistent with this

 

section.

 

     (18) The plan of operation, unless approved sooner in writing,

 

shall be considered to meet the requirements of this section if it

 

is not disapproved by written order of the commissioner within 30

 

days after the date of its submission. Before disapproval of all or

 

any part of the proposed plan of operation, the commissioner shall

 

notify the board in what respect the plan of operation fails to

 

meet the requirements and objectives of this section. If the board

 

fails to submit a revised plan of operation that meets the

 

requirements and objectives of this section within the 30-day

 

period, the commissioner shall enter an order accordingly and shall

 

immediately formulate and place into effect a plan consistent with

 

the requirements and objectives of this section.

 

     (17) (19) The proposed plan of operation or Any amendments to

 

the plan of operation of the association are subject to majority

 

approval by the board, ratified ratification by a majority of the

 

membership having a vote, with voting rights being apportioned

 

according to the premiums charged in subsection (7)(d), and are

 

subject to approval by the commissioner.director of the department.

 

     (18) (20) Upon approval by the commissioner and ratification

 

by the members of the plan submitted, or upon the promulgation of a

 

plan by the commissioner, each An insurer authorized to write

 

insurance providing the security required by section 3101(1) in

 

this state, as provided in this section, is bound by and shall

 

formally subscribe to and participate in the plan approved of

 

operation as a condition of maintaining its authority to transact

insurance in this state.

 

     (19) (21) The association is subject to all the reporting,

 

loss reserve, and investment requirements of the commissioner

 

director of the department to the same extent as would a member are

 

the members of the association.

 

     (20) (22) Premiums charged members by the association shall

 

must be recognized in the rate-making procedures for insurance

 

rates in the same manner that expenses and premium taxes are

 

recognized.

 

     (21) (23) The commissioner director of the department or an

 

authorized representative of the commissioner director of the

 

department may visit the association at any time and examine any

 

and all of the association's affairs.

 

     (22) (24) The association does not have liability for losses

 

occurring before July 1, 1978.

 

     (23) The board shall conduct its business at a public meeting

 

of the board held in compliance with the open meetings act, 1976 PA

 

267, MCL 15.261 to 15.275.

 

     (24) A writing prepared, owned, used, in the possession of, or

 

retained by the board in the performance of an official function is

 

subject to disclosure under the freedom of information act, 1976 PA

 

442, MCL 15.231 to 15.246.

 

     (25) As used in this section:

 

     (a) "Association" means the catastrophic claims association

 

created in subsection (1).

 

     (b) "Board" means the board of directors of the association

 

created in subsection (9).

     (c) (a) "Consumer price index" means the percentage of change

 

in the consumer price index for all urban consumers in the United

 

States city average for all items for the 24 months prior to before

 

October 1 of the year prior to before the July 1 effective date of

 

the biennial adjustment under subsection (2)(k) (2)(n) as reported

 

by the United States department Department of labor, bureau Labor,

 

Bureau of labor statistics, Labor Statistics, and as certified by

 

the commissioner.director of the department.

 

     (d) (b) "Motor vehicle accident policy" means a policy

 

providing the coverages required under section 3101(1).

 

     (e) (c) "Ultimate loss" means the actual loss amounts that a

 

member is obligated to pay and that are paid or payable by the

 

member, and do not include claim expenses. An ultimate loss is

 

incurred by the association on the date that the loss occurs.

 

     Sec. 3181. By 90 days after the effective date of the

 

amendatory act that added this section, an insurer engaged in

 

writing insurance coverages that provide the security required by

 

section 3101(1) shall file rates for the following 6 years that

 

will result in per vehicle premium reductions each year from the

 

rates in effect for the insurer on January 1, 2017, with a per

 

vehicle premium reduction in the sixth year of 65% or more from the

 

rates in effect for the insurer on January 1, 2017.

 

     Sec. 3182. (1) Notwithstanding anything in this act to the

 

contrary, an insurer shall not charge a premium for an automobile

 

insurance policy issued to 1 or more individuals that exceeds 2% of

 

the taxable income of the insured individual or individuals.

 

     (2) As used in this section, "taxable income" means that term

as defined in section 30 of the income tax act of 1967, 1967 PA

 

281, MCL 206.30.

 

     Enacting section 1. This amendatory act does not take effect

 

unless Senate Bill No. ____ or House Bill No. ____ (request no.

 

04311'17 a) of the 99th Legislature is enacted into law.