Bill Text: MI SB1022 | 2009-2010 | 95th Legislature | Introduced

Michigan Senate Bill 1022 (Prior Session Legislation)

Introduced

Bill Title: Insurance; no-fault; requirement for finding reasonable degree of competition; eliminate in certain cases. Amends secs. 2403 & 2603 of 1956 PA 218 (MCL 500.2403 & 500.2603). TIE BAR WITH: SB 1020'09, SB 1024'09, SB 1028'09

Spectrum: Partisan Bill (Democrat 12-0)

Status: (Introduced - Dead) 2009-12-10 - Referred To Committee On Economic Development And Regulatory Reform [SB1022 Detail]

Download: Michigan-2009-SB1022-Introduced.html

SENATE BILL No. 1022

December 10, 2009, Introduced by Senators CLARK-COLEMAN, BRATER, ANDERSON, HUNTER, CLARKE, SCOTT, THOMAS, JACOBS, PRUSI, CHERRY, OLSHOVE and SWITALSKI and referred to the Committee on Economic Development and Regulatory Reform.

A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

by amending sections 2403 and 2603 (MCL 500.2403 and 500.2603),

section 2403 as amended by 1993 PA 200.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 2403. (1) All rates shall be made in accordance with this

section and all of the following:

(a) Due consideration shall be given to past and prospective

loss experience within and outside this state; to catastrophe

hazards; 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; to

underwriting practice, judgment, and to all other relevant factors

within and outside this state. For worker's compensation insurance,

in determining the reasonableness of the margin for underwriting

profit and contingencies, consideration shall be given to all

after-tax investment profit or loss from unearned premium and loss

reserves attributable to worker's compensation insurance, as well

as the factors used to determine the amount of reserves. For all

other kinds of insurance to which this chapter applies, all factors

to which due consideration is given under this subdivision shall be

treated in a manner consistent with the laws of this state that

existed on December 28, 1981.

(b) 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.

establishment of rates and minimum premiums. Classification rates

may be modified to produce rates for individual risks in accordance

with rating plans that measure variations in hazards, expense

provisions, or both. The rating plans may measure any differences

among risks that may have a probable effect upon losses or expenses

as provided for in subdivision (a).

(d) Rates shall not be excessive, inadequate, or unfairly

discriminatory. For automobile insurance, due consideration shall

be given to the percentage of uninsured drivers in the state in

determining whether rates are excessive, inadequate, or unfairly

discriminatory. The percentage of uninsured drivers may be obtained

from information including, but not limited to, statistics and data

from the insurance information institute, the national association

of insurance commissioners, and law enforcement agencies. A rate

shall not be held to be excessive unless the rate is unreasonably

high for the insurance coverage provided and, except for automobile

insurance, a reasonable degree of competition does not exist with

respect to the classification, kind, or type of risks to which the

rate is applicable. Except as otherwise provided in this

subdivision, a rate shall 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

coverage 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 the insurance through ordinary methods. For commercial

liability insurance a rate shall not be held to be inadequate

unless the rate, after consideration of investment income and

marketing programs and underwriting programs, is unreasonably low

for the insurance coverage provided and is insufficient to sustain

projected losses and expenses; or unless the rate is unreasonably

low for the insurance coverage 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 the insurance through ordinary methods.

As used in this subdivision, "commercial liability insurance" means

insurance that provides indemnification for commercial, industrial,

professional, or business liabilities. For worker's compensation

insurance provided by an insurer that is controlled by a nonprofit

health care corporation formed pursuant to the nonprofit health

care corporation reform act, ~~Act No. 350 of the Public Acts of~~

~~1980, being sections 550.1101 to 550.1704 of the Michigan Compiled~~

~~Laws~~ 1980 PA 350, MCL 550.1101 to 550.1704, a rate shall not be

held to be inadequate unless the rate is unreasonably low for the

insurance coverage provided. 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 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 new coverages and classifications, by

reasonably anticipated loss and expense experience. A rate is not

unfairly discriminatory because the rate reflects differences in

expenses for individuals or risks with similar anticipated losses,

or because the rate reflects differences in losses for individuals

or risks with similar expenses. Rates are not unfairly

discriminatory if they are averaged broadly among persons insured

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

(2) Except to the extent necessary to meet the provisions of

subsection (1)(d), uniformity among insurers in any matters within

the scope of this section is neither required nor prohibited.

Sec. 2603. (1) All rates shall be made in accordance with the

following provisions:

(a) Due consideration shall be given to past and prospective

loss experience within and outside this state; to catastrophe

hazards; 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; and to

all other relevant factors within and outside this state. In the

case of fire insurance rates, consideration also shall be given to

the experience of the fire insurance business during a period of

not less than the most recent 5-year period for which that

experience is available.