January 29, 2015, Introduced by Reps. Talabi, Sarah Roberts, Banks, Chang, Rutledge, Faris, Byrd, Gay-Dagnogo, Robinson, Hovey-Wright, Chirkun, Plawecki, Santana and Durhal and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 2027, 2111, and 2151 (MCL 500.2027, 500.2111,
and 500.2151), section 2027 as amended by 1998 PA 26, section 2111
as amended by 2012 PA 441, and section 2151 as added by 2012 PA
165, and by adding section 2027a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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.
(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. (1) 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.
(2) Subsection (1)(a) to (f) does not prohibit a discount
based on expense savings related to group, blanket, or franchise
automobile insurance.
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 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.
(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) 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 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.
(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.
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.