HOUSE BILL No. 4412

 

March 6, 2007, Introduced by Reps. Melton, Virgil Smith, Johnson, Sheltrown, Gillard, Hood, Polidori, Kathleen Law, Young, Espinoza, Byrnes, Wojno, Garfield, Scott, Condino, Angerer, Jackson, Gonzales, Warren, Alma Smith and Cheeks and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

(MCL 500.100 to 500.8302) by adding chapter 21A.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

                             CHAPTER 21A

 

        CREDIT-BASED INSURANCE SCORING FOR PERSONAL INSURANCE

 

     Sec. 2151. As used in this chapter:

 

     (a) "Insurance score" means a number, rating, classification,

 

or comparative grouping of risks that is based in whole or in part

 

on credit information, a credit score, or on items of information

 

included in a credit report maintained by a consumer reporting

 

agency that an insurer uses for the purposes of predicting the

 

future loss exposure of an individual applicant or insured, for

 


classifying risk, or for setting the premium charged an individual

 

applicant or insured.

 

     (b) "Personal insurance" means policies underwritten on an

 

individual or group basis for personal, family, or household use,

 

subject to chapter 21, 24, or 26, and includes private passenger

 

automobile, homeowners, motorcycle, boat, personal watercraft,

 

snowmobile, recreational vehicle, mobile homeowners, and all other

 

noncommercial vehicular and noncommercial dwelling fire insurance

 

policies.

 

     Sec. 2153. This chapter applies only to personal insurance. If

 

any provision of this chapter is found to be inconsistent with a

 

provision of chapter 21, 24, or 26, this chapter controls with

 

respect to the use of insurance scores in the rating or

 

underwriting of personal insurance.

 

     Sec. 2155. (1) For new or renewal policies effective on and

 

after July 1, 2007, an insurer in the conduct of its business or

 

activities shall not use an insurance score as a rating factor.

 

     (2) For new and renewal policies effective on and after July

 

1, 2007, an insurer in the conduct of its business or activities

 

shall not use an insurance score as a basis to refuse to insure,

 

refuse to continue to insure, or limit coverage available.

 

     Sec. 2157. (1) For new and renewal policies effective on or

 

after July 1, 2007, an insurer shall adjust base rates in the

 

following manner:

 

     (a) Calculate the sum of earned premium at current rate level

 

for the period January 1, 2006 through December 31, 2006.

 

     (b) Calculate the sum of earned premium at current rate level

 


with all insurance score discounts eliminated for the period

 

January 1, 2006 through December 31, 2006.

 

     (c) Reduce base rates by the factor created from the

 

difference of the number 1 and the ratio of the amount of

 

subdivision (a) to the amount of subdivision (b).

 

     (2) The insurer shall file with the commissioner a

 

certification that it has made the base rate adjustment and

 

documentation describing the calculation of the base rates

 

adjustment. The insurer shall file the certificate and

 

documentation not later than May 1, 2007.

 

     Sec. 2159. If an insurer fails to make the filing required

 

under section 2157, then the insurer in any proceeding to determine

 

the validity of a personal insurance rate filing shall be subject

 

to the presumption that the rate filing does not conform to rate

 

standards under this chapter or chapter 21, 24, or 26.