July 26, 2007, Introduced by Senators HUNTER, THOMAS, SCOTT and GLEASON 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 section 2111 (MCL 500.2111), as amended by 2002 PA 492,
and by adding section 2110c.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2110c. (1) An insurer or a third party on the insurer's
behalf shall not use collection accounts with a medical industry
code, if so identified on an insured's or applicant's credit
report, as a negative factor in any insurance score or in reviewing
(2) As used in this section:
(a) "Consumer reporting agency" means any person which, for
monetary fees, 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
(b) "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 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.
(c) "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 used or expected to be used or collected in whole or in
part for the purpose of serving as a factor in the rating or
underwriting of personal insurance.
(d) "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.
Sec. 2111. (1) Notwithstanding any provision of this act and
this chapter to the contrary, classifications and territorial base
rates used by any insurer in this state with respect to automobile
insurance or home insurance shall conform to the applicable
requirements of this section.
(2) Classifications established pursuant to this section for
automobile insurance shall be based only upon 1 or more of the
following factors, which shall be applied by an insurer on a
uniform basis throughout the 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
(ii) Driver primacy, based upon 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 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
(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
(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
(ii) Vehicle make and model.
(iii) Vehicle design characteristics related to vehicle
(iv) Vehicle characteristics relating to automobile theft
(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
(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
or all of the following, when that information becomes available
to the insurer: (a)
Substantially at-fault accidents. (b)
Convictions 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, beginning 90 days after the
effective date of this sentence, 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
for automobile insurance based upon sex,
status, or claims made by the insured under the policy.
(5) Notwithstanding other provisions of this chapter,
automobile insurance risks may be grouped by territory.
(6) This section shall not be construed as limiting insurers
or rating organizations from establishing and maintaining
statistical reporting territories. This section shall not be
construed to 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
(7) Classifications established pursuant to this section for
home insurance other than inland marine insurance provided by
policy floaters or endorsements shall be based only upon 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 upon 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
(8) Notwithstanding other provisions of this chapter, home
insurance risks may be grouped by territory.
(9) An insurer may utilize factors in addition to those
specified in this section, if the commissioner finds, after a
hearing held pursuant to the administrative procedures act of 1969,
1969 PA 306, MCL 24.201 to 24.328, that the factors would encourage
innovation, would encourage insureds to minimize the risks of loss
from hazards insured against, and would be consistent with the
purposes of this chapter.