SENATE BILL No. 659

 

 

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

 

credit information.

 

     (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

 

parties.

 

     (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

 

vehicle.

 

     (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

 

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 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

 

classifications for automobile insurance based upon sex, or marital

 

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

 

statistical data.

 

     (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

 

services.

 

     (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.