September 11, 2012, Introduced by Senator YOUNG and referred to the Committee on Insurance.
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 2111b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
2111. (1) Notwithstanding Except
as provided in section
2111b, notwithstanding any provision of this act and this chapter
to the contrary, classifications and territorial base rates used by
any
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 pursuant to under this section
for
automobile insurance shall be based only upon on 1
or more of
the following factors, which shall be applied by an insurer on a
uniform
basis throughout the 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 upon 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,
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 on sex or
marital status.
(5) Notwithstanding other provisions of this chapter,
automobile insurance risks may be grouped by territory.
(6)
This section shall does not be construed as limiting limit
insurers or rating organizations from establishing and maintaining
statistical
reporting territories. This section shall does 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 under this section
for home insurance other than inland marine insurance provided by
policy
floaters or endorsements shall be based only upon 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 upon 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 utilize use
factors in addition to those
specified in this section, if the commissioner finds, after a
hearing
held pursuant to under 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.
Sec. 2111b. (1) An automobile insurer may offer each person
who purchases automobile insurance from the insurer a choice
between a mile-based rating plan and a time-based rating plan for
automobile insurance.
(2) An insurer offering a choice under subsection (1) may
require a person purchasing automobile insurance to use the same
rating plan for all vehicles covered under the person's automobile
insurance policy.
(3) An insurer that offers the choice under subsection (1)
shall include with any rate filings required by this act a
statement of any fee to be charged to policyholders or applicants
for insurance for participation in the mile-based rating plan.
(4) The commissioner shall analyze mile-based and time-based
rates filed by an insurer who offers a choice under subsection (1).
If the commissioner determines that the insurer's filed rates for a
mile-based rating plan are excessive in comparison to the premium
rates charged for similar coverage under the insurer's time‑based
rating plan, the commissioner shall reject the rates under
procedures provided in this act.
(5) Subsection (1) does not apply to an assessment relating to
the Michigan catastrophic claims association under section 3104.
(6) The commissioner shall do all of the following:
(a) Compile information regarding both of the following:
(i) The number of insurers writing motor vehicle insurance
based on mile-based rating plans.
(ii) The premium rates for mile-based rating plans compared to
standard time-based rating plans.
(b) Analyze the effect of mile-based rating plans on both of
the following:
(i) Premium rates offered for motor vehicle insurance based on
time-based rating plans.
(ii) The number of uninsured motorists in this state.
(c) Adopt rules as necessary to govern the use of mile-based
rating plans, including rules regarding all of the following:
(i) Prepayment arrangements.
(ii) Auditing of the odometer of a vehicle for the purpose of
determining whether coverage is in force.
(iii) The applicability of factors under section 2111 to mile-
based rating plans.
(7) As used in this section:
(a) "Mile-based rating plan" means a rating plan for which a
unit of exposure is 1 mile traveled by the insured motor vehicle.
(b) "Time-based rating plan" means a rating plan for which a
unit of exposure is a unit of time.