June 12, 2003, Introduced by Reps. Reeves, Clack, McConico, Stallworth, Tobocman, Accavitti, Waters, Minore, Vagnozzi, Zelenko, Condino and Hardman 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.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 2111. (1) Notwithstanding any provision of this act
2 and this chapter to the contrary, classifications and territorial
3 base rates used by any insurer in this state with respect to
4 automobile insurance or home insurance shall conform to the
5 applicable requirements of this section.
6 (2) Classifications established pursuant to this section for
7 automobile insurance shall be based only upon 1 or more of the
8 following factors, which shall be applied by an insurer on a
9 uniform basis throughout the state:
10 (a) With respect to all automobile insurance coverages:
1 (i) Either the age of the driver; the length of driving
2 experience; or the number of years licensed to operate a motor
3 vehicle.
4 (ii) Driver primacy, based upon the proportionate use of each
5 vehicle insured under the policy by individual drivers insured or
6 to be insured under the policy.
7 (iii) Average miles driven weekly, annually, or both.
8 (iv) Type of use, such as business, farm, or pleasure use.
9 (v) Vehicle characteristics, features, and options, such as
10 engine displacement, ability of vehicle and its equipment to
11 protect passengers from injury and other similar items, including
12 vehicle make and model.
13 (vi) Daily or weekly commuting mileage.
14 (vii) Number of cars insured by the insurer or number of
15 licensed operators in the household. However, number of licensed
16 operators shall not be used as an indirect measure of marital
17 status.
18 (viii) Amount of insurance.
19 (b) In addition to the factors prescribed in subdivision (a),
20 with respect to personal protection insurance coverage:
21 (i) Earned income.
22 (ii) Number of dependents of income earners insured under the
23 policy.
24 (iii) Coordination of benefits.
25 (iv) Use of a safety belt.
26 (c) In addition to the factors prescribed in subdivision (a),
27 with respect to collision and comprehensive coverages:
1 (i) The anticipated cost of vehicle repairs or replacement,
2 which may be measured by age, price, cost new, or value of the
3 insured automobile, and other factors directly relating to that
4 anticipated cost.
5 (ii) Vehicle make and model.
6 (iii) Vehicle design characteristics related to vehicle
7 damageability.
8 (iv) Vehicle characteristics relating to automobile theft
9 prevention devices.
10 (d) With respect to all automobile insurance coverage other
11 than comprehensive, successful completion by the individual
12 driver or drivers insured under the policy of an accident
13 prevention education course that meets the following criteria:
14 (i) The course shall include a minimum of 8 hours of
15 classroom instruction.
16 (ii) The course shall include, but not be limited to, a
17 review of all of the following:
18 (A) The effects of aging on driving behavior.
19 (B) The shapes, colors, and types of road signs.
20 (C) The effects of alcohol and medication on driving.
21 (D) The laws relating to the proper use of a motor vehicle.
22 (E) Accident prevention measures.
23 (F) The benefits of safety belts and child restraints.
24 (G) Major driving hazards.
25 (H) Interaction with other highway users such as
26 motorcyclists, bicyclists, and pedestrians.
27 (3) Each insurer shall establish a secondary or merit rating
1 plan for automobile insurance, other than comprehensive
2 coverage. A secondary or merit rating plan required under this
3 subsection shall provide for premium surcharges for any or all
4 coverages for automobile insurance, other than comprehensive
5 coverage, based upon any or all of the following, when that
6 information becomes available to the insurer:
7 (a) Substantially at-fault accidents.
8 (b) Convictions for, determinations of responsibility for
9 civil infractions for, or findings of responsibility in probate
10 court for civil infractions for, violations under chapter VI of
11 the Michigan vehicle code, 1949 PA 300, MCL 257.601 to 257.750.
12 However, beginning 90
days after the effective date of this
13 sentence May 28, 1996, an insured shall not be merit
rated for a
14 civil infraction under chapter VI of the Michigan vehicle code,
15 1949 PA 300, MCL 257.601 to 257.750, for a period of time longer
16 than that which the secretary of state's office carries points
17 for that infraction on the insured's motor vehicle record.
18 (4) An insurer shall not establish or maintain rates or
19 rating classifications for automobile insurance based upon sex or
20 marital status.
21 (5) Notwithstanding other provisions of this chapter,
22 automobile insurance
risks may shall be grouped by territory as
23 prescribed by the commissioner. The commissioner shall establish
24 uniform territorial rating to be used by all automobile insurance
25 insurers doing business in the state. Territorial boundaries
26 shall be based on objective criteria, including traffic patterns,
27 and shall be related to the driving environment including, but
1 not limited to, density of traffic, regularity of traffic flow,
2 traffic route size, and types of roadway. A territory shall not
3 include less than 1 county and may include more than 1 county.
4 An insurer shall not charge a territorial base rate for an
5 automobile insurance policy unless the territorial rating scheme
6 used by the insurer has been approved by the commissioner. An
7 insurer shall establish 1 actuarially sound base rate for each
8 prescribed territory which base rate shall be approved by the
9 commissioner pursuant to this chapter.
10 (6) This section shall not be construed as limiting insurers
11 or rating organizations from establishing and maintaining
12 statistical reporting territories. This section shall not be
13 construed to prohibit an insurer from establishing or
14 maintaining, for automobile insurance, a premium discount plan
15 for senior citizens in this state who are 65 years of age or
16 older, if the plan is uniformly applied by the insurer throughout
17 this state. If an insurer has not established and maintained a
18 premium discount plan for senior citizens, the insurer shall
19 offer reduced premium rates to senior citizens in this state who
20 are 65 years of age or older and who drive less than 3,000 miles
21 per year, regardless of statistical data.
22 (7) Classifications established pursuant to this section for
23 home insurance other than inland marine insurance provided by
24 policy floaters or endorsements shall be based only upon 1 or
25 more of the following factors:
26 (a) Amount and types of coverage.
27 (b) Security and safety devices, including locks, smoke
1 detectors, and similar, related devices.
2 (c) Repairable structural defects reasonably related to
3 risk.
4 (d) Fire protection class.
5 (e) Construction of structure, based on structure size,
6 building material components, and number of units.
7 (f) Loss experience of the insured, based upon prior claims
8 attributable to factors under the control of the insured that
9 have been paid by an insurer. An insured's failure, after
10 written notice from the insurer, to correct a physical condition
11 that presents a risk of repeated loss shall be considered a
12 factor under the control of the insured for purposes of this
13 subdivision.
14 (g) Use of smoking materials within the structure.
15 (h) Distance of the structure from a fire hydrant.
16 (i) Availability of law enforcement or crime prevention
17 services.
18 (8) Notwithstanding other provisions of this chapter, home
19 insurance risks may be grouped by territory.
20 (9) An insurer may utilize factors in addition to those
21 specified in this section, if the commissioner finds, after a
22 hearing held pursuant to the administrative procedures act of
23 1969, 1969 PA 306, MCL 24.201 to 24.328, that the factors would
24 encourage innovation, would encourage insureds to minimize the
25 risks of loss from hazards insured against, and would be
26 consistent with the purposes of this chapter.