HOUSE BILL No. 4664

April 25, 2007, Introduced by Reps. Young, Cushingberry, Melton, Johnson and Cheeks and referred to the Committee on Insurance.

     A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

by amending sections 2021, 2105, 2106, 2108, 2109, 2110, 2111,

2114, 2118, 2120, 2127, 2236, 2400, 2406, 2430, 2436, 2438, 2458,

2462, 2472, 2600, 2606, 2608, 2616, 2628, 2630, 2636, 2652, 2654,

2664, 2930, 3020, 3321, and 3340 (MCL 500.2021, 500.2105, 500.2106,

500.2108, 500.2109, 500.2110, 500.2111, 500.2114, 500.2118,

500.2120, 500.2127, 500.2236, 500.2400, 500.2406, 500.2430,

500.2436, 500.2438, 500.2458, 500.2462, 500.2472, 500.2600,

500.2606, 500.2608, 500.2616, 500.2628, 500.2630, 500.2636,

500.2652, 500.2654, 500.2664, 500.2930, 500.3020, 500.3321, and

500.3340), section 2021 as added by 1982 PA 7, sections 2111, 2118,

and 2930 as amended by 2002 PA 492, section 2120 as amended by 1984

PA 350, section 2236 as amended by 2002 PA 664, section 2400 as

amended by 1982 PA 8, section 2406 as amended by 1993 PA 200,

section 2436 as amended by 1982 PA 7, section 2458 as amended by

1988 PA 262, section 3020 as amended by 2006 PA 106, and section

3340 as amended by 1986 PA 10, and by adding sections 2026a, 2094,

2103a, 2106a, 2107a, 2109a, 2109b, 2111c, 2128, 2128a, 2128b,

2128c, 2128d, 2128e, 2128f, and 3105a; and to repeal acts and parts

of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 2021. An unfair method of competition and an unfair or

deceptive act or practice in the business of insurance includes

failure by a rating organization and an insurer which makes its own

rates, within a reasonable time after receiving written request

therefor and upon payment of such a reasonable charge as it may

make, to furnish to any an insured affected by a rate made by it,

or to the insured's authorized representative, of such insured, all

pertinent information to such the rate.

     Sec. 2026a. (1) It is an unfair method of competition and an

unfair or deceptive act or practice in the business of insurance

for a private passenger nonfleet automobile insurer or the

insurer's agent to solicit, offer, pay, or receive a kickback or

bribe in connection with the process of adjusting, resolving,

denying, or litigating a claim for automotive repair.

     (2) An insurer or an insurer's agent who violates this section

is guilty of a felony punishable by imprisonment for not less than

1 year or more than 5 years, or a fine of not more than $50,000.00,

or both, and in addition, the insurer is subject to the certificate

of authority revocation proceedings of this chapter.

Sec. 2094. An individual threatened with injury or injured

directly or indirectly by a private passenger nonfleet automobile

insurer's violation of any provision of this chapter may bring an

action for appropriate injunctive or other equitable relief against

immediate irreparable harm, actual damages sustained by reason of a

violation of this chapter, and, as determined by the court,

interest on the damages from the date of the complaint, taxable

costs, and reasonable attorney's fees. This remedy is in addition

to any other remedy and penalty provisions provided by this

chapter.

Sec. 2103a. As used in this chapter:

     (a) "Group automobile insurance" means automobile insurance

covering not less than 25 eligible employees or members, with or

without their eligible dependents, written under a master policy

issued to and endorsed by a governmental corporation, unit, agency,

or department, or to a corporation, partnership, individual

employer, or an association, upon application of an executive

officer or trustee of the association having a constitution or

bylaws, and formed in good faith for purposes other than that of

obtaining insurance.

     (b) "Total return rating" means the consideration of total

revenue and available assets of the insurer, including, but not

limited to, investment income, capital and surplus, underwriting

and operating profits, premium revenue, and all other reserves.

     Sec. 2105. (1) No A policy of automobile insurance or home

insurance shall not be offered, bound, made, issued, delivered, or

renewed in this state on and after January 1, 1981, except in

conformity with this chapter. This chapter shall does not apply to

policies of automobile insurance or home insurance offered, bound,

made, issued, delivered or renewed in this state before January 1,

1981.

     (2) This chapter shall does not apply to insurance written on

a group, franchise, blanket policy, or similar basis which that

offers home insurance or automobile insurance to all members of the

group, franchise plan, or blanket coverage who are eligible

persons.

     Sec. 2106. Except as specifically provided in this chapter,

the provisions of chapter 24 and chapter 26 shall do not apply to

automobile insurance and home insurance. An insurer may use rates

for automobile insurance or home insurance as soon as those rates

are filed. An insurer shall not use rates for automobile insurance

until those rates have been approved by the commissioner. To the

extent that other provisions of this code act are inconsistent with

the provisions of this chapter, this chapter shall govern governs

with respect to automobile insurance and home insurance.

     Sec. 2106a. To be authorized to write group automobile

insurance in this state, an insurer shall offer the group coverage

to every eligible person in the group in a uniform manner and shall

follow the rate-making, underwriting, and other applicable

provisions of this act.

     Sec. 2107a. (1) By not later than 1 year after the effective

date of this section and annually thereafter, each insurer subject

to this chapter shall file base rates for automobile insurance and

shall make filings that conform to this act as amended by the 2007

amendatory act that added this section.

     (2) The commissioner shall review a filing submitted under

subsection (1) and shall approve or disapprove the filing within 60

days after its submission.

     (3) A filing approved under subsection (2) shall not be

revised for 12 months after the effective date of the filing unless

the revision meets either of the following:

     (a) Lowers the price of the coverage.

     (b) Is in response to a ruling or decision by the

commissioner, the court, or a hearing officer.

     (4) A rule change or other change filed with the commissioner

that results in a change in the cost of coverage is considered a

revision in a rate filing under this section.

     (5) If a filing is disapproved under subsection (2), the

insurer, within 30 days of the order of disapproval, shall make a

revised filing with the commissioner. The revised filing is subject

to review under this chapter in the same manner as an original

filing made under this chapter.

     Sec. 2108. (1) On Except as otherwise provided in section

2107a, on the effective date thereof, each insurer shall file with

the commissioner every manual of classification, every manual of

rules and rates, every rating plan, and every modification of a

manual of classification, manual of rules and rates, or a rating

plan which that it proposes to use for automobile insurance and

home insurance. Each filing shall state the character and extent of

the coverage contemplated. Each insurer subject to this chapter who

maintains rates in any part of this state shall at all times

maintain rates in effect for all eligible persons meeting the

underwriting criteria of the insurer.

     (2) An Except for filings concerning rates, an insurer may

satisfy its obligation to make filings under subsection (1) by

becoming a member of, or a subscriber to, a licensed rating

organization licensed under chapter 24 or chapter 26 which that

makes those filings, and by filing with the commissioner a copy of

its authorization of the rating organization to make those filings

on its behalf. Nothing contained in this chapter shall be construed

as requiring any insurer to become a member of or a subscriber to

any rating organization. Insurers may file and use deviations from

filings made on their behalf, which deviations shall be are subject

to the provisions of this chapter.

     (3) Each filing shall be accompanied by a certification by or

on behalf of the insurer that, to the best of its information and

belief, the filing conforms to the requirements of this chapter.

     (4) Each filing shall include information that supports the

filing with respect to the requirements of section 2109 or 2109a,

as applicable. The information may include 1 or more of the

following:

     (a) The experience or judgment of the insurer or rating

organization making the filing.

     (b) The interpretation of the insurer or rating organization

of any statistical data it relies upon.

     (c) The experience of other insurers. or rating organizations.

     (d) Any other relevant information.

     (5) A filing and any accompanying information shall be open to

public inspection upon filing.

     (6) An insurer shall not make, issue, or renew a contract or

policy except in accordance with filings which that are in effect

for the insurer pursuant to this chapter.

     Sec. 2109. (1) All rates for automobile insurance and home

insurance shall be made in accordance with the following

provisions:

     (a) Rates shall not be excessive, inadequate, or unfairly

discriminatory. A rate shall not be held to be excessive unless the

rate is unreasonably high for the insurance coverage provided and a

reasonable degree of competition does not exist for the insurance

to which the rate is applicable.

     (b) A rate shall not be held to be inadequate unless the rate

is unreasonably low for the insurance coverage provided and the

continued use of the rate endangers the solvency of the insurer; or

unless the rate is unreasonably low for the insurance provided and

the use of the rate has or will have the effect of destroying

competition among insurers, creating a monopoly, or causing a kind

of insurance to be unavailable to a significant number of

applicants who are in good faith entitled to procure that insurance

through ordinary methods.

     (c) A rate for a coverage is unfairly discriminatory in

relation to another rate for the same coverage if the differential

between the rates is not reasonably justified by differences in

losses, expenses, or both, or by differences in the uncertainty of

loss, for the individuals or risks to which the rates apply. A

reasonable justification shall be supported by a reasonable

classification system; by sound actuarial principles when

applicable; and by actual and credible loss and expense statistics

or, in the case of new coverages and classifications, by reasonably

anticipated loss and expense experience. A rate is not unfairly

discriminatory because it reflects differences in expenses for

individuals or risks with similar anticipated losses, or because it

reflects differences in losses for individuals or risks with

similar expenses.

     (2) A determination concerning the existence of a reasonable

degree of competition with respect to subsection (1)(a) shall take

into account a reasonable spectrum of relevant economic tests,

including the number of insurers actively engaged in writing the

insurance in question, the present availability of such insurance

compared to its availability in comparable past periods, the

underwriting return of that insurance over a period of time

sufficient to assure reliability in relation to the risk associated

with that insurance, and the difficulty encountered by new insurers

in entering the market in order to compete for the writing of that

insurance.

     Sec. 2109a. (1) All rates for automobile insurance shall be

reviewed by the commissioner by examining the insurer's report

prepared pursuant to section 2128 and shall be made in accordance

with total return rating and the following provisions:

     (a) Rates shall not be excessive, inadequate, or unfairly

discriminatory. A rate shall not be approved by the commissioner

unless it is actuarially justified based upon the information

received pursuant to section 2128.

     (b) A rate shall not be held to be inadequate unless the rate,

after consideration of investment income and surplus, is

unreasonably low for the insurance coverage provided and is

insufficient to sustain projected losses and expenses; or unless

the rate is unreasonably low for the insurance provided and the use

of the rate has or will have the effect of destroying competition

among insurers, creating a monopoly, or causing a kind of insurance

to be unavailable to a significant number of applicants who are in

good faith entitled to procure that insurance through ordinary

methods.

     (c) A rate for a coverage is unfairly discriminatory in

relation to another rate for the same coverage if the differential

between the rates is not reasonably justified by differences in

losses, expenses, or both, or by differences in the uncertainty of

loss, for the individuals or risks to which the rates apply. A

reasonable justification shall be supported by a reasonable

classification system; by sound actuarial principles when

applicable; and by actual and credible loss and expense statistics

or, in the case of new coverages and classifications, by reasonably

anticipated loss and expense experience. A rate is not unfairly

discriminatory because it reflects differences in expenses for

individuals or risks with similar anticipated losses, or because it

reflects differences in losses for individuals or risks with

similar expenses.

     (2) The commissioner shall not approve a rate increase for

automobile insurance unless the commissioner determines that the

data received from the report prepared pursuant to section 2128

justifies a rate increase. The commissioner shall not approve a

rate increase by examining actuarial data from a line other than

the insurer's automobile insurance line or if the insurer fails to

file the data required by section 2128. The commissioner shall not

approve a rate increase if the commissioner finds the insurer's

administrative expenses to be excessive.

     (3) Each insurer shall submit annually to the commissioner a

complete breakdown of litigation costs associated with first and

third party automobile insurance claims that have been received or

are in the process of being litigated and of amounts reserved to be

used for those expenses. The commissioner shall not approve a rate

if the administrative costs associated with the litigation of first

party claims exceed 1% of the administrative costs associated with

the litigation of third party claims. Each automobile insurance

insurer's total administrative expenses shall be allocated to each

territory according to the insurer's proportionate share of premium

written in each territory. Each premium charged within each

territory shall contain an equal share of the administrative

expense for the territory. Rates shall be filed and charged under

this section so that each automobile insurance premium includes an

equal share of each insurer's overall administrative expense.

Sec. 2109b. (1) If the commissioner determines that any person

or organization has violated the automobile rate-making or

underwriting provisions of this chapter, the commissioner may issue

a cease and desist order and order the person or organization to

pay a civil fine of not more than $500.00 for each violation and a

civil fine of not more than $5,000.00 for each willful violation. A

default in the payment of a civil fine under this section may be

remedied by any means authorized under the revised judicature act

of 1961, 1961 PA 236, MCL 600.101 to 600.9947. A civil fine

collected pursuant to this subsection shall be used for the

operation of the automobile insurance data collection agency

created in section 2128e.

     (2) If the commissioner finds that a violation of the

automobile rate-making or underwriting provisions of this chapter

has occurred and that the violation has resulted in an increase in

automobile insurance premiums or a decrease in benefits, the

commissioner shall order the insurer to return the premium or the

amount of benefits that should have been paid, along with an

interest charge of 12% per annum to be applied from the time the

premium was collected or the benefit was due or would have been due

to the consumer.

     (3) The commissioner may suspend the license of an insurer

that fails to comply with the commissioner's order to correct a

violation of this chapter.

     Sec. 2110. (1) In developing and evaluating rates pursuant to

the standards prescribed in section sections 2109 and 2109a, due

consideration shall be given to past and prospective loss

experience within and outside this state; , to catastrophe hazards,

if any; to a reasonable margin for underwriting profit and

contingencies; to dividends, savings, or unabsorbed premium

deposits allowed or returned by insurers to their policyholders,

members, or subscribers; to past and prospective expenses, both

countrywide and those specially applicable to this state exclusive

of assessments under this code act; to assessments under this code

act; to underwriting practice and judgment; and to all other

relevant factors within and outside this state.

     (2) The systems of expense provisions included in the rates

for use by any insurer or group of insurers may differ from those

of other insurers or groups of insurers to reflect the requirements

of the operating methods of the insurer or group with respect to

any kind of insurance, or with respect to any subdivision or

combination thereof for which subdivision or combination separate

expense provisions are applicable.

     (3) Risks may be grouped by classifications for the

establishment of rates and minimum premiums. The classifications

may measure differences in losses, expenses, or both.

     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 and classifications used by any insurer

in this state with respect to automobile 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.

     (v) The waiver of coverage for work loss benefits under

section 3107.

     (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 May 28, 1996, 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.

     (5) Notwithstanding other provisions of this chapter,

automobile insurance risks may shall be grouped by territory as

prescribed by the commissioner. The commissioner shall establish

uniform territorial rating to be used by all automobile insurance

insurers doing business in this state. Territorial boundaries shall

be based upon objective criteria, including traffic patterns, and

shall be related to the driving environment including, but not

limited to, density of traffic, regularity of traffic flow, traffic

route size, and types of roadway. A territory shall not include

less than 1 county and may include more than 1 county. An insurer

shall not charge a territorial base rate for an automobile

insurance policy unless the territorial rating scheme used by the

insurer has been approved by the commissioner. An insurer shall

establish 1 actuarially sound base rate for each prescribed

territory, which base rate shall be approved by the commissioner

pursuant to this chapter.

     (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.

     Sec. 2111c. (1) By not later than 1 year after the effective

date of this section, each automobile insurance insurer shall file

base rates for automobile insurance that conform to this act as

amended by the 2007 amendatory act that added this section and, for

each uniform territory, reflect a reduction that is at least an

overall 20% reduction from the aggregate rates previously charged

in the territory by the 10 automobile insurance insurers having the

greatest market share in the state based on rates in effect as of

May 1, 2006. The commissioner shall require a rate reduction to

this level unless the insurer, after conforming fully with all of

the provisions of this act, can demonstrate that a different rate

level is actuarially essential pursuant to section 2109a.

     (2) By not later than 1 year after the effective date of this

section, each automobile insurance insurer who did not write

automobile insurance in this state on May 1, 2006 shall file base

rates for automobile insurance that do not exceed the weighted

average of the base rates filed on May 1, 2006 by the 10 largest

automobile insurance insurers by market share.

     (3) Assessments for the Michigan catastrophic claims

association, automobile theft prevention authority, and the

Michigan automobile insurance placement facility shall not be

considered in achieving the reduction required by subsections (1)

and (2).

     Sec. 2114. (1) A person or organization aggrieved with respect

to any filing which that is in effect and which that affects the

person or organization may make written application to the

commissioner for a hearing on the filing. However, the insurer or

rating organization which that made the filing shall not be

authorized to proceed under this subsection. The application shall

specify the grounds to be relied upon by the applicant. If the

commissioner finds that the application is made in good faith, that

the applicant would be so aggrieved if the grounds specified are

established, or that the grounds specified otherwise justify

holding a hearing, the commissioner, not more than 30 days after

receipt of the application, shall hold a hearing in accordance with

Act No. 306 of the Public Acts of 1969, as amended the

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

24.328, upon not less than 10 days' written notice to the

applicant, the insurer, and the rating organization which that made

the filing.

     (2) If after hearing initiated under subsection (1) or upon

the commissioner's own motion pursuant to Act No. 306 of the Public

Acts of 1969, as amended the administrative procedures act of 1969,

1969 PA 306, MCL 24.201 to 24.328, the commissioner finds that a

filing does not meet the requirements of sections 2109, and 2109a,

or 2111, as applicable, the commissioner shall issue an order

stating the specific reasons for that finding. The order shall

state when, within a reasonable time after issuance of the order,

the filing shall be considered no longer effective. A copy of the

order shall be sent to the applicant, if any, and to each insurer

and rating organization subject to the order. The order shall not

affect a contract or policy made or issued before the date the

filing becomes ineffective, as indicated in the commissioner's

order.

     Sec. 2118. (1) As a condition of maintaining its certificate

of authority, an insurer shall not refuse to insure, refuse to

continue to insure, or limit coverage available to an eligible

person for automobile insurance, except in accordance with

underwriting rules established pursuant to this section and

sections 2119 and 2120.

     (2) The underwriting rules that an insurer may establish for

automobile insurance shall be based only on the following:

     (a) Criteria identical to the standards set forth in section

2103(1).

     (b) The insurance eligibility point accumulation in excess of

the amounts established by section 2103(1) of a member of the

household of the eligible person insured or to be insured, if the

member of the household usually accounts for 10% or more of the use

of a vehicle insured or to be insured. For purposes of this

subdivision, a person who is the principal driver for 1 automobile

insurance policy shall be rebuttably presumed not to usually

account for more than 10% of the use of other vehicles of the

household not insured under the policy of that person.

     (c) With respect to a vehicle insured or to be insured,

substantial modifications from the vehicle's original manufactured

state for purposes of increasing the speed or acceleration

capabilities of the vehicle.

     (d) Failure by the person to provide proof that insurance

required by section 3101 was maintained in force with respect to

any vehicle which was both owned by the person and driven or moved

by the person or by a member of the household of the person during

the 6-month period immediately preceding application. Such proof

shall take the form of a certification by the person on a form

provided by the insurer that the vehicle was not driven or moved

without maintaining the insurance required by section 3101 during

the 6-month period immediately preceding application.

(d) (e) Type of vehicle insured or to be insured, based on 1

of the following, without regard to the age of the vehicle:

     (i) The vehicle is of limited production or of custom

manufacture.

     (ii) The insurer does not have a rate lawfully in effect for

the type of vehicle.

     (iii) The vehicle represents exposure to extraordinary expense

for repair or replacement under comprehensive or collision

coverage.

(e) (f) Use of a vehicle insured or to be insured for

transportation of passengers for hire, for rental purposes, or for

commercial purposes. Rules under this subdivision shall not be

based on the use of a vehicle for volunteer or charitable purposes

or for which reimbursement for normal operating expenses is

received.

(f) (g) Payment of a minimum deposit at the time of

application or renewal, not to exceed the smallest deposit required

under an extended payment or premium finance plan customarily used

by the insurer.

(g) (h) For purposes of requiring comprehensive deductibles of

not more than $150.00, or of refusing to insure if the person

refuses to accept a required deductible, the claim experience of

the person with respect to comprehensive coverage.

(h) (i) Total abstinence from the consumption of alcoholic

beverages except when if such beverages are consumed as part of a

religious ceremony. However, an insurer shall not utilize an

underwriting rule based on this subdivision unless the insurer has

been authorized to transact automobile insurance in this state

prior to January 1, 1981, and has consistently utilized such an

underwriting rule as part of the insurer's automobile insurance

underwriting since being authorized to transact automobile

insurance in this state.

(i) (j) One or more incidents involving a threat, harassment,

or physical assault by the insured or applicant for insurance on an

insurer employee, agent, or agent employee while acting within the

scope of his or her employment so long as a report of the incident

was filed with an appropriate law enforcement agency.

     Sec. 2120. (1) Affiliated insurers may establish underwriting

rules so that each affiliate will provide automobile insurance only

to certain eligible persons. This subsection shall apply only if an

eligible person can obtain automobile insurance from 1 of the

affiliates. The underwriting rules shall be in compliance with this

section , section and sections 2118 , and section 2119.

     (2) An insurer may establish separate rating plans so that

certain eligible persons are provided automobile insurance under 1

rating plan and other eligible persons are provided automobile

insurance under another rating plan. This subsection shall apply

only if all eligible persons can obtain automobile insurance under

a rating plan of the insurer. Underwriting rules consistent with

this section , section and sections 2118 , and section 2119 shall

be established to define the rating plan applicable to each

eligible person.

     (3) Underwriting rules under this section shall be based only

on the following:

     (a) With respect to a vehicle insured or to be insured,

substantial modifications from the vehicle's original manufactured

state for purposes of increasing the speed or acceleration

capabilities of the vehicle.

     (b) Failure of the person to provide proof that insurance

required by section 3101 was maintained in force with respect to

any vehicle owned and operated by the person or by a member of the

household of the person during the 6-month period immediately

preceding application or renewal of the policy. Such proof shall

take the form of a certification by the person that the required

insurance was maintained in force for the 6-month period with

respect to such vehicle.

(b) (c) For purposes of insuring persons who have refused a

deductible lawfully required under section 2118(2)(h) 2118(2)(g),

the claim experience of the person with respect to comprehensive

coverage.

     (d) Refusal of the person to pay a minimum deposit required

under section 2118(2)(g) 2118(2)(f).

     (e) A person's insurance eligibility point accumulation under

section 2103(1)(h), or the total insurance eligibility point

accumulation of all persons who account for 10% or more of the use

of 1 or more vehicles insured or to be insured under the policy.

     (f) The type of vehicle insured or to be insured as provided

in section 2118(2)(e) 2118(2)(d).

     Sec. 2127. The commissioner may by rule prospectively require

insurers, rating organizations, and advisory organizations to

collect and report data only to the extent necessary to monitor and

evaluate the automobile and home insurance markets in this state.

The commissioner shall authorize the use of sampling techniques in

each instance where sampling is practicable and consistent with the

purposes for which the data are to be collected and reported. Rules

promulgated under this section are in addition to, and do not

replace, the reporting requirements in section 2128.

     Sec. 2128. On or before April 1 of each year, each insurer who

issues automobile insurance in this state shall file with the

commissioner and with the automobile insurance data collection

agency created in section 2128e on forms prescribed by the

automobile insurance data collection agency, the following

automobile insurance data, by territory, for the prior calendar

year:

     (a) With respect to personal protection insurance coverage:

     (i) The number of claims for personal protection insurance

benefits for which payment is made.

     (ii) The number of claims for personal protection insurance

benefits that are closed without payment.

     (iii) The number of claims for personal protection insurance

benefits that involve some form of litigation and are closed

without payment.

     (iv) The number of claims for personal protection insurance

benefits that involve litigation and for which payment is made

after litigation commences, including the length of time between

the filing of the claim and the first payment.

     (v) The amount of interest charges paid on claims for personal

protection insurance benefits and the number of cases for which

interest charges have been paid.

     (vi) The litigation costs for claims for personal protection

insurance benefits.

     (vii) The number of cases going to verdict and the amount of

the verdict in those cases where an award is made.

     (viii) The number of verdicts of no cause of action.

     (ix) The number of cases where attorney fees are paid, the

total amount of attorney fees paid, and the amount of attorney fees

paid for each case where fees were paid.

     (b) With respect to property protection insurance coverage:

     (i) The number of third party automobile bodily injury tort

claims closed by payment to the claimant before the commencement of

litigation and a breakdown of how many of these claims were death

threshold claims, serious impairment of body function threshold

claims, and permanent serious disfigurement threshold claims.

     (ii) The number of third party automobile bodily injury tort

claim lawsuits filed, and a breakdown of how many were filed for

death threshold claims, serious impairment of body function

threshold claims, and permanent serious disfigurement threshold

claims.

     (iii) The number of third party automobile bodily injury tort

claims closed by payment to the claimant after the commencement of

litigation and a breakdown of how many of these claims were death

threshold claims, serious impairment of body function threshold

claims, and permanent serious disfigurement threshold claims.

     (iv) The dollar amount paid to claimants to settle third party

automobile bodily injury tort claims before and after litigation

had been commenced and a breakdown of the dollar amounts paid for

death threshold claims, serious impairment of body function

threshold claims, and permanent serious disfigurement threshold

claims.

     (v) The number and dollar amount paid or reserved for all

bodily injury claims set up or opened, indicating the number and

dollar amount of reserves for claims remaining open at the end of

the reporting period.

Sec. 2128a. Each automobile insurance insurer writing

automobile insurance in this state shall file annually on or before

April 1 with the commissioner a certified audit of the insurer's

books and records prepared by an independent certified public

accountant.

Sec. 2128b. (1) On or before January 15, 2009 and every 2

years thereafter, the commissioner shall issue a preliminary report

detailing the state of competition or availability in the

automobile insurance market on a statewide basis and delineating

specific classifications, kinds or types of insurance, if any,

where competition or availability does not exist and shall hold a

public hearing on the report. The report shall be based on relevant

economic tests, including, but not limited to, those in subsection

(3). The findings in the report shall not be based on any single

measure of competition, but appropriate weight shall be given to

all measures of competition. The report shall include a

certification of whether or not competition or availability exists.

A person who disagrees with the report and findings of the

commissioner may request a contested hearing pursuant to the

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

24.328, not later than 60 days after issuance of the preliminary

report.

     (2) On or before August 1, 2009 and every 2 years thereafter,

the commissioner shall issue a final report that shall include a

final certification of whether or not a reasonable degree of

competition or availability exists in the automobile insurance

market on a statewide basis and if competition or availability does

not exist, a plan to create competition or availability. The final

report and certification shall be supported by substantial

evidence.

     (3) For purposes of determining whether competition or

availability exists in the automobile insurance market, all of the

following shall be considered by the commissione

     (a) The extent to which any insurer controls the automobile

insurance market or any portion of that market. With respect to

competition on a statewide basis, an insurer shall not be

considered to control the automobile insurance market unless it has

more than a 15% market share.

     (b) Whether the total number of insurers writing automobile

insurance in this state is sufficient to provide multiple options

and adequate service to individuals.

     (c) The disparity among automobile insurance rates and

classifications to the extent that such classifications result in

rate differentials.

     (d) The availability of automobile insurance to individuals in

all geographic areas of the state.

     (e) The residual market share.

     (f) The overall rate level.

     (g) Any other factors the commissioner considers relevant.

     (4) A plan to create competition or availability shall only

relate to those geographic areas, classifications, or kinds or

types of risks where competition or availability has been certified

not to exist. The plan may include methods designed to create

competition or availability as the commissioner considers

necessary, and may provide for the commissioner to do 1 or more of

the following:

     (a) Authorize, by order, joint underwriting activities in a

manner specified in the commissioner's order.

     (b) Modify the rate approval process in a manner to increase

competition or availability while at the same time providing for

reasonably timely rate approvals. Modifications under this

subdivision shall not affect the requirements of sections 2106 and

2107a.

     (c) Order excess profits regulation. Excess profits regulation

authorized by this subdivision shall be based upon rules

promulgated pursuant to the administrative procedures act of 1969,

1969 PA 306, MCL 24.201 to 24.328. Excess profits shall include

both underwriting profits and all after-tax investment or

investment profit or loss from unearned premiums and loss reserves

attributable to automobile insurance. The commissioner, pursuant to

excess profits regulation, may establish forms for the reporting of

financial data by the insurer.

     (d) Establish and require automobile insurance rates, by

order, that insurers shall use as a condition of maintaining their

certificate of authority. The order setting the rates shall take

effect not less than 90 days or more than 150 days after the order

is issued.

     (e) Establish and implement a plan to assist in informing

consumers of how to obtain automobile insurance at the most

favorable rates and how to obtain benefits for which they are

eligible. The plan may include the use of toll-free telephone

numbers for use by automobile insurance consumers and may provide

for the distribution of information to local units of government.

     (5) The reports and certifications required under subsections

(1) and (2) shall be forwarded to the governor, the clerk of the

house, the secretary of the senate, and all the members of the

house of representatives and senate standing committees on

insurance issues.

     Sec. 2128c. (1) Each insurer writing 7% or more of the

automobile insurance in this state shall geographically market

automobile insurance proportionate to the number of registered

vehicles in each area of the state. Beginning 1 year after the

effective date of this section, each insurer writing 7% or more of

the automobile insurance in this state shall submit annually to the

commissioner a marketing plan indicating the number of agents that

market for the insurer and the location of their offices. The

commissioner shall determine the adequacy of each insurer's

marketing plan and approve or disapprove the plan within 30 days

after the commissioner's receipt of the plan.

     (2) If the commissioner, after reviewing an automobile

insurer's marketing plan, finds the plan is not in compliance with

subsection (1), the commissioner shall notify the insurer in

writing of the insurer's failure to comply with the law, shall

recommend revisions to the insurer's plan, and shall require that a

revised plan be resubmitted within 30 days. The commissioner shall

approve or disapprove an insurer's revisions to the plan within 30

days after the commissioner's receipt of the revised plan.

     (3) If the commissioner finds that an automobile insurance

insurer has willfully violated the provisions of this section, the

commissioner may suspend or revoke the insurer's license to do

business and may order the insurer to pay a civil fine of not more

than $10,000.00 for each violation.

     (4) If the commissioner finds that an automobile insurance

insurer has failed to file a marketing plan complying with this

section, has failed to revise a plan pursuant to the commissioner's

finding, or has consistently failed to submit an acceptable

marketing plan, the commissioner may suspend or revoke the

insurer's license to do business and may order the insurer to pay a

civil fine of not more than $2,000.00 for each occurrence.

     (5) The commissioner shall notify each automobile insurance

insurer licensed in this state of the marketing plan filing

requirement.

     Sec. 2128d. (1) 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 access to a reasonably competitive

and convenient automobile insurance market in this state is lacking

for certain consumers, the commissioner may order the Michigan

automobile insurance placement facility to develop a market access

plan, subject to the commissioner's approval, to assure that those

consumers have reasonable and convenient access to the Michigan

automobile insurance placement facility and competitive insurance

markets in this state.

     (2) If a market access plan under subsection (1) is not

submitted within 30 days after the date of the commissioner's

order, or if the plan does not meet the commissioner's approval,

the commissioner shall develop a market access plan and order its

implementation by the Michigan automobile insurance placement

facility until such time that a plan established by the Michigan

automobile insurance placement facility is approved by the

commissioner.

     Sec. 2128e. (1) There is created an automobile insurance data

collection agency to administer the automobile insurance data

collection requirements of this act. The governing board of the

automobile insurance data collection agency shall be composed of

the commissioner and 8 members appointed by the commissioner as

follows:

     (a) Two persons who represent a private automobile insurance

insurer not holding more than 15% of the state's overall market

share at the time its representative serves on the board.

     (b) Two persons who represent the general public of this

state.

     (c) One person who is a licensed medical professional in this

state and who does not own any portion of an automobile insurance

insurer or manage directly or indirectly an automobile insurance

insurer's affairs.

     (d) One person who is a licensed attorney in this state, who

does not own any portion of an automobile insurance insurer or

manage directly or indirectly an automobile insurance insurer's

affairs, and who has at least 5 years of experience in automobile

accident related litigation.

     (e) One person who is an independent insurance agent.

     (f) One person who has at least 10 years of data processing

experience in a combination of hardware acquisition and software

development.

     (2) A member of the governing board of the automobile

insurance data collection agency shall serve for a term of 2 years.

     (3) The automobile insurance data collection agency, under the

direction and control of the commissioner and subject to the

commissioner's approval, shall have the following duties:

     (a) Prescribe rate filing forms and data collection forms and

establish uniform data reporting requirements necessary to satisfy

the provisions of this chapter.

     (b) Analyze reported data, analyze automobile insurance

insurers' rate-making data, and report these findings to the

commissioner, and collect and analyze other pertinent data at the

commissioner's request.

     (c) Prepare reports on automobile insurance as requested by

the commissioner.

     (d) Establish uniform classification symbols or other uniform

designations for use by automobile insurance insurers to establish

risk associated with each type of vehicle to be insured.

     (e) In a uniform manner, gather all data necessary to

accomplish total return rate-making. Information shall be gathered

that enables the commissioner to assess an insurer's actual loss

experience, level of profit, interest income, method for assessing

anticipated losses, particular application of loss trend factors,

pure premium, frequency of losses based on the number of vehicles

insured, and the loss costs and frequency of losses associated with

the component parts of each aspect of coverage, including, but not

limited to, medical, wage-loss, replacement services, survivors

benefits, death benefit, collision coverage, comprehensive coverage

with theft reported as a separate component, bodily injury or

liability coverage reported by policy limits, property protection,

and all other benefits being marketed by the insurer.

     (f) Gather detailed data about insurers' administrative

expenses and their relationship to the premium charged, including

costs for each type of litigation associated with automobile

insurance claims resolution, salaries, fringe benefits,

commissions, and costs associated with overhead and other fixed

costs.

     (g) Require each insurer to list the items that are used to

compose a base rate and require each insurer to explain the

applications of base rates.

     (h) Establish forms to enable the collection of data

sufficient to permit the commissioner to determine that all aspects

of automobile insurance rate-making are actuarially sound and that

automobile insurance rates are not excessive or discriminatory.

     (i) Require the reporting of all automobile insurance claims

costs and the frequency of each type of loss and provide the

commissioner with this data.

     (j) Collect all automobile insurance rate-making data and

evaluate this data by determining its actuarial soundness and by

making comparisons based on statewide uniform rating territories as

established by this act.

     (k) Ensure that all necessary data are collected and analyzed

in a manner that complies with the provisions of this chapter.

     (l) Subject to the approval of the commissioner, designate 1

advisory organization for the purpose of implementing its data

collection plan and the compilation of rate-making and other

financial data from automobile insurance insurers. The designated

advisory organization shall report its findings to the automobile

insurance data collection agency, which shall report to the

commissioner.

     (m) Report to the commissioner any known violation of this

act.

     (n) Complete any other task required to satisfy the provisions

of this act as requested by the commissioner.

     (4) The commissioner shall make recommendations to the

legislature annually regarding the adequacy of statutory

underwriting and rate-making provisions based upon the information

gathered and analyzed by the automobile insurance data collection

agency and any other information that the commissioner considers

appropriate.

     Sec. 2128f. (1) On or before April 1, 2008, and on or before

each April 1 thereafter, each insurer engaged in writing insurance

coverages that provide the security required by section 3101(1)

within this state, as a condition of its authority to transact

insurance in this state, shall pay to the automobile insurance data

collection agency an assessment equal to $1.00 multiplied by the

insurer's total earned car years of insurance providing the

security required by section 3101(1) written in this state during

the immediately preceding calendar year.

     (2) Money received pursuant to subsection (1), and all other

money received by the automobile insurance data collection agency,

shall be segregated and placed in a fund to be known as the data

collection fund. The data collection fund shall be administered by

the automobile insurance data collection agency.

     (3) Money in the data collection fund shall be used to pay the

costs of administration of the automobile insurance data collection

agency and shall not be considered state money.

     Sec. 2236. (1) A basic insurance policy form or annuity

contract form shall not be issued or delivered to any person in

this state, and an insurance or annuity application form if a

written application is required and is to be made a part of the

policy or contract, a printed rider or indorsement form or form of

renewal certificate, and a group certificate in connection with the

policy or contract, shall not be issued or delivered to a person in

this state, until a copy of the form is filed with the insurance

bureau and approved by the commissioner as conforming with the

requirements of this act and not inconsistent with the law. Failure

of the commissioner to act within 30 days after submittal

constitutes approval. All such forms, except policies of disability

insurance as defined in section 3400, shall be plainly printed with

type size not less than 8-point unless the commissioner determines

that portions of such a form printed with type less than 8-point is

not deceptive or misleading.

     (2) An Except for filings concerning rates, an insurer may

satisfy its obligations to make form filings by becoming a member

of, or a subscriber to, a rating organization, licensed under

section 2436 or 2630, which makes such form filings and by filing

with the commissioner a copy of its authorization of the rating

organization to make the filings on its behalf. Every member of or

subscriber to a rating organization shall adhere to the form

filings made on its behalf by the organization except that an

insurer may file with the commissioner a substitute form, and

thereafter if a subsequent form filing by the rating organization

affects the use of the substitute form, the insurer shall review

its use and notify the commissioner whether to withdraw its

substitute form.

     (3) Beginning January 1, 1992, the commissioner shall not

approve a form filed pursuant to this section providing for or

relating to an insurance policy or an annuity contract for

personal, family, or household purposes if the form fails to obtain

the readability score or meet the other requirements of this

subsection, as applicable:

     (a) The readability score for a form for which approval is

required by this section shall not be less than 45, as determined

by the method provided in subdivisions (b) and (c).

     (b) The readability score for a form shall be determined as

follows:

     (i) For a form containing not more than 10,000 words, the

entire form shall be analyzed. For a form containing more than

10,000 words, not less than two 200-word samples per page shall be

analyzed instead of the entire form. The samples shall be separated

by at least 20 printed lines.

     (ii) Count the number of words and sentences in the form or

samples and divide the total number of words by the total number of

sentences. Multiply this quotient by a factor of 1.015.

     (iii) Count the total number of syllables in the form or samples

and divide the total number of syllables by the total number of

words. Multiply this quotient by a factor of 84.6. As used in this

subparagraph, "syllable" means a unit of spoken language consisting

of 1 or more letters of a word as indicated by an accepted

dictionary. If the dictionary shows 2 or more equally acceptable

pronunciations of a word, the pronunciation containing fewer

syllables may be used.

     (iv) Add the figures obtained in subparagraphs (ii) and (iii) and

subtract this sum from 206.835. The figure obtained equals the

readability score for the form.

     (c) For the purposes of subdivision (b)(ii) and (iii), the

following procedures shall be used:

     (i) A contraction, hyphenated word, or numbers and letters when

separated by spaces shall be counted as 1 word.

     (ii) A unit of words ending with a period, semicolon, or colon,

but excluding headings and captions, shall be counted as 1

sentence.

     (d) In determining the readability score, the method provided

in subdivisions (b) and (c):

     (i) Shall be applied to an insurance policy form or an annuity

contract, together with a rider or indorsement form usually

associated with such an insurance policy form or annuity contract.

     (ii) Shall not be applied to words or phrases that are defined

in an insurance policy form, an annuity contract, or riders,

indorsements, or group certificates pursuant to an insurance policy

form or annuity contract.

     (iii) Shall not be applied to language specifically agreed upon

through collective bargaining or required by a collective

bargaining agreement.

     (iv) Shall not be applied to language that is prescribed by

state or federal statute or by rules or regulations promulgated

pursuant to a state or federal statute.

     (e) Each form for which approval is required by this section

shall contain both of the following:

     (i) Topical captions.

     (ii) An identification of exclusions.

     (f) Each insurance policy and annuity contract that has more

than 3,000 words printed on not more than 3 pages of text or that

has more than 3 pages of text regardless of the number of words

shall contain a table of contents. This subdivision does not apply

to indorsements.

     (g) Each rider or indorsement form that changes coverage shall

do all of the following:

     (i) Contain a properly descriptive title.

     (ii) Reproduce either the entire paragraph or the provision as

changed.

     (iii) Be accompanied by an explanation of the change.

     (h) If a computer system approved by the commissioner

calculates the readability score of a form as being in compliance

with this subsection, the form is considered in compliance with the

readability score requirements of this subsection.

     (4) After January 1, 1992, any change or addition to a policy

or annuity contract form for personal, family, or household

purposes, whether by indorsement, rider, or otherwise, or a change

or addition to a rider or indorsement form to such policy or

annuity contract form, which policy or annuity contract form has

not been previously approved under subsection (3), shall be

submitted for approval pursuant to subsection (3).

     (5) Upon written notice to the insurer, the commissioner may

disapprove, withdraw approval or prohibit the issuance,

advertising, or delivery of any form to any person in this state if

it violates any provisions of this act, or contains inconsistent,

ambiguous, or misleading clauses, or contains exceptions and

conditions that unreasonably or deceptively affect the risk

purported to be assumed in the general coverage of the policy. The

notice shall specify the objectionable provisions or conditions and

state the reasons for the commissioner's decision. If the form is

legally in use by the insurer in this state, the notice shall give

the effective date of the commissioner's disapproval, which shall

not be less than 30 days subsequent to after the mailing or

delivery of the notice to the insurer. If the form is not legally

in use, then disapproval shall be effective immediately.

     (6) If a form is disapproved or approval is withdrawn under

the provisions of this act, the insurer is entitled upon demand to

a hearing before the commissioner or a deputy commissioner within

30 days after the notice of disapproval or of withdrawal of

approval. After the hearing, the commissioner shall make findings

of fact and law, and either affirm, modify, or withdraw his or her

original order or decision.

     (7) Any issuance, use, or delivery by an insurer of any form

without the prior approval of the commissioner as required by

subsection (1) or after withdrawal of approval as provided by

subsection (5) constitutes a separate violation for which the

commissioner may order the imposition of a civil penalty of $25.00

for each offense, but not to exceed the maximum penalty of $500.00

for any 1 series of offenses relating to any 1 basic policy form,

which penalty may be recovered by the attorney general as provided

in section 230.

     (8) The filing requirements of this section do not apply to

any of the following:

     (a) Insurance against loss of or damage to:

     (i) Imports, exports, or domestic shipments.

     (ii) Bridges, tunnels, or other instrumentalities of

transportation and communication.

     (iii) Aircraft and attached equipment.

     (iv) Vessels and watercraft under construction or owned by or

used in a business or having a straight-line hull length of more

than 24 feet.

     (b) Insurance against loss resulting from liability, other

than worker's compensation or employers' liability arising out of

the ownership, maintenance, or use of:

     (i) Imports, exports, or domestic shipments.

     (ii) Aircraft and attached equipment.

     (iii) Vessels and watercraft under construction or owned by or

used in a business or having a straight-line hull length of more

than 24 feet.

     (c) Surety bonds other than fidelity bonds.

     (d) Policies, riders, indorsements, or forms of unique

character designed for and used with relation to insurance upon a

particular subject, or that relate to the manner of distribution of

benefits or to the reservation of rights and benefits under life or

disability insurance policies and are used at the request of the

individual policyholder, contract holder, or certificate holder.

Beginning September 1, 1968, the commissioner by order may exempt

from the filing requirements of this section and sections 2242,

3606, and 4430 for so long as he or she considers proper any

insurance document or form, except that portion of the document or

form that establishes a relationship between group disability

insurance and personal protection insurance benefits subject to

exclusions or deductibles pursuant to section 3109a, as specified

in the order to which this section practicably may not be applied,

or the filing and approval of which are considered unnecessary for

the protection of the public. Insurance documents or forms

providing medical payments or income replacement benefits, except

that portion of the document or form that establishes a

relationship between group disability insurance and personal

protection insurance benefits subject to exclusions or deductibles

pursuant to section 3109a, exempt by order of the commissioner from

the filing requirements of this section and sections 2242 and 3606

are considered approved by the commissioner for purposes of section

3430.

     (e) Insurance that meets both of the following:

     (i) Is sold to an exempt commercial policyholder.

     (ii) Contains a prominent disclaimer that states "This policy

is exempt from the filing requirements of section 2236 of the

insurance code of 1956, 1956 PA 218, MCL 500.2236." or words that

are substantially similar.

     (9) As used in this section and sections 2401 and 2601,

"exempt commercial policyholder" means an insured that purchases

the insurance for other than personal, family, or household

purposes.

     (10) Every order made by the commissioner under the provisions

of this section is subject to court review as provided in section

244.

     Sec. 2400. (1) Except with respect to worker's compensation

insurance, the The purpose of this chapter is to promote the public

welfare by regulating insurance rates to the end that they shall

not be excessive, inadequate, or unfairly discriminatory, and to

authorize and regulate cooperative action among insurers in rate-

making and in other matters within the scope of the insurance code

this act. Nothing in this chapter is intended (1) to prohibit or

discourage reasonable competition. , or (2) to prohibit, or

encourage except to the extent necessary to accomplish the

aforementioned purpose, uniformity in insurance rates, rating

systems, rating plans, or practices.

     (2) With respect to worker's compensation insurance, the The

purposes of this chapter are also include the following:

     (a) To protect Protecting policyholders and the public against

the adverse effects of excessive, inadequate, or unfairly

discriminatory rates.

     (b) To promote Promoting price competition among insurers

writing worker's compensation insurance so as to encourage rates

which that will result in the lowest possible rates consistent with

the benefits established in the worker's disability compensation

act of 1969, Act No. 317 of the Public Acts of 1969, as amended,

being sections 418.101 to 418.941 of the Michigan Compiled Laws,

provided and with maintaining the solvency of insurers.

     (c) To provide Providing regulatory controls and other

activity in the absence of competition.

     (d) To improve Improving the availability, fairness, and

reliability of worker's compensation insurance.

     (2) Antitrust provisions in this chapter are not exclusive and

other provisions provided by law may apply.

     (3) This chapter shall be liberally interpreted to carry into

effect the provisions of this section.

     Sec. 2406. (1) Except for worker's compensation insurance,

every each insurer shall file with the commissioner every manual of

classification, every manual of rules and rates, every rating plan,

and every modification of any of the foregoing that it proposes to

use. Every such In its filing, each insurer shall state the

proposed effective date thereof of the filing and shall indicate

the character and extent of the coverage contemplated. If a filing

is not accompanied by the information upon which the insurer

supports the filing, and the commissioner does not have sufficient

information to determine whether the filing meets the requirements

of this chapter, the commissioner shall within 10 days of the

filing give written notice to the insurer to furnish the

information upon which it that supports the filing. The information

furnished in support of a filing may include the experience or

judgment of the insurer or rating organization making the filing,

its interpretation of any statistical data it relies upon, the

experience of other insurers, or rating organizations, or any other

relevant factors. A filing and any supporting information shall be

open to public inspection after the filing becomes effective.

     (2) Except for worker's compensation insurance and for filings

concerning rates, an insurer may satisfy its obligation to make

such filings by becoming a member of, or a subscriber to, a

licensed rating organization that makes such filings, and by filing

with the commissioner a copy of its authorization of the rating

organization to make such filings on its behalf. Nothing contained

in this chapter shall be construed as requiring any insurer to

become a member of or a subscriber to any rating organization.

     (3) For worker's compensation insurance in this state the

insurer shall file with the commissioner all rates and rating

systems. Every insurer that insures worker's compensation in this

state on the effective date of this subsection shall file the rates

not later than the effective date of this subsection.

     (4) Except as provided in subsection (3) and as otherwise

provided in this subsection, the rates and rating systems for

worker's compensation insurance shall be filed not later than the

date the rates and rating systems are to be effective. However, if

the insurer providing worker's compensation insurance is controlled

by a nonprofit health care corporation formed pursuant to operating

under the nonprofit health care corporation reform act, Act No. 350

of the Public Acts of 1980, being sections 550.1101 to 550.1704 of

the Michigan Compiled Laws 1980 PA 350, MCL 550.1101 to 550.1704,

the rates and rating systems that it proposes to use shall be filed

with the commissioner not less than 45 days before the effective

date of the filing. These filings shall be considered to meet the

requirements of this chapter unless and until the commissioner

disapproves a filing pursuant to section 2418 or 2420.

     (5) Each filing under subsections (3) and (4) shall be

accompanied by a certification by the insurer that, to the best of

its information and belief, the filing conforms to the requirements

of this chapter.

     (6) As a condition of maintaining its certificate of

authority, an insurer shall not do any of the following:

     (a) Have any rates filed on its behalf in this state by a

rating organization.

     (b) Share information with any other insurer or rating

organization concerning establishing rates or rating systems.

     (c) Agree with any other insurer or rating organization to

adhere to or use any rate, rating plan, rating schedule, rating

rule, or underwriting rule in this state.

     (d) Make available to any other insurer or rating organization

information on actuarial projections, trending factors, profits, or

expenses except loss adjustment expenses.

     Sec. 2430. (1) In lieu of the filing requirements of this

chapter and as an alternative method of filing, any an insurer or

rating organization may file with the commissioner any a manual of

classification, rules or rates, any a rating plan, and every

modification of any of the foregoing which that it proposes to use,

the filing to indicate the character and extent of the coverage

contemplated. In lieu of the filing requirements of this chapter

and as an alternative method of filing, a rating organization may

file with the commissioner for an insurer a manual of

classification, rules, and every modification of any of the

foregoing, the filing to indicate the character and extent of the

coverage contemplated. Every such filing under this section shall

state the effective date thereof of the filing, shall take effect

on said that date, shall not be subject to any waiting period

requirements, and shall be deemed considered to meet the

requirements of section 2403 (1) (d) (rate standards) 2403(1)(d). A

filing and any supporting information shall be open to public

inspection, if the filing is not disapproved.

     (2) At any time within 15 30 days from and after the date of

any such a filing under subsection (1), the commissioner may give

written notice to the insurer or rating organization making such

the filing or on whose behalf the filing was made, specifying in

what respect and to what extent he contends such the commissioner

finds that the filing fails to comply with the requirements of

section 2403(1)(d) and fixing a date for hearing not less than 10

days from the date of the mailing of such the notice. At such the

hearing, the factors specified in section 2406(1) shall be

considered. If the commissioner after hearing finds that the filing

does not comply with the provisions of this chapter, he the

commissioner may issue his an order determining wherein in what

respect and to what extent such the filing is deemed to be improper

and fixing a date, thereafter, within a reasonable time, after

which such the filing shall no longer be effective. Any An order of

disapproval under this section must be entered within 30 days of

the date of the filing affected.

     (3) In the event that no If a notice of hearing shall be is

not issued within 15 30 days from the date of any such a filing

under subsection (1), the filing shall be deemed considered to be

approved. If such the filing shall be is disapproved, the insuring

provisions of any a contract or policy issued prior to before the

time the order becomes effective shall not be affected. But

However, if the commissioner disapproves such a filing as not being

in compliance with section 2403 (1) (d) (rate standards), he

2403(1)(d), the commissioner may order an adjustment of the premium

to be made with the policyholder either by refund or collection of

additional premium, if the amount is substantial and equals or

exceeds the cost of making the adjustment. The

     (4) At any time, the commissioner may thereafter review any

such a filing in the manner provided in sections 2418 and 2420. ,

but if so reviewed, no However, if the commissioner disapproves a

filing pursuant to that review beyond the thirtieth day after the

date of filing, the commissioner shall not order an adjustment of

premium. may be ordered. Sections 2406 (2) (filing may be made by

rating organization), 2408 (1) (commissioner shall review filing as

soon as reasonably possible), and 2412 (insurer must adhere to

filing) shall be

     (5) Sections 2406(2), 2408(1), and 2412 are applicable to

filings made under this section.

     Sec. 2436. (1) A corporation, an association, a partnership,

or an individual, whether located within or outside this state, may

make application to apply with the commissioner for a license as a

rating organization to make rates and insurance contract forms for

the kinds of insurance or subdivisions thereof of insurance, except

for worker's compensation insurance, as are specified in its

application. and The corporation, association, partnership, or

individual shall file with the application all of the following:

     (a) A copy of its constitution, its articles of agreement or

association, or its certificate of incorporation , and of its

bylaws and rules governing the conduct of its business.

     (b) A list of its members and subscribers.

     (c) The name and address of a resident of this state upon whom

notices or orders of the commissioner or process affecting the

rating organization may be served.

     (d) A statement of its qualifications as a rating

organization.

     (2) If the commissioner finds that the applicant is competent,

trustworthy, and otherwise qualified to act as a rating

organization and that its constitution, articles of agreement or

association, or certificate of incorporation , and its bylaws and

rules governing the conduct of its business conform to the

requirements of law, he or she the commissioner shall issue a

license specifying the kinds of insurance or subdivisions thereof

of insurance for which the applicant is authorized to act as a

rating organization. Every application shall be granted or denied

in whole or in part by the The commissioner, within 60 days of the

date of its filing, with the commissioner shall grant or deny the

application in whole or in part.

     (3) The fee for the a license shall be under this section is

$25.00, which shall be fee is in lieu of all other fees, licenses,

or taxes imposed by the state or any political subdivision of the

this state.

     (4) Licenses issued pursuant to this section shall remain in

force for 3 years from date of issuance unless suspended or revoked

by the commissioner, after hearing upon notice, pursuant to section

2478, in the event if the rating organization ceases to meet the

requirements of this section.

     (5) Every A rating organization shall notify the commissioner

promptly of every a change in any of the following:

     (a) Its constitution, its articles of agreement or

association, or its certificate of incorporation , and its bylaws

and rules governing the conduct of its business.

     (b) Its list of members and subscribers.

     (c) The name and address of the resident of this state

designated by it upon whom notices or orders of the commissioner or

process affecting the rating organization may be served.

     Sec. 2438. (1) Subject to reasonable rules and regulations

which have been approved by the commissioner, as reasonable, each a

rating organization shall permit any an insurer, not a member, to

be a subscriber to its rating services for any kind of insurance or

subdivision thereof of insurance for which it is authorized

licensed to act as a rating organization. Notice of proposed

changes in such the rules and regulations shall be given to

subscribers. Each rating organization shall furnish its rating

services without discrimination to its members and subscribers.

     (2) The At the request of a subscriber or insurer, the

reasonableness of any a rule or regulation in its application to

subscribers , or the refusal of any a rating organization to admit

an insurer as a subscriber , shall , at the request of any

subscriber or any such insurer, be reviewed by the commissioner at

a hearing held upon at least 10 days' written notice to such the

rating organization and to such the requesting subscriber or

insurer. If the commissioner finds that such the rule or regulation

is unreasonable in its application to subscribers, he the

commissioner shall order that such the rule or regulation shall is

not be applicable to subscribers.

     (3) If the rating organization fails to grant or reject an

insurer's application for subscribership within 30 days after it

was made, the insurer may request a review by the commissioner as

if the application had been rejected. If the commissioner finds

that the insurer has been refused admittance to the rating

organization as a subscriber without justification, he the

commissioner shall order the rating organization to admit the

insurer as a subscriber. If he the commissioner finds that the

action of the rating organization was justified, he the

commissioner shall make an order affirming its action affirmed.

     Sec. 2458. Every rating organization and every Each insurer,

which makes its own rates shall, within a reasonable time after

receiving written request therefor for the information and upon

payment of such a reasonable charge, as it may make, shall furnish

to any an insured affected by a rate made by it the insurer, or to

the insured's authorized representative, of the insured, all

pertinent information as to the rate. Every rating organization and

every Each insurer which makes its own rates shall provide within

this state reasonable means whereby any for a person aggrieved by

the application of its the insurer's rating system may to be heard,

in person or by his or her authorized representative, on his or her

written request to review the manner in which the rating system has

been applied in connection with the insurance afforded to him or

her. If the rating organization or insurer fails to grant or reject

the request within 30 days after it is made, the applicant may

proceed in the same manner as if his or her application had been

rejected. Any A party affected by the action of the rating

organization or insurer on the request may appeal, within 30 days

after written notice of the action, appeal to the commissioner,

who, after a hearing held upon not less than 10 days' written

notice to the appellant and to the rating organization or insurer,

may affirm or reverse the action. A person who requests a hearing

before the commissioner pursuant to this section may be represented

at the hearing by an attorney. A person, other than an individual,

that requests a hearing before the commissioner pursuant to this

section may also be represented by an officer or employee of that

person. An individual who requests a hearing before the

commissioner pursuant to this section may also be represented by a

relative of the individual.

     Sec. 2462. (1) Every A group, association, or other

organization of insurers, whether located within or outside this

state, which assists insurers which make their own filings or

rating organizations in rate making, by the collection and

furnishing of loss or expense statistics, or by the submission of

recommendations, but which does not make filings under this

chapter, shall be known as an advisory organization.

     (2) Every Each advisory organization shall file with the

commissioner all of the following:

     (a) A copy of its constitution, its articles of agreement or

association, or its certificate of incorporation and of its bylaws,

rules, and regulations governing its activities. ,

     (b) A list of its members. ,

     (c) The name and address of a resident of this state upon whom

notices or orders of the commissioner or process issued at his the

commissioner's direction may be served. , and

     (d) An agreement that the commissioner may examine such the

advisory organization in accordance with pursuant to the provisions

of section 2468.

     (3) If, after a hearing, the commissioner finds that the

furnishing of such information or assistance involves any act or

practice which that is unfair or unreasonable or otherwise

inconsistent with the provisions of this chapter, he the

commissioner may issue a written order specifying in what respects

such the act or practice is unfair or unreasonable or otherwise

inconsistent with the provisions of this chapter, and requiring the

discontinuance of such the act or practice.

     (4) No An insurer which makes its own filings nor any rating

organization shall not support its filings by statistics or adopt

rate making recommendations, furnished to it by an advisory

organization which that has not complied with this section or with

an order of the commissioner involving such the statistics or

recommendations issued under subsection (3). of this section. If

the commissioner finds such the insurer or rating organization to

be is in violation of this subsection, he the commissioner may

issue an order requiring the discontinuance of such the violation.

     Sec. 2472. (1) The commissioner shall promulgate reasonable

rules and statistical plans, reasonably adapted to each of the

rating systems on file with him, which the commissioner. The

commissioner may be modified modify the rules and plans from time

to time. and which Each insurer shall be used thereafter use the

rules and plans after promulgation to the extent applicable to its

the insurer's particular rating system or systems, by each insurer

in the recording and reporting of its loss and countrywide expense

experience, in order that the experience of all insurers may be

made available at least annually in such the form and detail as may

be that is necessary to aid him the commissioner in determining

whether rating systems comply with the standards set forth in

section 2403. Such The rules and plans may also provide for the

recording and reporting of expense experience items which that are

specially specifically applicable to this state and are not

susceptible of determination by a prorating of countrywide expense

experience. In promulgating such rules and plans under this

section, the commissioner shall give due consideration to the

rating systems on file with him the commissioner and, in order that

such the rules and plans may be as uniform as is practicable among

the several states, to the rules and to the form of the plans used

for such rating systems in other states. No An insurer shall not be

required to record or report its loss experience on a

classification basis that is inconsistent with the rating system

filed by it. and no An insurer shall not be required to record or

report its loss or expense experience on any basis or statistical

plan that differs from that which is regularly employed and

maintained in the usual course of such the insurer's business, or

to any rating organization or agency of which it is not a member or

subscriber. The commissioner may designate 1 or more rating

organizations or other agencies to assist him in the gathering such

of and making compilations of experience and making compilations

thereof, and such under this section. The commissioner shall make

compilations shall be made of experience under this section

available, subject to reasonable rules promulgated by the

commissioner, to insurers and rating organizations.

     (2) Reasonable rules and plans may be promulgated by the

commissioner for the interchange of data necessary for the

application of rating plans.

     (3) In order to further uniform administration of rate

regulatory laws, the commissioner and every each insurer and rating

organization may exchange information and experience data with

insurance supervisory officials , insurers and rating organizations

in other states and may consult with them with respect to rate

making and the application of rating systems. In addition, each

insurer and each rating organization may exchange historical loss

data.

     Sec. 2600. (1) The purpose of this chapter is to promote the

public welfare by regulating insurance rates to the end that they

shall not be excessive, inadequate, or unfairly discriminatory, and

to authorize and regulate cooperative action among insurers in rate

making and in other matters within the scope of the insurance code

this act. Nothing in this chapter is intended (1) to prohibit or

discourage reasonable competition. , or (2) to prohibit, or

encourage except to the extent necessary to accomplish the

aforementioned purpose, uniformity in insurance rates, rating

systems, rating plans or practices.

     (2) Conformity with this chapter shall not be deemed to be

considered a violation of section 2075. (compacts to restrain

competition prohibited). Antitrust provisions are not exclusive and

other provisions provided by law may apply.

     (3) This chapter shall be liberally interpreted to carry into

effect the provisions of this section.

     Sec. 2606. (1) Every Each insurer shall file with the

commissioner, except as to inland marine risks which that by

general custom of the business are not written according to manual

rates or rating plans, every manual, minimum, class rate, rating

schedule or rating plan, and every other rating rule, and every

modification of any of the foregoing which that it proposes to use.

Every such In its filing, each insurer shall state the proposed

effective date thereof of the filing, and shall indicate the

character and extent of the coverage contemplated.

     (2) When If a filing is not accompanied by the information

upon which the insurer supports such the filing, and the

commissioner does not have sufficient information to determine

whether such the filing meets the requirements of this chapter, he

the commissioner shall require such the insurer to furnish the

information upon which it supports such the filing and in such

event the waiting period shall commence as of the date such the

information is furnished. The information furnished in support of a

filing may include (a) the experience or judgment of the insurer or

rating organization making the filing, (b) its interpretation of

any statistical data it relies upon, (c) the experience of other

insurers, or rating organizations, or (d) any other relevant

factors.

     (3) A filing and any supporting information shall be open to

public inspection after the filing becomes effective.

     (4) Specific inland marine rates on risks specially rated,

made by a rating organization, shall be filed with the

commissioner.

(4) (5) An Except for filings concerning rates, an insurer may

satisfy its obligation to make such filings by becoming a member

of, or a subscriber to, a licensed rating organization which that

makes such filings, and by filing with the commissioner a copy of

its authorization of the rating organization to make such filings

on its behalf. Nothing contained in this chapter shall be construed

as requiring any insurer to become a member of or a subscriber to

any rating organization.

     (5) As a condition of maintaining its certificate of

authority, an insurer shall not do any of the following:

     (a) Have any rates filed on its behalf in this state by a

rating organization.

     (b) Share information with any other insurer or rating

organization concerning establishing rates or rating systems.

     (c) Agree with any other insurer or rating organization to

adhere to or use any rate, rating plan, rating schedule, rating

rule, or underwriting rule in this state.

     (d) Make available to any other insurer or rating organization

information on actuarial projections, trending factors, profits, or

expenses except loss adjustment expenses.

     Sec. 2608. (1) The commissioner shall review filings as soon

as reasonably possible after they have been made in order to

determine whether if they meet the requirements of this chapter.

     (2) Subject to the exception specified in subsection (3) of

this section, each Each filing shall be on file for a waiting

period of 15 days before it becomes effective, which period may be

extended by the commissioner for an additional period not to exceed

15 days if he the commissioner gives written notice within such the

waiting period to the insurer or rating organization which that

made the filing that he the commissioner needs such the additional

time for the consideration of such the filing. Upon written

application by such the insurer or rating organization, the

commissioner may authorize a filing which he that the commissioner

has reviewed to become effective before the expiration of the

waiting period or any extension thereof of the waiting period. A

filing shall be deemed considered to meet the requirements of this

chapter unless disapproved by the commissioner within the waiting

period or any extension thereof of the waiting period.

     (3) Specific inland marine rates on risks specially rated by a

rating organization shall become effective when filed and shall be

deemed to meet the requirements of this chapter until such time as

the commissioner reviews the filing and so long thereafter as the

filing remains in effect.

     Sec. 2616. (1) If within the waiting period or any extension

thereof of the waiting period as provided in section 2608(2), the

commissioner finds that a filing does not meet the requirements of

this chapter, he the commissioner shall send to the insurer or

rating organization which that made such the filing, written notice

of disapproval of such the filing specifying therein in what

respects he respect the commissioner finds such the filing fails to

meet the requirements of this chapter and stating that such the

filing shall not become effective.

     (2) If within 30 days after a specific inland marine rate on a

risk specially rated by a rating organization, subject to section

2608 (3) has become effective, the commissioner finds that such

filing does not meet the requirements of this chapter, he shall

send to the rating organization which made such filing written

notice of disapproval of such filing specifying therein in what

respects he finds that such filing fails to meet the requirements

of this chapter and stating when, within a reasonable period

thereafter, such filing shall be deemed no longer effective. Said

disapproval shall not affect any contract made or issued prior to

the expiration of the period set forth in said notice.

     Sec. 2628. (1) In lieu of the filing requirements of this

chapter and as an alternative method of filing, any an insurer or

rating organization may file with the commissioner any a manual of

classification, rules or rates, any a rating plan, and every

modification of any of the foregoing which that it proposes to use,

the filing to indicate the character and extent of the coverage

contemplated. In lieu of the filing requirements of this chapter

and as an alternative method of filing, a rating organization may

file with the commissioner for an insurer a manual of

classification, rules, and every modification of any of the

foregoing, the filing to indicate the character and extent of the

coverage contemplated. Every such filing under this section shall

state the effective date thereof of the filing, shall take effect

on said that date, shall not be subject to any waiting period

requirements, and shall be deemed considered to meet the

requirements of subdivision (d) of subsection (1) of section 2603

(rate standards) section 2603(1)(d). A filing and any supporting

information shall be open to public inspection, if the filing is

not disapproved.

     (2) At any time within 15 30 days from and after the date of

any such a filing under subsection (1), the commissioner may give

written notice to the insurer or rating organization making such

the filing or on whose behalf the filing is made, specifying in

what respect and to what extent he contends such the commissioner

finds that the filing fails to comply with the requirements of

subdivision (d) of subsection (1) of section 2603 section

2603(1)(d) and fixing a date for hearing not less than 10 days from

the date of the mailing of such the notice. At such the hearing the

factors specified in subsection (2) of section 2606 section 2606(2)

shall be considered. If the commissioner after hearing finds that

the filing does not comply with the provisions of this chapter, he

the commissioner may issue his an order determining wherein in what

respect and to what extent such the filing is deemed to be improper

and fixing a date, thereafter, within a reasonable time, after

which such the filing shall no longer be effective. Any An order of

disapproval under this section must be entered within 30 days of

the date of the filing affected.

     (3) In the event that no If a notice of hearing shall be is

not issued within 15 30 days from the date of any such a filing

under subsection (1), the filing shall be deemed considered to be

approved. If such the filing shall be is disapproved, the insuring

provisions of any a contract or policy issued prior to before the

time the order becomes effective shall not be affected. But

However, if the commissioner disapproves such a filing as not being

in compliance with subdivision (d) of subsection (1) of section

2603 (rate standards), he section 2603(1)(d), the commissioner may

order an adjustment of the premium to be made with the policyholder

either by refund or collection of additional premium, if the amount

is substantial and equals or exceeds the cost of making the

adjustment. The

     (4) At any time, the commissioner may thereafter review any

such a filing in the manner provided in sections 2618 and 2620. ,

but if so reviewed, no However, if the commissioner disapproves a

filing pursuant to that review beyond the thirtieth day after the

date of filing, the commissioner shall not order an adjustment of

premium. may be ordered. Subsection (5) of section 2606 (filing may

be made by rating organization), subsection (1) of section 2608

(commissioner shall review filing as soon as reasonably possible),

and 2612 (insurer must adhere to filing) shall be

     (5) Sections 2606(4), 2608(1), and 2612 are applicable to

filings made under this section.

     Sec. 2630. (1) A corporation, an unincorporated association, a

partnership, or an individual, whether located within or outside

this state, may make application to apply with the commissioner for

license as a rating organization to make rates and insurance

contract forms for such the kinds of insurance, or subdivision or

of insurance, or class of risk, or a part or combination thereof as

are specified in its application. and The corporation, association,

partnership, or individual shall file therewith with the

application all of the following:

     (a) A copy of its constitution, its articles of agreement or

association, or its certificate of incorporation , and of its

bylaws and rules governing the conduct of its business.

     (b) A list of its members and subscribers.

     (c) The name and address of a resident of this state upon whom

notices or orders of the commissioner or process affecting such the

rating organization may be served.

     (d) A statement of its qualifications as a rating

organization.

     (2) If the commissioner finds that the applicant is competent,

trustworthy, and otherwise qualified to act as a rating

organization and that its constitution, articles of agreement or

association, or certificate of incorporation , and its bylaws and

rules governing the conduct of its business conform to the

requirements of law, he the commissioner shall issue a license

specifying the kinds of insurance, or subdivision or of insurance,

or class of risk, or part or combination thereof for which the

applicant is authorized to act as a rating organization. Every such

application shall be granted or denied in whole or in part by the

The commissioner, within 60 days of the date of its filing, with

him shall grant or deny the application in whole or in part.

     (3) Licenses issued pursuant to this section shall remain in

effect for 3 years unless sooner suspended or revoked by the

commissioner.

     (4) The fee for the a license shall be under this section is

$25.00.

     (5) Licenses A license issued pursuant to this section may be

suspended or revoked by the commissioner, after hearing upon

notice, in the event if the rating organization ceases to meet the

requirements of this section.

     (6) Every A rating organization shall notify the commissioner

promptly of every a change in any of the following:

(a) its Its constitution, its articles of agreement or

association, or its certificate of incorporation , and its bylaws

and rules governing the conduct of its business. ,

(b) its Its list of members and subscribers. and

(c) the The name and address of the resident of this state

designated by it upon whom notices or orders of the commissioner or

process affecting such the rating organization may be served.

     Sec. 2636. (1) Subject to reasonable rules and regulations

which have been approved by the commissioner, as reasonable, each a

rating organization shall permit any an insurer, not a member, to

be a subscriber to its rating services for any kind of insurance,

subdivision of insurance, or class of risk, or a part or

combination thereof for which it is authorized to act as a rating

organization. Notice of proposed changes in such the rules and

regulations shall be given to subscribers. Each rating organization

shall furnish its rating services without discrimination to its

members and subscribers.

     (2) The At the request of a subscriber or insurer, the

reasonableness of any a rule or regulation in its application to

subscribers , or the refusal of any a rating organization to admit

an insurer as a subscriber , shall , at the request of any

subscriber or any such insurer, be reviewed by the commissioner at

a hearing held upon at least 10 days' written notice to such the

rating organization and to such the requesting subscriber or

insurer. If the commissioner finds that such the rule or regulation

is unreasonable in its application to subscribers, he the

commissioner shall order that such the rule or regulation shall is

not be applicable to subscribers.

     (3) If the rating organization fails to grant or reject an

insurer's application for subscribership within 30 days after it

was made, the insurer may request a review by the commissioner as

if the application had been rejected. If the commissioner finds

that the insurer has been refused admittance to the rating

organization as a subscriber without justification, he the

commissioner shall order the rating organization to admit the

insurer as a subscriber. If he the commissioner finds that the

action of the rating organization was justified, he the

commissioner shall make an order affirming its action affirmed.

     Sec. 2652. Every rating organization and every insurer which

makes its own rates shall Each insurer, within a reasonable time

after receiving written request therefor for the information and

upon payment of such a reasonable charge, as it may make, shall

furnish to any an insured affected by a rate made by it the

insurer, or to the insured's authorized representative, of such

insured, all pertinent information as to such rate. Every rating

organization and every insurer which makes its own rates Each

insurer shall provide within this state reasonable means whereby

any for a person aggrieved by the application of its the insurer's

rating system may to be heard, in person or by his or her

authorized representative, on his or her written request to review

the manner in which such the rating system has been applied in

connection with the insurance afforded him or her. If the rating

organization or insurer fails to grant or reject such the request

within 30 days after it is made, the applicant may proceed in the

same manner as if his or her application had been rejected. Any A

party affected by the action of such rating organization or such

the insurer on such the request may appeal, within 30 days after

written notice of such the action, appeal to the commissioner, who,

after a hearing held upon not less than 10 days' written notice to

the appellant and to such rating organization or the insurer, may

affirm or reverse such the action.

     Sec. 2654. (1) Every A group, association, or other

organization of insurers, whether located within or outside this

state, which assists insurers which make their own filings or

rating organizations in rate making, by the collection and

furnishing of loss or expense statistics, or by the submission of

recommendations, but which does not make filings under this

chapter, shall be known as an advisory organization.

     (2) Every Each advisory organization shall file with the

commissioner all of the following:

     (a) A copy of its constitution, its articles of agreement or

association, or its certificate of incorporation and of its bylaws,

rules, and regulations governing its activities. ,

     (b) A list of its members. ,

     (c) The name and address of a resident of this state upon whom

notices or orders of the commissioner or process issued at his the

commissioner's direction may be served. , and

     (d) An agreement that the commissioner may examine such the

advisory organization in accordance with pursuant to the provisions

of section 2662.

     (3) If, after a hearing, the commissioner finds that the

furnishing of such information or assistance involves any act or

practice which that is unfair or unreasonable or otherwise

inconsistent with the provisions of this chapter, he the

commissioner may issue a written order specifying in what respects

such the act or practice is unfair or unreasonable or otherwise

inconsistent with the provisions of this chapter, and requiring the

discontinuance of such the act or practice.

     (4) No An insurer which makes its own filings nor any rating

organization shall not support its filings by statistics or adopt

rate making recommendations, furnished to it by an advisory

organization which that has not complied with this section or with

an order of the commissioner involving such the statistics or

recommendations issued under subsection (3). of this section. If

the commissioner finds such the insurer or rating organization to

be is in violation of this subsection, he the commissioner may

issue an order requiring the discontinuance of such the violation.

     Sec. 2664. (1) The commissioner shall promulgate reasonable

rules and statistical plans, reasonably adapted to each of the

rating systems on file with him, which may be modified from time to

time and which shall be used thereafter by each the commissioner.

The commissioner may modify the rules and plans from time to time.

Each insurer shall use the rules and plans after promulgation to

the extent applicable to the insurer's particular rating system or

systems in the recording and reporting of its loss and countrywide

expense experience, in order that the experience of all insurers

may be made available at least annually in such the form and detail

as may be that is necessary to aid him the commissioner in

determining whether rating systems comply with the standards set

forth in section 2603. Such The rules and plans may also provide

for the recording and reporting of expense experience items which

that are specially specifically applicable to this state and are

not susceptible of determination by a prorating of countrywide

expense experience. In promulgating such rules and plans under this

section, the commissioner shall give due consideration to the

rating systems on file with him the commissioner and, in order that

such the rules and plans may be as uniform as is practicable among

the several states, to the rules and to the form of the plans used

for such rating systems in other states. No An insurer shall not be

required to record or report its loss experience on a

classification basis that is inconsistent with the rating system

filed by it. The commissioner may designate 1 or more rating

organizations or other agencies to assist him in the gathering such

of and making compilations of experience and making compilations

thereof, and such under this section. The commissioner shall make

compilations shall be made of experience under this section

available, subject to reasonable rules promulgated by the

commissioner, to insurers and rating organizations.

     (2) Reasonable rules and plans may be promulgated by the

commissioner for the interchange of data necessary for the

application of rating plans.

     (3) In order to further uniform administration of rate

regulatory laws, the commissioner and every each insurer and rating

organization may exchange information and experience data with

insurance supervisory officials , insurers and rating organizations

in other states and may consult with them with respect to rate

making and the application of rating systems. In addition, each

insurer and each rating organization may exchange historical loss

data.

     Sec. 2930. (1) The premium for basic property insurance of any

risk by the pool shall be equal to the rate for identical insurance

established by a licensed rating organization for identical

insurance within this state plus a uniform surcharge approved by

the commissioner.

     (2) The pool shall establish rates for any basic property

insurance. that is without rates established by a licensed rating

organization or that the pool, with the approval of the

commissioner, determines should be otherwise rated in order to

better effectuate the purposes of this chapter. The pool shall file

with the commissioner for his or her approval each rate and each

policy form to be issued by it. The pool, acting as agent for

participating members, shall file policy forms for basic property

insurance to be issued by participating members under the

provisions of this chapter. Rates and policy forms shall be filed

in accordance with this chapter as the commissioner designates.

     Sec. 3020. (1) A policy of casualty insurance, except worker's

compensation and mortgage guaranty insurance, including all classes

of motor vehicle coverage, shall not be issued or delivered in this

state by an insurer authorized to do business in this state for

which a premium or advance assessment is charged, unless the policy

contains the following provisions:

     (a) That the policy may be canceled at any time at the request

of the insured, in which case the insurer shall refund the excess

of paid premium or assessment above the pro rata rates for the

expired time, except as otherwise provided in subsections (2), (3),

and (4).

     (b) Except as otherwise provided in subdivision (d), that the

policy may be canceled at any time by the insurer by mailing to the

insured at the insured's address last known to the insurer or an

authorized agent of the insurer, with postage fully prepaid, a not

less than 10 days' written notice of cancellation with or without

tender of the excess of paid premium or assessment above the pro

rata premium for the expired time.

     (c) That the minimum earned premium on any policy canceled

pursuant to this subsection, other than automobile insurance as

defined in section 2102(2)(a) and (b), shall not be less than the

pro rata premium for the expired time or $25.00, whichever is

greater.

     (d) That an insurer may refuse to renew a malpractice

insurance policy only by mailing to the insured at the insured's

address last known to the insurer or an authorized agent of the

insurer, with postage fully prepaid, a not less than 60 days'

written notice of refusal to renew. As used in this subdivision,

"malpractice insurance" means malpractice insurance as described in

section 624(1)(h).

     (2) An insurer may file a rule with the commissioner providing

for a minimum retention of premium for automobile insurance as

defined in section 2102(2)(a) and (b). The rule shall describe the

circumstances under which the retention is applied and shall set

forth the amount to be retained, which is subject to the approval

of the commissioner. The rule shall include, but need not be

limited to, the following provisions:

     (a) That a minimum retention shall be applied only when the

amount exceeds the amount that would have been retained had the

policy been canceled on a pro rata basis.

     (b) That a minimum retention does not apply to renewal

policies.

     (c) That a minimum retention does not apply when a policy is

canceled for the following reasons:

     (i) The insured is no longer required to maintain security

pursuant to section 3101(1).

     (ii) The insured has replaced the automobile insurance policy

being canceled with an automobile insurance policy from another

insurer and provides proof of the replacement coverage to the

canceling insurer.

     (3) Notwithstanding subsection (1), an insurer may issue a

noncancelable, nonrefundable, 6-month prepaid automobile insurance

policy in order for an insured to meet the registration

requirements of section 227a of the Michigan vehicle code, 1949 PA

300, MCL 257.227a.

     (4) An insurer may provide for a short rate premium for

insurance on a motorcycle, watercraft, off-road vehicle, or

snowmobile. As used in this subsection:

     (a) "Motorcycle" means that term as defined in section 3101.

     (b) "Off-road vehicle" means an ORV as defined in section

81101 of the natural resources and environmental protection act,

1994 PA 451, MCL 324.81101.

     (c) "Snowmobile" means that term as defined in section 82101

of the natural resources and environmental protection act, 1994 PA

451, MCL 324.82101.

     (d) "Watercraft" means that term as defined in section 80301

of the natural resources and environmental protection act, 1994 PA

451, MCL 324.80301.

     (5) Cancellation shall not be effective until after the notice

as prescribed in this section is has expired, and the cancellation

shall be without prejudice to any claim originating before the

cancellation. The mailing of notice is prima facie proof of notice.

Delivery of written notice is equivalent to mailing.

     (6) A notice of cancellation, including a cancellation notice

under section 3224, shall be accompanied by a statement that the

insured shall not operate or permit the operation of the vehicle to

which notice of cancellation is applicable, or operate any other

vehicle, unless the vehicle is insured as required by law.

     (7) An insurer who wishes to provide for a short rate premium

under subsection (4) shall file with the commissioner pursuant to

chapter 24 or 26 a rule establishing a short rate premium. The rule

shall describe the circumstances under which the short rate is

applied and shall set forth the amount or percentage to be

retained.

     Sec. 3105a. An insurer liable to pay personal protection

insurance benefits under this chapter has a duty to deal fairly and

in good faith with its insured, any person entitled to receive

personal protection insurance benefits under a policy issued to its

insured, or any person entitled to receive personal protection

insurance benefits from the insurer under the provisions of this

chapter. The duty imposed by this section is considered to involve

matters of mental concern and solicitude. A breach of the duty to

deal fairly and in good faith subjects the insurer to liability in

tort for any damages proximately arising therefrom and for punitive

damages.

     Sec. 3321. The facility shall provide the following, with

respect to all automobiles not included in section 3320:

     (a) Only the insurance required by law or required by the

commissioner. of insurance. The commissioner may only require

insurance for which a rate has been filed by an insurance rating

organization or insurer, and which rate is in effect and which the

commissioner finds, after a public hearing, to be reasonable,

necessary, and in the public interest. The temporary provision of

insurance may be required pending the public hearing if the

commissioner determines it necessary to do so.

     (b) The equitable distribution of applicants to participating

members in accordance with the participation ratios defined in

section 3303.

     Sec. 3340. (1) As agent for participating members, the

facility shall file with the commissioner every manual of

classification, every manual of rules and rates, every rating plan

and every modification of a manual of classification, manual of

rules and rates, or rating plan proposed for use for private

passenger nonfleet automobile insurance placed through the

facility. The facility may incorporate by reference in its filings

other material on file with the commissioner. The classifications,

rules, and rates and any amendments thereof shall be to the

classifications, rules, and rates are subject to prior written

approval by the commissioner. Except as provided in this chapter,

rates filed by the facility for private passenger nonfleet

automobile insurance shall be in accordance with chapter 21 and

rates by the facility for all other automobile insurance shall be

filed in accordance with chapter 24.

     (2) Every participating member designated to act on behalf of

the facility shall be is authorized to use the rates and rules

approved by the commissioner for use by the facility on business

placed through the facility and shall not use other rates for

automobile insurance placed through the facility.

     (3) Laws relating to rating organizations or advisory

organizations shall not do apply to functions provided for under

this section.

     (4) Private passenger nonfleet automobile rates for the

facility shall comply with the following requirements:

     (a) The territories for the facility shall be defined as those

of the principal rating organization for the voluntary market.

(a) (b) The base rates for the facility shall be derived from

the weighted average of the base rates currently charged in each

facility territory by the 5 largest insurer groups, determined by

voluntary net direct automobile insurance car years written in the

state for the calendar year ending December 31 of the second prior

year as reported to the statistical agent.

     (c) The base rates as determined in subdivision (b) in each

facility territory shall be modified as follows:

     (i) One hundred percent of the weighted average in each

territory in the highest rated territory or territories in the

state within a single political subdivision.

     (ii) From 105% to 125% of the weighted average for all other

facility territories, with the highest rated such territories

receiving the lowest surcharge and increasing to the highest

surcharge in the lowest rated facility territories in 5 percentage

point increments. In no event, however, shall any such rate exceed

the rate established in subdivision (i).

(b) (d) The facility shall adjust its rates at least once each

year or whenever changes in private competitive insurance market

rate levels would produce a change in excess of 5% in the facility

rate. for any facility territory. However, changes shall not be

made more often than quarterly.

(c) (e) In the event that If underwriting losses and

administrative expenses resulting from the operation of the

facility at rates established pursuant to this subsection would

exceed an amount equal to 5% of the net direct private passenger

nonfleet automobile premiums for this state, the levels specified

in subdivision (c)(i) and (ii) shall be proportionately increased in

an amount to produce underwriting losses and administrative

expenses that do not exceed 5%.

     Enacting section 1. Sections 122, 2107, 2131, 2446, and 2640

of the insurance code of 1956, 1956 PA 218, MCL 500.122, 500.2107,

500.2131, 500.2446, and 500.2640, are repealed.

     Enacting section 2. (1) The legislature finds that there

exists in this state an emergency for a significant number of

citizens who are obligated under law to purchase automobile

insurance that has become unaffordable and unavailable. A

substantial number of urban registered vehicles are now without

automobile insurance coverage. While a vehicle is often a necessity

for employment and other essential daily activities, citizens who

drive automobiles without insurance coverage violate criminal law

regardless of the fact that for a substantial number of those

citizens it is impossible to obtain automobile insurance due to the

unaffordability and the unequal availability of that insurance. The

affordability and equal availability of automobile insurance is

essential to the preservation of the state's interest in providing

that its citizens obtain automobile insurance coverage under the

state's compulsory automobile insurance laws. In many areas of the

state, insurers are charging in a subjective and discriminatory

manner unreasonable amounts for coverage. In addition, the

automobile insurance market structure has not resulted in promoting

reasonable competition among insurers, and this has further

contributed to the unaffordability and unavailability of automobile

insurance.

     (2) It is the purpose of this amendatory act to preserve the

state's interest in providing its citizens with automobile

insurance coverage by relieving the emergency condition of

unaffordable and unequally available automobile insurance; to

provide more stringent regulation of automobile insurance rate-

making and underwriting and to eliminate and prevent arbitrary and

discriminatory practices in automobile insurance marketing, rate-

making, and underwriting; to monitor the level of competition in

the automobile insurance market and to enable corrective measures

when necessary to create a healthy, competitive market for

automobile insurance; to examine loss prevention systems, controls,

and costs; to ensure that automobile insurance prices reflect the

actual costs of claims and reasonable expenses; and to eliminate

injustices that have resulted from the compulsory automobile

insurance system.