November 7, 2007, Introduced by Reps. Corriveau, Scott, Virgil Smith, Byrnes, Leland, Hood, Johnson, Melton, Constan, Young, Lemmons, Farrah, Coulouris, Alma Smith, Polidori, Vagnozzi, Tobocman, Condino and Dean and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 3340 (MCL 500.3340), as amended by 1986 PA 10.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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 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 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 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.
(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 10 largest insurer groups insurers,
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). Discounts shall be
incorporated in the rating plan including discounts for senior
citizens in conformity with the standards established in section
2111(6), and discounts for absence of claims during the past 3
years, antilock brakes, air bags, security systems, seat belt
usage, completion of a driver improvement course, and any
additional discounts as required or authorized by the commissioner
by order or rule.
(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.
(e)
In the event that 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%.