HOUSE BILL NO. 4024

January 10, 2019, Introduced by Reps. LaFave and Rendon and referred to the Committee on Insurance.

"The insurance code of 1956,"

by amending sections 3104, 3107, 3109a, 3135, and 3157 (MCL 500.3104, 500.3107, 500.3109a, 500.3135, and 500.3157), section 3104 as amended by 2002 PA 662, section 3107 as amended by 2012 PA 542, section 3109a as amended by 2012 PA 454, and section 3135 as amended by 2012 PA 158, and by adding section 3180.

the people of the state of michigan enact:

Sec. 3104. (1) An The catastrophic claims association is created as an unincorporated, nonprofit association. to be known as the catastrophic claims association, hereinafter referred to as the association, is created. Each insurer engaged in writing insurance coverages that provide the security required by section 3101(1) within in this state, as a condition of its authority to transact insurance in this state, shall be is a member of the association and shall be is bound by the plan of operation of the association. Each An insurer engaged in writing insurance coverages that provide the security required by section 3103(1) within in this state, as a condition of its authority to transact insurance in this state, shall be considered is a member of the association, but only for purposes of premiums under subsection (7)(d). Except as expressly provided in this section, the association is not subject to any laws of this state with respect to insurers, but in all other respects the association is subject to the laws of this state to the extent that the association would be if it were an insurer organized and subsisting under chapter 50.

(2) The For a motor vehicle accident policy issued or renewed before 90 days after the effective date of the amendatory act that added section 3180 and for a motor vehicle accident policy issued or renewed after 90 days after the effective date of the amendatory act that added section 3180 for which the coverage level under section 3109a(2)(c) applies, the association shall provide and each member shall accept indemnification for 100% of the amount of ultimate loss sustained under personal protection insurance coverages in excess of the following amounts in each loss occurrence:

(a) For a motor vehicle accident policy issued or renewed before July 1, 2002, $250,000.00.

(b) For a motor vehicle accident policy issued or renewed during the period July 1, 2002 to June 30, 2003, $300,000.00.

(d) For a motor vehicle accident policy issued or renewed during the period July 1, 2004 to June 30, 2005, $350,000.00.

(e) For a motor vehicle accident policy issued or renewed during the period July 1, 2005 to June 30, 2006, $375,000.00.

(f) For a motor vehicle accident policy issued or renewed during the period July 1, 2006 to June 30, 2007, $400,000.00.

(g) For a motor vehicle accident policy issued or renewed during the period July 1, 2007 to June 30, 2008, $420,000.00.

(h) For a motor vehicle accident policy issued or renewed during the period July 1, 2008 to June 30, 2009, $440,000.00.

(i) For a motor vehicle accident policy issued or renewed during the period July 1, 2009 to June 30, 2010, $460,000.00.

(j) For a motor vehicle accident policy issued or renewed during the period July 1, 2010 to June 30, 2011, $480,000.00.

(k) For a motor vehicle accident policy issued or renewed during the period July 1, 2011 to June 30, 2013, $500,000.00.

(l) For a motor vehicle accident policy issued or renewed during the period July 1, 2013 to June 30, 2015, $530,000.00.

(m) For a motor vehicle accident policy issued or renewed during the period July 1, 2015 to June 30, 2017, $545,000.00.

(n) For a motor vehicle accident policy issued or renewed during the period July 1, 2017 to June 30, 2019, $555,000.00. Beginning July 1, 2013, 2019, this $500,000.00 $555,000.00 amount shall must be increased biennially on July 1 of each odd-numbered year, for policies issued or renewed before July 1 of the following odd-numbered year, by the lesser of 6% or the consumer price index, Consumer Price Index, and rounded to the nearest $5,000.00. This The association shall calculate the biennial adjustment shall be calculated by the association by January 1 of the year of its July 1 effective date.

(3) An insurer may withdraw from the association only upon on ceasing to write insurance that provides the security required by section 3101(1) in this state.

(4) An insurer whose membership in the association has been terminated by withdrawal shall continue continues to be bound by the plan of operation, and upon on withdrawal, all unpaid premiums that have been charged to the withdrawing member are payable as of the effective date of the withdrawal.

(5) An unsatisfied net liability to the association of an insolvent member shall must be assumed by and apportioned among the remaining members of the association as provided in the plan of operation. The association has all rights allowed by law on behalf of the remaining members against the estate or funds of the insolvent member for sums money due the association.

(6) If a member has been merged or consolidated into another insurer or another insurer has reinsured a member's entire business that provides the security required by section 3101(1) in this state, the member and successors in interest of the member remain liable for the member's obligations.

(7) The association shall do all of the following on behalf of the members of the association:

(a) Assume 100% of all liability as provided in subsection (2).

(b) Establish procedures by which members shall must promptly report to the association each claim that, on the basis of the injuries or damages sustained, may reasonably be anticipated to involve the association if the member is ultimately held legally liable for the injuries or damages. Solely for the purpose of reporting claims, the member shall in all instances consider itself legally liable for the injuries or damages. The member shall also advise the association of subsequent developments likely to materially affect the interest of the association in the claim.

(c) Maintain relevant loss and expense data relative relating to all liabilities of the association and require each member to furnish statistics, in connection with liabilities of the association, at the times and in the form and detail as may be required by the plan of operation.

(d) In a manner provided for in the plan of operation, calculate and charge to members of the association a total premium sufficient to cover the expected losses and expenses of the association that the association will likely incur during the period for which the premium is applicable. The total premium shall must include an amount to cover incurred but not reported losses for the period and may must be adjusted for any excess or deficient premiums from previous periods. Excesses or deficiencies from previous periods may must either be fully adjusted in a single period or may be adjusted over several periods in a manner provided for in the plan of operation. Each member shall must be charged an amount equal to that member's total written car years of insurance providing the security required by section 3101(1) or 3103(1), or both, written in this state during the period to which the premium applies, with the total written car years of insurance multiplied by the applicable average premium per car. The average premium per car shall be is the total premium, calculated as adjusted for any excesses or deficiencies, divided by the total written car years of insurance providing the security required by section 3101(1) or 3103(1), or both, written in this state of all members during the period to which the premium applies, excluding cars insured under a policy with a coverage limit under section 3109a(2)(a) or (b) except for any portion of total premium that is an adjustment for a deficiency in a previous period. A member may not be charged a premium for a car insured under a policy with a coverage limit under section 3109a(2)(a) or (b) other than for the portion of the total premium attributable to an adjustment for a deficiency in a previous period. A member shall must be charged a premium for a historic vehicle that is insured with the member of 20% of the premium charged for a car insured with the member. As used in this subdivision:

(i) "Car" includes a motorcycle but does not include a historic vehicle.

(ii) "Historic vehicle" means a vehicle that is a registered historic vehicle under section 803a or 803p of the Michigan vehicle code, 1949 PA 300, MCL 257.803a and 257.803p.

(e) Require and accept the payment of premiums from members of the association as provided for in the plan of operation. The association shall do either of the following:

(i) Require payment of the premium in full within 45 days after the premium charge.

(ii) Require payment of the premiums to be made periodically to cover the actual cash obligations of the association.

(f) Receive and distribute all sums money required by the operation of the association.

(g) Establish procedures for reviewing claims procedures and practices of members of the association. If the claims procedures or practices of a member are considered inadequate to properly service the liabilities of the association, the association may undertake or may contract with another person, including another member, to adjust or assist in the adjustment of claims for the member on claims that create a potential liability to the association and may charge the cost of the adjustment to the member.

(8) In addition to other powers granted to it by this section, the association may do all of the following:

(a) Sue and be sued in the name of the association. A judgment against the association shall does not create any direct liability against the individual members of the association. The association may provide for the indemnification of its members, members of the board of directors of the association, and officers, employees, and other persons lawfully acting on behalf of the association.

(b) Reinsure all or any portion of its potential liability with reinsurers licensed to transact insurance in this state or approved by the commissioner.director of the department.

(c) Provide for appropriate housing, equipment, and personnel as may be necessary to assure the efficient operation of the association.

(d) Pursuant to the plan of operation, adopt reasonable rules for the administration of the association, enforce those rules, and delegate authority, as the board considers necessary to assure the proper administration and operation of the association consistent with the plan of operation.

(e) Contract for goods and services, including independent claims management, actuarial, investment, and legal services, from others within in or without outside of this state to assure the efficient operation of the association.

(f) Hear and determine complaints of a company or other interested party concerning the operation of the association.

(g) Perform other acts not specifically enumerated in this section that are necessary or proper to accomplish the purposes of the association and that are not inconsistent with this section or the plan of operation.

(9) A board of directors is created , hereinafter referred to as the board, which shall be responsible for the operation of and shall operate the association consistent with the plan of operation and this section.

(10) The plan of operation shall must provide for all of the following:

(a) The establishment of necessary facilities.

(b) The management and operation of the association.

(c) Procedures to be utilized in charging premiums, including adjustments from excess or deficient premiums from prior periods.

(d) Procedures governing the actual payment of premiums to the association.

(e) Reimbursement of each member of the board by the association for actual and necessary expenses incurred on association business.

(f) The investment policy of the association.

(g) Any other matters required by or necessary to effectively implement this section.

(11) Each The board shall must include members that would contribute a total of not less than 40% of the total premium calculated pursuant to under subsection (7)(d). Each director shall be board member is entitled to 1 vote. The initial term of office of a director shall be board member is 2 years.

(12) As part of the plan of operation, the board shall adopt rules providing for the composition and term of successor boards to the initial board and the terms of board members, consistent with the membership composition requirements in subsections (11) and (13). Terms of the directors shall board members must be staggered so that the terms of all the directors board members do not expire at the same time and so that a director board member does not serve a term of more than 4 years.

(13) The board shall must consist of 5 directors, board members and the commissioner shall be director of the department, who is an ex officio member of the board without vote.

(14) Each director The director of the department shall be appointed by the commissioner and appoint the board members. A board member shall serve until that member's his or her successor is selected and qualified. The board shall elect the chairperson of the board. shall be elected by the board. A The director of the department shall fill any vacancy on the board shall be filled by the commissioner consistent with as provided in the plan of operation.

(15) After the board is appointed, the The board shall meet as often as the chairperson, the commissioner, director of the department, or the plan of operation shall require, requires, or at the request of any 3 members of the board. board members. The chairperson shall retain the right to may vote on all issues. Four members of the board board members constitute a quorum.

(16) An The board shall furnish to each member an annual report of the operations of the association in a form and detail as may be determined by the board. shall be furnished to each member.

(17) Not more than 60 days after the initial organizational meeting of the board, the board shall submit to the commissioner for approval a proposed plan of operation consistent with the objectives and provisions of this section, which shall provide for the economical, fair, and nondiscriminatory administration of the association and for the prompt and efficient provision of indemnity. If a plan is not submitted within this 60-day period, then the commissioner, after consultation with the board, shall formulate and place into effect a plan consistent with this section.

(18) The plan of operation, unless approved sooner in writing, shall be considered to meet the requirements of this section if it is not disapproved by written order of the commissioner within 30 days after the date of its submission. Before disapproval of all or any part of the proposed plan of operation, the commissioner shall notify the board in what respect the plan of operation fails to meet the requirements and objectives of this section. If the board fails to submit a revised plan of operation that meets the requirements and objectives of this section within the 30-day period, the commissioner shall enter an order accordingly and shall immediately formulate and place into effect a plan consistent with the requirements and objectives of this section.

(17) (19) The proposed plan of operation or Any amendments to the plan of operation of the association are subject to majority approval by the board, ratified ratification by a majority of the membership of the association having a vote, with voting rights being apportioned according to the premiums charged in subsection (7)(d), and are subject to approval by the commissioner.director of the department.

(18) (20) Upon approval by the commissioner and ratification by the members of the plan submitted, or upon the promulgation of a plan by the commissioner, each An insurer authorized to write insurance providing the security required by section 3101(1) in this state, as provided in this section, is bound by and shall formally subscribe to and participate in the plan approved of operation as a condition of maintaining its authority to transact insurance in this state.

(19) (21) The association is subject to all the reporting, loss reserve, and investment requirements of the commissioner director of the department to the same extent as would is a member of the association.

(20) (22) Premiums charged members by the association shall must be recognized in the rate-making procedures for insurance rates in the same manner that expenses and premium taxes are recognized. If a member of the association passes on any portion of the premium payable under this section to an insured, the amount passed on must equal the portion of the premium payable by the member under this section attributable to the car or historic vehicle insured, including any adjustments for excesses or deficiencies from a previous period.

(21) (23) The commissioner director of the department or an authorized representative of the commissioner director of the department may visit the association at any time and examine any and all of the association's affairs.

(22) (24) The association does not have liability for losses occurring before July 1, 1978. After 90 days after the effective date of the amendatory act that added section 3180, the association does not have liability for a loss under a motor vehicle accident policy for which a coverage limit under section 3109a(2)(a) or (b) applies.

(23) (25) As used in this section:

(a) "Association" means the catastrophic claims association created in subsection (1).

(b) "Board" means the board of directors of the association created in subsection (9).

(d) (a) "Consumer price index" Price Index" means the percentage of change in the consumer price index Consumer Price Index for all urban consumers in the United States city average for all items for the 24 months prior to before October 1 of the year prior to before the July 1 effective date of the biennial adjustment under subsection (2)(k) (2)(n) as reported by the United States department of labor, bureau of labor statistics, Department of Labor, Bureau of Labor Statistics, and as certified by the commissioner.director of the department.

(e) "Historic vehicle" means a vehicle that is a registered historic vehicle under section 803a or 803p of the Michigan vehicle code, 1949 PA 300, MCL 257.803a and 257.803p.

(f) (b) "Motor vehicle accident policy" means a policy providing the coverages required under section 3101(1).

(g) (c) "Ultimate loss" means the actual loss amounts that a member is obligated to pay and that are paid or payable by the member, and do not include claim expenses. An ultimate loss is incurred by the association on the date that the loss occurs.

Sec. 3107. (1) Except as otherwise provided in subsection (2), this chapter, personal protection insurance benefits are payable for the following:

(a) Allowable expenses consisting of all reasonable charges incurred, up to any applicable coverage limit under section 3109a, for reasonably necessary products, services and accommodations for an injured person's care, recovery, or rehabilitation. Allowable expenses within personal protection insurance coverage shall do not include either any of the following:

(i) Charges for a hospital room in excess of a reasonable and customary charge for semiprivate accommodations, except if unless the injured person requires special or intensive care.

(ii) Funeral and burial expenses in excess of the amount set forth in the policy which shall must not be less than $1,750.00 or more than $5,000.00.

(b) Work loss consisting of loss of income from work an injured person would have performed during the first 3 years after the date of the accident if he or she had not been injured. Work loss does not include any loss after the date on which the injured person dies. Because the benefits received from personal protection insurance for loss of income are not taxable income, the benefits payable for such loss of income shall must be reduced 15% unless the claimant presents to the insurer in support of his or her claim reasonable proof of a lower value of the income tax advantage in his or her case, in which case the lower value shall apply. must be applied. For the period beginning October 1, 2012 through September 30, 2013, the benefits payable for work loss sustained in a single 30-day period and the income earned by an injured person for work during the same period together shall must not exceed $5,189.00, which maximum shall apply must be applied pro rata to any lesser period of work loss. Beginning October 1, 2013, the maximum shall must be adjusted annually to reflect changes in the cost of living under rules prescribed by the commissioner director, but any change in the maximum shall apply applies only to benefits arising out of accidents occurring subsequent to an accident that occurs after the date of change in the maximum.

(c) Expenses not exceeding $20.00 per day, reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he or she had not been injured, an injured person would have performed during the first 3 years after the date of the accident, not for income but for the benefit of himself or herself or of his or her dependent.

(2) Both of the following apply to personal protection insurance benefits payable under subsection (1):

(a) A person who is 60 years of age or older and in the event of an accidental bodily injury would not be eligible to receive work loss benefits under subsection (1)(b) may waive coverage for work loss benefits by signing a waiver on a form provided by the insurer. An insurer shall offer a reduced premium rate to a person who waives coverage under this subsection subdivision for work loss benefits. Waiver of coverage for work loss benefits applies only to work loss benefits payable to the person or persons who have signed the waiver form.

(b) An insurer shall is not be required to provide coverage for the medical use of marihuana or for expenses related to the medical use of marihuana.

Sec. 3109a. (1) An insurer providing personal protection insurance benefits under this chapter may offer, at appropriately reduced premium rates, deductibles and exclusions reasonably related to other health and accident coverage on the insured. Any deductibles and exclusions offered under this section are subject to prior approval by the commissioner director and shall must apply only to benefits payable to the insured person named in the policy, the spouse of the insured person, and any relative of either domiciled in the same household.

(2) For an insurance policy that provides personal protection insurance benefits and is issued or renewed after 90 days after the effective date of the amendatory act that added section 3180, the insured person named in the policy shall, on a form approved by the director, select 1 of the following coverage levels for the personal protection insurance benefits:

(a) A limit of $250,000.00 per individual per loss occurrence on personal protection insurance benefits under this chapter.

(b) A limit of $500,000.00 per individual per loss occurrence on personal protection insurance benefits under this chapter.

(3) All of the following apply to subsection (2):

(a) If an insured person named in the policy does not select 1 of the coverage levels on a form approved by the director under subsection (2), no maximum limit on personal protection insurance benefits under this chapter applies under the policy. However, if an insured person named in the policy has previously selected as provided in this subdivision 1 of the coverage levels under subsection (2) and does not, before renewal of the policy, select a different coverage level in writing on a form approved by the director, the coverage level applicable before the renewal applies under the policy.

(b) If the insured person named in the policy selects a coverage limit under subsection (2)(a) or (b), the coverage limit under subsection (2)(a) or (b) applies to personal protection insurance benefits payable under the policy to the insured person, the insured person's spouse, a relative of either domiciled in the same household, and any other person with a right to claim personal protection insurance benefits under the policy.

(c) If the insured person named in the policy does not select a coverage limit under subsection (2)(a) or (b) for a policy, no maximum limit applies to personal protection insurance benefits payable under the policy to the insured person, the insured person's spouse, a relative of either domiciled in the same household, or any other resident of this state with a right to claim personal protection benefits under the policy.

(d) If the coverage limit under subsection (2)(a) or (b) applies to a person claiming personal protection insurance benefits, the coverage limit applies on a per occurrence per loss basis notwithstanding the number of policies applicable to the occurrence or the loss.

(4) The form required under subsection (2) must do all of the following:

(a) State, in a conspicuous manner, the benefits and risks associated with each coverage option available under subsection (2).

(b) Provide a line for the insured person to sign, acknowledging that he or she has read the form and understands the options available to him or her.

(5) For purposes of this section, the date that a policy is issued or renewed is the effective date of both the personal protection insurance coverage under the policy and the coverage level applicable under this section.

Sec. 3135. (1) A person remains subject to tort liability for noneconomic loss caused by his or her ownership, maintenance, or use of a motor vehicle only if the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement.

(2) For a cause of action for damages pursuant to subsection (1), filed on or after July 26, 1996, all of the following apply:

(a) The issues of whether the injured person has suffered serious impairment of body function or permanent serious disfigurement are questions of law for the court if the court finds either of the following:

(i) There is no factual dispute concerning the nature and extent of the person's injuries.

(ii) There is a factual dispute concerning the nature and extent of the person's injuries, but the dispute is not material to the determination whether the person has suffered a serious impairment of body function or permanent serious disfigurement. However, for a closed-head injury, a question of fact for the jury is created if a licensed allopathic or osteopathic physician who regularly diagnoses or treats closed-head injuries testifies under oath that there may be a serious neurological injury.

(b) Damages shall must be assessed on the basis of comparative fault, except that damages shall must not be assessed in favor of a party who is more than 50% at fault.

(c) Damages shall must not be assessed in favor of a party who was operating his or her own vehicle at the time the injury occurred and did not have in effect for that motor vehicle the security required by section 3101 at the time the injury occurred.

(3) Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance, or use within this state of a motor vehicle with respect to which the security required by section 3101 was in effect is abolished except as to:

(a) Intentionally caused harm to persons or property. Even though a person knows that harm to persons or property is substantially certain to be caused by his or her act or omission, the person does not cause or suffer that harm intentionally if he or she acts or refrains from acting for the purpose of averting injury to any person, including himself or herself, or for the purpose of averting damage to tangible property.

(b) Damages for noneconomic loss as provided and limited in subsections (1) and (2).

(c) Damages for allowable expenses, work loss, and survivor's loss as defined in under sections 3107 to 3110 in excess of the daily, monthly, and 3-year limitations contained in those sections or in excess of any applicable limit under section 3109a(2). The party liable for damages is entitled to an exemption reducing his or her liability by the amount of taxes that would have been payable on account of income the injured person would have received if he or she had not been injured.

(d) Damages for economic loss by a nonresident in excess of the personal protection insurance benefits provided under section 3163(4). Damages under this subdivision are not recoverable to the extent that benefits covering the same loss are available from other sources, regardless of the nature or number of benefit sources available and regardless of the nature or form of the benefits.

(e) Damages up to $1,000.00 to a motor vehicle, to the extent that the damages are not covered by insurance. An action for damages under this subdivision shall must be conducted as provided in subsection (4).

(4) All of the following apply to an action for damages under subsection (3)(e):

(a) Damages shall must be assessed on the basis of comparative fault, except that damages shall must not be assessed in favor of a party who is more than 50% at fault.

(b) Liability is not a component of residual liability, as prescribed in section 3131, for which maintenance of security is required by this act.

(c) The action shall must be commenced, whenever legally possible, in the small claims division of the district court or the municipal court. If the defendant or plaintiff removes the action to a higher court and does not prevail, the judge may assess costs.

(d) A decision of the court is not res judicata in any proceeding to determine any other liability arising from the same circumstances that gave rise to the action.

(e) Damages shall must not be assessed if the damaged motor vehicle was being operated at the time of the damage without the security required by section 3101.

(5) As used in this section, "serious impairment of body function" means an objectively manifested impairment of an important body function that affects the person's general ability to lead his or her normal life.

Sec. 3157. (1) A Subject to subsections (2) and (3), a physician, hospital, clinic, or other person or institution lawfully rendering treatment, products, services, or accommodations to an injured person for an accidental bodily injury covered by personal protection insurance, and a person or institution providing rehabilitative occupational training to the injured person following the injury, may charge a reasonable amount for the treatment, training, products, services, and accommodations rendered. The charge shall must not exceed the amount the person or institution customarily charges for like treatment, training, products, services, and accommodations in cases not involving that do not involve personal protection insurance.

(2) A physician, hospital, clinic, or other person or institution that renders a treatment, training, product, service, or accommodation to an injured person for an accidental bodily injury is not eligible for payment or reimbursement under this chapter of more than 100% of the amount payable for the treatment, training, product, service, or accommodation under R 418.10101 to R 418.101503 of the Michigan Administrative Code or schedules of maximum fees for worker's compensation developed under those rules, in effect on December 31, 2018. The director shall review any changes to R 418.10101 to R 418.101503 of the Michigan Administrative Code or schedules of maximum fees for worker's compensation developed under those rules, in effect on December 31, 2018. If the director determines that the changes are reasonable and appropriate for purposes of assuring affordable automobile insurance in this state, the changes apply for purposes of this subsection and the director shall issue an order to that effect.

(3) If R 418.10101 to R 418.101503 of the Michigan Administrative Code or schedules of maximum fees for worker's compensation developed under those rules, in effect on December 31, 2018, including any changes applicable under subsection (2), do not provide an amount payable for treatment, training, product, service, or accommodation rendered to an injured person for accidental bodily injury covered by personal protection insurance or rehabilitative occupational training to the injured person following the injury, the physician, hospital, clinic, or other person or institution that renders the treatment, product, service, or accommodation is not eligible for payment or reimbursement under this chapter of more than the average amount accepted by the physician, hospital, clinic, or other person or institution as payment or reimbursement in full for the treatment, training, product, service, or accommodation during the preceding calendar year in cases that do not involve personal protection insurance.

Sec. 3180. (1) By 90 days after the effective date of the amendatory act that added this section, an insurer that offers automobile insurance in this state shall file premium rates for personal protection insurance coverage for automobile insurance policies effective after 90 days after the effective date of the amendatory act that added this section and before 1 year after 90 days after the effective date of the amendatory act that added this section. The premium rates filed, and any subsequent premium rates filed by the insurer for personal protection insurance coverage for automobile insurance policies effective before 5 years after 90 days after the effective date of the amendatory act that added this section, must reflect savings expected from the amendments to this chapter made by the amendatory act that added this section, consistent with the requirements of sections 2109 to 2111a for policies to which chapter 21 applies, section 2403 for policies to which chapter 24 applies, and section 2603 for policies to which chapter 26 applies.

(2) If premium rates filed by an insurer under subsection (1) for personal protection insurance coverage do not result in an average 40% or greater reduction per vehicle for policies subject to the coverage limits under section 3109a(2)(a), an average 20% or greater reduction per vehicle for policies subject to the coverage limits under section 3109a(2)(b), and an average 10% or greater reduction per vehicle for policies subject to the coverage level under section 3109a(2)(c) from the premium rates for personal protection insurance coverage that were in effect for the insurer on October 1 of the year preceding the year in which the amendatory act that added this section takes effect, the insurer shall include with the filing both of the following:

(a) Premium rates for personal protection insurance coverage as near as practicable to those reductions recognizing the justifications described in this subsection.

(b) A detailed explanation of the reasons for the insurer's failure to achieve the required reductions and a demonstration using generally accepted and reasonable actuarial techniques that the required reductions are not justified because of requirements under subsection (1) or 1 or more of the following:

(i) Expected losses of the insurer from the provision of automobile insurance.

(ii) Inflation, as shown by the Consumer Price Index calculated and published by the United States Department of Labor, Bureau of Labor Statistics.

(iii) A change in an assessment imposed on an insurer under section 3104 or 3330.

(3) The director shall review premium rates filed by an insurer under subsection (1) for compliance with subsections (1) and (2). The director shall disapprove a filing that contains a premium rate if after review the director determines both of the following:

(a) That the premium rate does not result in the reductions required by subsections (1) and (2).

(b) That the failure to achieve the reductions is not justified using generally accepted and reasonable actuarial techniques because of 1 or more of the factors listed in subsection (2)(b).

(4) If the director disapproves a premium rate filing under subsection (3), the director shall do both of the following:

(a) Determine what premium rate reductions the insurer could achieve that are as near as practicable to the average per vehicle reductions required under subsections (1) and (2) recognizing the factors listed in subsection (2)(b).

(b) Provide the insurer with a written explanation of the reasons for the disapproval and the director's determination under subdivision (a).

(5) If the director disapproves a premium rate filing under subsection (3), the insurer shall submit a revised premium rate filing to the director within 15 days of the disapproval that complies with the director's determination under subsection (4)(a). The premium rate filing is subject to review in the same manner as an original premium rate filing under subsection (3).

(6) A premium rate filing under this section that is not disapproved by the director within 30 days of its submission is considered approved. However, the director may extend the time under this subsection by an additional 30 days by giving the insurer written notice before the initial 30-day period expires of the extended time period and the reasons for the extension.

(7) After 90 days after the effective date of the amendatory act that added this section and before 5 years after 90 days after the effective date of the amendatory act that added this section, an insurer shall not issue or renew an automobile insurance policy in this state unless the premium rates filed by the insurer for personal protection insurance coverage are approved under this section.

(8) For purposes of calculating a personal protection insurance premium or premium rate under this section, the premium includes the catastrophic claims assessment imposed under section 3104.

Enacting section 1. This amendatory act does not take effect unless, as provided in section 34 of article IV of the state constitution of 1963, it is approved by a majority of the electors of this state voting at the November 2020 regular election, held under section 641(1)(a) of the Michigan election law, 1954 PA 116, MCL 168.641.