HOUSE BILL NO. 4651

May 21, 2019, Introduced by Reps. Robinson, Gay-Dagnogo, Guerra, Jones, Tyrone Carter and Bolden and referred to the Committee on Insurance.

"The insurance code of 1956,"

by amending sections 2106, 2108, 2109, and 2114 (MCL 500.2106, 500.2108, 500.2109, and 500.2114), section 2108 as amended by 2015 PA 141, and by adding section 213.

the people of the state of michigan enact:

Sec. 213. (1) As soon as practicable after the effective date of this section, the director shall employ 14 actuaries who are qualified to carry out this section, and shall maintain the actuaries, or their successors, as employees of the department.

(2) The actuaries employed under this section shall review rate and other filings made by automobile insurers under chapters 21, 24, and 26, to determine whether the filings comply with the requirements of those chapters, with particular emphasis on whether the filings contain rates that are excessive as described in section 2109.

Sec. 2106. (1) 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.

(2) An insurer shall file and use rates for automobile insurance in accordance with sections 2406 and 2408.

(3) An insurer may use rates for automobile insurance or home insurance as soon as those rates are filed.

(4) 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. 2108. (1) On the effective date of a manual of classification, manual of rules and rates, rating plan, or modification of a manual of classification, manual of rules and rates, or rating plan that an insurer proposes to use for automobile insurance or home insurance, the insurer shall file the manual or plan with the director. For automobile insurance, an insurer shall file a manual or plan described in this subsection in accordance with sections 2406 and 2408. Each filing under this subsection must state the character and extent of the coverage contemplated. An insurer that is subject to this chapter and that 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 insurer may satisfy its obligation to make filings under subsection (1) by becoming a member of, or a subscriber to, a rating organization licensed under chapter 24 or chapter 26 that makes the filings, and by filing with the director a copy of its authorization of the rating organization to make the filings on its behalf. This chapter does not require an insurer to become a member of or a subscriber to a rating organization. An insurer may file and use deviations from filings made on its behalf. The deviations are subject to this chapter.

(3) A filing under this section must be accompanied by a certification by or on behalf of the insurer that, to the best of the insurer's information and belief, the filing conforms to the requirements of this chapter.

(4) A filing under this section must include information that supports the filing with respect to the requirements of section 2109. 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 on.

(d) Any other relevant information.

(5) Except as otherwise provided in this subsection, the department shall make a filing under this section and any accompanying information open to public inspection on filing. An insurer or a rating organization filing on the insurer's behalf may designate information included in the filing or any accompanying information as a trade secret. The insurer or the rating organization filing on behalf of the insurer shall demonstrate to the director that the designated information is a trade secret. If the director determines that the information is a trade secret, the information is not subject to public inspection and is exempt from the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246. As used in this subsection, "trade secret" means that term as defined in section 2 of the uniform trade secrets act, 1998 PA 448, MCL 445.1902. However, trade secret does not include filings and information accompanying filings under this section that were subject to public inspection before the effective date of the amendatory act that added this sentence.January 11, 2016.

(6) An insurer shall not make, issue, or renew a contract or policy except in accordance with filings that are in effect for the insurer under this chapter.

Sec. 2109. (1) All rates for automobile insurance and home insurance shall must be made in accordance with the following provisions:

(a) Rates shall must not be excessive, inadequate, or unfairly discriminatory. A rate shall must 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 must 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 must 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 for 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. 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 director for a hearing on the filing. However, the insurer or rating organization which that made the filing shall may not be authorized to proceed under this subsection. The director may also commence a contested case regarding a filing under this subsection. An application shall by an aggrieved person under this subsection must specify the grounds to be relied upon on by the applicant. If the commissioner director 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, director, not more than 30 days after receipt of the application, shall hold a hearing in accordance with Act No. 306 of the Public Acts the administrative procedures act of 1969, as amended, upon 1969 PA 306, MCL 24.201 to 24.328, on not less than 10 days' written notice to the applicant, the insurer, and the any rating organization which that made the filing. If the director commences a contested case regarding a filing under this subsection, the director shall hold a hearing as provided in this subsection.

(2) If after a hearing initiated under subsection (1) or upon on the commissioner's director's own motion pursuant to Act No. 306 of the Public Acts under the administrative procedures act of 1969, as amended, 1969 PA 306, MCL 24.201 to 24.328, the commissioner director finds that a filing does not meet any of the requirements of sections 2109 and 2111, this chapter or chapter 24, the commissioner director shall issue an order stating the specific reasons for that the finding. The order shall must state when, within a reasonable time after issuance of the order, the filing shall be considered will no longer be effective. A copy of the order shall must be sent to the applicant, if any, and to each insurer and rating organization subject to the order. The An order shall issued under this subsection does not affect a contract or policy made or issued before the date the filing becomes ineffective, as indicated in the commissioner's director's order.