HOUSE BILL No. 5536

 

February 12, 2004, Introduced by Reps. Hunter, Hood, Farrah, Stallworth, Condino, Tobocman, Phillips, Elkins, Minore and Daniels and referred to the Committee on Insurance.

        

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                 A bill to amend 1956 PA 218, entitled                                             

                                                                                

    "The insurance code of 1956,"                                               

                                                                                

    by amending section 2111 (MCL 500.2111), as amended by 2002 PA              

                                                                                

    492, and by adding section 2110b.                                           

                                                                                

                THE PEOPLE OF THE STATE OF MICHIGAN ENACT:                      

                                                                                

1       Sec. 2110b.  (1) An insurer or a third party on the                         

                                                                                

2   insurer's behalf shall not use collection accounts with a medical           

                                                                                

3   industry code, if so identified on an insured's or applicant's              

                                                                                

4   credit report, as a negative factor in any insurance score or in            

                                                                                

5   reviewing credit information.                                               

                                                                                

6       (2) As used in this section:                                                

                                                                                

7       (a) "Consumer reporting agency" means any person which, for                 

                                                                                

8   monetary fees, dues, or on a cooperative nonprofit basis,                   

                                                                                

9   regularly engages in whole or in part in the practice of                    

                                                                                

10  assembling or evaluating consumer credit information or other               

                                                                                


                                                                                

1   information on consumers for the purpose of furnishing consumer             

                                                                                

2   reports to third parties.                                                   

                                                                                

3       (b) "Credit information" means any credit-related information               

                                                                                

4   derived from a credit report, found on a credit report itself, or           

                                                                                

5   provided on an application for personal insurance.  Information             

                                                                                

6   that is not credit-related shall not be considered credit                   

                                                                                

7   information, regardless of whether it is contained in a credit              

                                                                                

8   report or in an application, or is used to calculate an insurance           

                                                                                

9   score.                                                                      

                                                                                

10      (c) "Credit report" means any written, oral, or other                       

                                                                                

11  communication of information by a consumer reporting agency                 

                                                                                

12  bearing on a consumer's credit worthiness, credit standing, or              

                                                                                

13  credit capacity used or expected to be used or collected in whole           

                                                                                

14  or in part for the purpose of serving as a factor in the rating             

                                                                                

15  or underwriting of personal insurance.                                      

                                                                                

16      (d) "Insurance score" means a number or rating that is                      

                                                                                

17  derived from an algorithm, computer application, model, or other            

                                                                                

18  process that is based in whole or in part on credit information             

                                                                                

19  for the purposes of predicting the future insurance loss exposure           

                                                                                

20  of an individual applicant or insured.                                      

                                                                                

21      Sec. 2111.  (1) Notwithstanding any provision of this act                   

                                                                                

22  and this chapter to the contrary, classifications and territorial           

                                                                                

23  base rates used by any insurer in this state with respect to                

                                                                                

24  automobile insurance or home insurance shall conform to the                 

                                                                                

25  applicable requirements of this section.                                    

                                                                                

26      (2) Classifications established pursuant to this section for                

                                                                                

27  automobile insurance shall be based only upon 1 or more of the              


                                                                                

1   following factors, which shall be applied by an insurer on a                

                                                                                

2   uniform basis throughout the state:                                         

                                                                                

3       (a) With respect to all automobile insurance coverages:                     

                                                                                

4                                                                                (i) Either the age of the driver; the length of driving                             

                                                                                

5   experience; or the number of years licensed to operate a motor              

                                                                                

6   vehicle.                                                                    

                                                                                

7       (ii) Driver primacy, based upon the proportionate use of each                

                                                                                

8   vehicle insured under the policy by individual drivers insured or           

                                                                                

9   to be insured under the policy.                                             

                                                                                

10      (iii) Average miles driven weekly, annually, or both.                        

                                                                                

11      (iv) Type of use, such as business, farm, or pleasure use.                   

                                                                                

12      (v) Vehicle characteristics, features, and options, such as                 

                                                                                

13  engine displacement, ability of vehicle and its equipment to                

                                                                                

14  protect passengers from injury and other similar items, including           

                                                                                

15  vehicle make and model.                                                     

                                                                                

16      (vi) Daily or weekly commuting mileage.                                      

                                                                                

17      (vii) Number of cars insured by the insurer or number of                     

                                                                                

18  licensed operators in the household.  However, number of licensed           

                                                                                

19  operators shall not be used as an indirect measure of marital               

                                                                                

20  status.                                                                     

                                                                                

21      (viii) Amount of insurance.                                                   

                                                                                

22      (b) In addition to the factors prescribed in subdivision (a),               

                                                                                

23  with respect to personal protection insurance coverage:                     

                                                                                

24                                                                               (i) Earned income.                                                                  

                                                                                

25      (ii) Number of dependents of income earners insured under the                

                                                                                

26  policy.                                                                     

                                                                                

27      (iii) Coordination of benefits.                                              


                                                                                

1       (iv) Use of a safety belt.                                                   

                                                                                

2       (c) In addition to the factors prescribed in subdivision (a),               

                                                                                

3   with respect to collision and comprehensive coverages:                      

                                                                                

4                                                                                (i) The anticipated cost of vehicle repairs or replacement,                         

                                                                                

5   which may be measured by age, price, cost new, or value of the              

                                                                                

6   insured automobile, and other factors directly relating to that             

                                                                                

7   anticipated cost.                                                           

                                                                                

8       (ii) Vehicle make and model.                                                 

                                                                                

9       (iii) Vehicle design characteristics related to vehicle                      

                                                                                

10  damageability.                                                              

                                                                                

11      (iv) Vehicle characteristics relating to automobile theft                    

                                                                                

12  prevention devices.                                                         

                                                                                

13      (d) With respect to all automobile insurance coverage other                 

                                                                                

14  than comprehensive, successful completion by the individual                 

                                                                                

15  driver or drivers insured under the policy of an accident                   

                                                                                

16  prevention education course that meets the following criteria:              

                                                                                

17                                                                               (i) The course shall include a minimum of 8 hours of                                

                                                                                

18  classroom instruction.                                                      

                                                                                

19      (ii) The course shall include, but not be limited to, a                      

                                                                                

20  review of all of the following:                                             

                                                                                

21      (A) The effects of aging on driving behavior.                               

                                                                                

22      (B) The shapes, colors, and types of road signs.                            

                                                                                

23      (C) The effects of alcohol and medication on driving.                       

                                                                                

24      (D) The laws relating to the proper use of a motor vehicle.                 

                                                                                

25      (E) Accident prevention measures.                                           

                                                                                

26      (F) The benefits of safety belts and child restraints.                      

                                                                                

27      (G) Major driving hazards.                                                  


                                                                                

1       (H) Interaction with other highway users such as                            

                                                                                

2   motorcyclists, bicyclists, and pedestrians.                                 

                                                                                

3       (3) Each insurer shall establish a secondary or merit rating                

                                                                                

4   plan for automobile insurance, other than comprehensive                     

                                                                                

5   coverage.  A secondary or merit rating plan required under this             

                                                                                

6   subsection shall provide for premium surcharges for any or all              

                                                                                

7   coverages for automobile insurance, other than comprehensive                

                                                                                

8   coverage, based upon  any or all of the following, when that                

                                                                                

9   information becomes available to the insurer:                               

                                                                                

10      (a) Substantially at-fault accidents.                                       

                                                                                

11      (b) Convictions  convictions for, determinations of                         

                                                                                

12  responsibility for civil infractions for, or findings of                    

                                                                                

13  responsibility in probate court for civil infractions for,                  

                                                                                

14  violations under chapter VI of the Michigan vehicle code, 1949              

                                                                                

15  PA 300, MCL 257.601 to 257.750.  However, beginning 90 days after           

                                                                                

16  the effective date of this sentence, an insured shall not be                

                                                                                

17  merit rated for a civil infraction under chapter VI of the                  

                                                                                

18  Michigan vehicle code, 1949 PA 300, MCL 257.601 to 257.750, for a           

                                                                                

19  period of time longer than that which the secretary of state's              

                                                                                

20  office carries points for that infraction on the insured's motor            

                                                                                

21  vehicle record.                                                             

                                                                                

22      (4) An insurer shall not establish or maintain rates or                     

                                                                                

23  rating classifications for automobile insurance based upon sex,             

                                                                                

24  or  marital status, or claims made by the insured under the                

                                                                                

25  policy.                                                                     

                                                                                

26      (5) Notwithstanding other provisions of this chapter,                       

                                                                                

27  automobile insurance risks may be grouped by territory.                     


                                                                                

1       (6) This section shall not be construed as limiting insurers                

                                                                                

2   or rating organizations from establishing and maintaining                   

                                                                                

3   statistical reporting territories.  This section shall not be               

                                                                                

4   construed to prohibit an insurer from establishing or                       

                                                                                

5   maintaining, for automobile insurance, a premium discount plan              

                                                                                

6   for senior citizens in this state who are 65 years of age or                

                                                                                

7   older, if the plan is uniformly applied by the insurer throughout           

                                                                                

8   this state.  If an insurer has not established and maintained a             

                                                                                

9   premium discount plan for senior citizens, the insurer shall                

                                                                                

10  offer reduced premium rates to senior citizens in this state who            

                                                                                

11  are 65 years of age or older and who drive less than 3,000 miles            

                                                                                

12  per year, regardless of statistical data.                                   

                                                                                

13      (7) Classifications established pursuant to this section for                

                                                                                

14  home insurance other than inland marine insurance provided by               

                                                                                

15  policy floaters or endorsements shall be based only upon 1 or               

                                                                                

16  more of the following factors:                                              

                                                                                

17      (a) Amount and types of coverage.                                           

                                                                                

18      (b) Security and safety devices, including locks, smoke                     

                                                                                

19  detectors, and similar, related devices.                                    

                                                                                

20      (c) Repairable structural defects reasonably related to                     

                                                                                

21  risk.                                                                       

                                                                                

22      (d) Fire protection class.                                                  

                                                                                

23      (e) Construction of structure, based on structure size,                     

                                                                                

24  building material components, and number of units.                          

                                                                                

25      (f) Loss experience of the insured, based upon prior claims                 

                                                                                

26  attributable to factors under the control of the insured that               

                                                                                

27  have been paid by an insurer.  An insured's failure, after                  


                                                                                

1   written notice from the insurer, to correct a physical condition            

                                                                                

2   that presents a risk of repeated loss shall be considered a                 

                                                                                

3   factor under the control of the insured for purposes of this                

                                                                                

4   subdivision.                                                                

                                                                                

5       (g) Use of smoking materials within the structure.                          

                                                                                

6       (h) Distance of the structure from a fire hydrant.                          

                                                                                

7       (i) Availability of law enforcement or crime prevention                     

                                                                                

8   services.                                                                   

                                                                                

9       (8) Notwithstanding other provisions of this chapter, home                  

                                                                                

10  insurance risks may be grouped by territory.                                

                                                                                

11      (9) An insurer may utilize factors in addition to those                     

                                                                                

12  specified in this section, if the commissioner finds, after a               

                                                                                

13  hearing held pursuant to the administrative procedures act of               

                                                                                

14  1969, 1969 PA 306, MCL 24.201 to 24.328, that the factors would             

                                                                                

15  encourage innovation, would encourage insureds to minimize the              

                                                                                

16  risks of loss from hazards insured against, and would be                    

                                                                                

17  consistent with the purposes of this chapter.