The bill amends the Michigan Insurance Code of 1956, specifically sections 2109 and 2119, to enhance regulations surrounding automobile and home insurance rates. It mandates that all rates must not be excessive, inadequate, or unfairly discriminatory, with specific criteria outlined for determining what constitutes excessive or inadequate rates. The bill introduces the concept of "price optimization," which refers to the practice of setting rates based on factors unrelated to the risk of loss, and explicitly prohibits insurers from establishing underwriting rules through this method. Additionally, it emphasizes the need for a reasonable classification system and sound actuarial principles to justify rate differences.

Furthermore, the bill requires insurers to document their underwriting rules in writing and apply them uniformly across the state. It stipulates that insurers cannot transact insurance inconsistently with these rules and must file their underwriting rules with the director for public inspection. If any rules are found inconsistent with the chapter, the director has the authority to prohibit their use after a hearing. The bill also clarifies that insurers may have different underwriting rules for new applicants compared to renewals, provided that the applicants or existing insureds are not eligible persons. Overall, the amendments aim to promote fairness and transparency in the insurance market.

Statutes affected:
Senate Introduced Bill: 500.2109, 500.2119