The bill amends the Michigan Insurance Code of 1956 by adding a new section, 2027a, which prohibits insurers from using price optimization in their ratemaking processes. Price optimization is defined as the practice of setting rates or varying premiums based on factors unrelated to the actual risk of loss or expense. This includes considerations such as the insured's price tolerance, the likelihood of policy turnover, and the estimated willingness of the insured to pay higher premiums compared to others.

Additionally, the bill outlines specific activities that constitute insurance policy turnover, which includes shopping for lower premiums, canceling policies before their expiration, failing to renew policies, and lodging complaints with insurers or their representatives. The intent of this legislation is to protect consumers from unfair practices in the insurance industry by ensuring that rates are based on risk rather than arbitrary factors.

Statutes affected:
Substitute (S-1): 500.100, 500.8302
Senate Introduced Bill: 500.2109, 500.2119
As Passed by the Senate: 500.100, 500.8302