SB 1013

substitute for
Senate BILL NO. 1013
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
(MCL 500.100 to 500.8302) by adding section 2027a.
the peoplE of the state of michigan enact:
Sec. 2027a. (1)
It is an unfair method of competition and an unfair or deceptive act or
practice in the business of insurance for a property and casualty insurer to use
price optimization in ratemaking.
(2) As used in this section:
(a) "Engage in activities that result in insurance policy
turnover" includes, but is not limited to, any of the following:
(i) Shopping with
other insurers for a lower premium.
(ii) Canceling a
policy before the expiration of the policy term.
(iii) Failing to
renew a policy at the renewal of the policy term.
(iv) Complaining to
the insurer or the insurer's agent or representative.
(b) "Price optimization" means a practice to charge based on an
insured's price tolerance that results in rate or premium adjustments that are
not actuarially justified and based on factors that are unrelated to
risk of loss or expense, including, but not limited to, any of the following:
(i) Considering the
likelihood that the insured will engage in activities that result in insurance
policy turnover.
(ii) Estimating the
willingness of the insured to pay a higher premium compared to other insureds.
(iii) Using any measure
of a consumer's or group of consumers' price elasticity of demand.