Regulatory Modernization Bill Introduced in Mich.

April 3, 2002

Michigan has an opportunity to continue streamlining its rate and form filing process by adopting legislation recently introduced by Senator Bill Bullard (R-Highland), according to the National Association of Independent Insurers (NAII).

This legislation (SB1213) is another step forward in Michigan’s efforts to modernize the regulatory environment for insurance,” Laura Kotelman, counsel for the NAII remarked. “NAII fully supports this legislation because modernizing rate and form filing procedures will provide greater competition and reduce insurance rates.”

Michigan currently operates under a no file order for personal lines that was issued under the previous Insurance Commissioner Joe Olson. This legislation incorporates the order into the law and makes it same day filing for rates in personal lines. “By making the order law, it removes the possibility that an insurance commissioner could simply rescind the order and institute new filing requirements,” Kotelman said.

The bill exempts large commercial policyholders from filing rates and forms if they employ a producer or broker and meet at least two of the following criteria: pay annual property and casualty premiums totaling more than $25,000, generate annual net revenues or sales in excess of $10 million, employ more than 50 employees, purchase insurance through a full-time risk manager, possess a net worth in excess of $2.5 million, is a not-for-profit organization or public body with annual expenditures of at least $25 million or is a municipality with a population over 50,000.

In addition the bill sets forth grievance procedures under the Administrative Procedures Act for rate challenges. A rate can not be considered excessive, inadequate or unfairly discriminatory if a reasonable degree of competition exists. For insurers that subscribe to a rating organization, the rating organization must file its forms with a 30-day waiting period for approval.

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