WeVote
Log In

Bill

Bill

SB 1013

Insurance: no-fault; price optimization use in determining insurance rates; prohibit. Amends secs. 2109 & 2119 of 1956 PA 218 (MCL 500.2109 & 500.2119).

2025-2026 Regular Session Introduced by Mary Cavanagh and 4 co-sponsors

SB 1013 bans price optimization in auto and home insurance pricing and underwriting, requiring risk-based rates and public filing of underwriting rules.

referred to Committee on Insurance
#insurance:insurers #insurance:no-fault #stateagencies(existing):insuranceandfinancialservices
0
WeVote Research Nonpartisan
Bill Summary · SB 1013

Summary of SB 1013 (2025-2026) — Michigan

Purpose and intent

  • Proposes amendments to the Michigan Insurance Code (1956 PA 218) to prohibit the use of price optimization in determining automobile and home insurance rates, and to prohibit underwriting rules from being established through price optimization.
  • The bill aims to ensure rates are not unfairly discriminatory and that underwriting rules are based on risk and credible loss/expense data rather than factors unrelated to risk.

Key provisions and changes

  • Sec. 2109 (rate standards)

    • Reaffirms general rate standards: rates for automobile and home insurance must not be excessive, inadequate, or unfairly discriminatory.
    • Clarifies that a rate can be considered unfairly discriminatory if the differential between rates for the same coverage is not reasonably justified by differences in losses, expenses, or uncertainty of loss.
    • Explicitly adds that a rate is unfairly discriminatory if it is established through or impacted by price optimization.
    • Defines “price optimization” as establishing or varying premiums based on factors unrelated to risk, including:
    • Charging the highest price the market will bear.
    • Using the likelihood of policy turnover (e.g., shoppers, non-renewals, cancellations, complaints) in premium determinations.
    • Estimating the willingness of the insured to pay a higher premium.
    • Using price elasticity of demand as a factor.
    • Section also references a broad set of competitive and actuarial considerations for determining reasonable competition, including insurer count, availability, underwriting returns, and entry barriers for new insurers.

  • Sec. 2119 (underwriting rules)

    • Insurers must put in writing all underwriting rules used in Michigan and apply them uniformly and consistently.
    • If an insurer has multiple rating plans for identical coverages, it cannot have underwriting rules that would allow a person to be insured under more than one rating plan.
    • New applicants can have different underwriting rules than renewals only if those applicants are not eligible persons; renewals of ineligible persons may be governed by contractual noncancel/ nonrenew obligations.
    • Insurers must file underwriting rules with the insurance commissioner (for informational purposes) before use; the rules must be publicly available.
    • If a filed underwriting rule is inconsistent with the chapter, the commissioner can prohibit its use after a hearing.
    • The section clarifies that price optimization cannot be used to establish underwriting rules.

Who and what is affected

  • Insurers offering automobile and home insurance in Michigan.
  • Underwriting rule practices and rate-setting processes for these lines of insurance.
  • Consumers seeking automobile or home insurance, as the bill targets practices that could influence premiums and eligibility.

Procedural and timeline aspects

  • Introduced: June 2, 2026.
  • Referred to: Committee on Economic and Community Development.
  • No specific effective date or sunset included in the text provided; typical enactment would follow passage and signing, with any effective date stated in the enacted statute.

Additional context and supplemental details

  • The bill aligns with prior efforts to ban price optimization, similar to SB 498 (2019-2020) and related House bills.
  • Background note references a 2024 DIFS bulletin reaffirming that price optimization is not permitted in Michigan, and that the department reviews rate filings to ensure compliance.
  • Fiscal impact: Describes a minimal impact on state government; DIFS already adheres to practices consistent with the bill (per DIFS Bulletin 2024-09-INS).

Practical takeaway

SB 1013 would make price optimization a prohibited factor in setting premiums and underwriting rules for auto and home insurance in Michigan, reinforcing that rates must be based on risk-based, defensible actuarial principles and transparent underwriting practices. It would require insurers to file and publicly disclose underwriting rules and would empower the state to halt any rule found inconsistent with the act.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.