THE FUTURE OF INSURANCE REGULATION IN MICHIGAN

1. THE FUTURE OF INSURANCE REGULATION IN MICHIGAN Our department continues to follow the path of regulatory reinvention.

2. The insurance industry is a very important economic driver for our state. During the recessionary period, insurance employment continued to expand unlike many other sectors that drastically contracted. It continues to be most helpful to citizens for covering financial obligations during accident situations.

3. We have a number of insurers in the immediate area that can attest to this growth and the increased need consumers have for insurance products.

4. DIFS will continue to play a vital role in looking at insurance rules and guidelines to consider eliminating those that are burdensome on insurers and that do not provide meaningful consumer protection.

5. We must adhere to the law in making such determinations in that we can only prohibit what Michigan law gives us the authority to prohibit, yet we will continue to review the laws and support elimination of provisions and/or changes that we feel are warranted for the industry to operate at an optimum level of freedom to engage their business and thrive while also providing necessary consumer protection.

6. Here is a short track record of things we have done over the past few years to be a partner in REINVENTING the insurance regulatory processes:

7. We discontinued the separate MCL 500.438(3) requests for policy forms by line and the review of those forms that took place through mid-2011. We discontinued sending out the plethora of disapproval notices that we were sending out from 2007 through mid-2011.

8. We endeavor to work in a manner that allows us and insurers to resolve issues without having to resort to heavy use of that method. Over the last couple of years we have cut disapprovals from hundreds per year down to three or four per year.

9. We disengaged filing of administrative rules requiring us to initiate projects in which the entire industry had to send us a plethora of information for review outside of the normal SERFF filing process. In addition, we disengaged other big projects that were formerly at the door, so that insurers would not have to continue to utilize resources in a manner that greatly increased cost but may have done little for consumer protection.

10. We have been far more engaging of insurer’s proposals in pre-filing communications (meetings, teleconferences, emails, etc.) in order to help them know if their additions, revisions, and withdrawals would be acceptable upon filing.

11. In response to a request from the health insurance industry, we revised our SERFF Portal display parameters so the Affordable Care Act Plan Management Documents would not be displayed until 10-1-13.

12. We collaborated with legislators and supported changes made to: MCL 500.2110a and 2111(9) to allow insurers unlimited classification types when they are shown to be actuarially justified.

13. MCL 500.3109 to allow insurers to file deductibles higher than $500 on full coverage Personal Injury Protection when they are not illusory and the discounts are shown to be actuarially justified. MCL 500.3109a to allow any insurer the ability to eliminate the discounted coordinated PIP coverage option from its rating plan as long as it does not provide such coverage to any policyholder.

14. MCL 500.2121 to allow insurers unlimited inspection criteria and to no longer considering binding criteria unacceptable when it is tied to performing inspection. MCL 500.2930a to allow Michigan Basic to change its rate development process from an average of the top ten home insurers’ HO2 rates to a process that measures its own losses and expenses in an actuarially justified manner.

15. MCL 500.3171 through MCL 500.3178 to allow transfer assigned claims functions from the state to the Michigan Automobile Insurance Placement Facility, so that member insurers would be able to leverage their great expertise in bringing costs down, weeding out frivolous claims, and quickly getting benefits to injured parties entitled to them.

16. We are collaborating with legislators and supporting change to MCL 500.3107 so that Personal Injury Protection is no longer unlimited and that it provides a meaningful coverage limit that is not burdensome on the industry or on the consumer from a loss and cost perspective.

17. We have worked with a number of insurers to help them appropriately initiate processes for determining which new business risks could be refused coordinated PIP coverage and which policyholders with coordinated PIP coverage could have their coverage changed at renewal to full coverage PIP at a higher premium (via underwriting questionnaires, supplemental applications, disclaimers, etc.).

18. We also did the following in order to better serve consumers and insurers: Worked in a more collaborative way with insurers with regard to policies and rates required by the Affordable Care Act in order to help the process be as open to free market principles as is possible under the federal act.

19. We also did the following in order to better serve consumers and insurers: Worked in a more collaborative way with insurers with regard to policies and rates required by the Affordable Care Act in order to help the process be as open to free market principles as is possible under the federal act.

20. We collaborated with the Michigan Automobile Insurance Placement Facility to revise its rate development methodology to initiate classification rates based on the average credit score of policyholders covered by the top five insurers.

21. We issued the Memorandum Rescinding Bulletin 83-10 so that MCL 500.3163 certified insurers would no longer believe they must provide “limited collision without a deductible” coverage to their out-of-state drivers whose vehicles are damaged in auto accidents in Michigan.

22. We have placed greater emphasis on communicating to insurers that they can exempt all commercial policy forms from filing by using the prominent disclaimer in MCL 500.2236(8)(e). Once done, MCL 500.2401(2)(d) and MCL 500.2601(3)(f) exempts rates and rules for every commercial type of insurance, except workers compensation.

23. We rescinded the insurance credit scoring bulletins 2003-01-INS and 2003-02-INS to eliminate the extra work they required. Now, insurers submit these filings with justification in the same manner they submit all other classification rate filings. No special annual reporting required.

24. We eliminated the policy review standard by which we were communicating that insurers must provide coverage on a proportionate share when other insurance of the same type is purchased by the policyholder. Numerous other bulletins have been rescinded as a result of our ongoing regulatory reinvention process.

25. We believe these collaborative efforts and initiatives we have taken to REINVENT our regulatory processes result in: • Much less cost for insurers • Greater resources applied by insurers to areas of operation deemed greater priority • Better and more accessible coverage for consumers, and • Many trees being saved from destruction and many computer servers being overloaded.

26. Please send comments or suggestion to me at the email address below: ParlorR@michigan.gov