Since Michigan has some of the highest auto insurance rates in the nation, Governor Gretchen Whitmer has ordered a review of two specific aspects to see their impact on rates. She has charged the Department of Insurance and Financial Services (DIFS) to examine the use of non-driving factors to set rates and the pricing of coordinated policies. The department will begin the review immediately and produce a report as soon as possible.
Currently, in some circumstances an insurer may use non-driving factors to determine insurance premiums. These factors can include education, home ownership, occupation, credit scoring factors, and in some cases gender and marital status. Under the directive, DIFS will identify what specific non-driving factors insurers are using and how those factors are being applied. They will make recommendations for legislation, rulemaking, or other measurers as appropriate to ensure compliance. Additionally, DIFS will examine the use of “price optimization” techniques, which employs consumer data to measure consumers’ anticipated resistance to increased premiums.
Coordinated policies allow insurers to offer such policies to drivers with health insurance as their primary policy lowering the risk to the auto insurers. Under the law, insurers are required to lower auto insurance premiums for coordinated policies to account for the reduced risk. As part of the review, DIFS will examine how insurance companies are determining whether coordinated auto insurance policies have “appropriately reduced” premiums. As part of the review, the department will consider any necessary actions to ensure compliance.
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