Our high auto insurance rates are something that we’ve discussed and tried to figure out many times how to lower here from the Senate floor. This particular piece of legislation is something that I’ve worked on term after term after term, to ban insurance companies from using a billing scam known as price optimization.
Did you know that your rates and the rates of everybody in Michigan might be even higher just because you’re a loyal customer of your insurance company? Price optimization is a shady practice that companies use to determine the highest price you can sustain. The highest price you’re willing to pay for insurance using non-risk factors like your shopping habits, your online activity, your demographic data, or other personal information. So, if you are a loyal customer, they may jack up your rate because they know you’re just likely to renew your policy, whatever the increased cost may be. If you’re less likely to comparison shop, you’re not going to see the same rewards, discounts, perks, and special offers, as someone else who may shop around, even if you’re in the same risk pool. Insurance rates should be based on risk factors, not whether you’re likely to pay more for insurance or are less likely to shop around for other options.
Maryland was the first state to take action to ban the use of this practice of setting insurance rates in 2014. In 2015, Ohio’s insurance regulators published a bulletin outlawing the same; and I introduced this bill for the first time in 2016. Since then, at least 20 other states have banned price optimization in rate-setting as a premium development tool across the political spectrum—from Indiana and Florida to California and Connecticut. In 2024, our Department of Insurance and Financial Services issued a bulletin adding Michigan to that list. Now that this bulletin is in place, it is time to codify this permanently into law this consumer protection piece so that Michiganders are never subject to these unfair practices.
The following bill was read a third time:
Senate Bill No. 947, entitled
A bill to amend 1994 PA 451, entitled “Natural resources and environmental protection act,” by amending sections 31502, 31503, 31504, 31505, 31506, 31507, 31508, 31509, 31510, 31511, 31513, 31515, 31516, 31517, 31518, 31520, 31521, and 31523 (MCL 324.31502, 324.31503, 324.31504, 324.31505, 324.31506, 324.31507, 324.31508, 324.31509, 324.31510, 324.31511, 324.31513, 324.31515, 324.31516, 324.31517, 324.31518, 324.31520, 324.31521, and 324.31523), sections 31502, 31503, 31504, 31505, 31507, 31508, 31510, 31511, 31513, 31515, 31516, 31517, 31518, 31520, 31521, and 31523 as added by 1995 PA 59, section 31506 as amended by 1995 PA 100, and section 31509 as amended by 2004 PA 325, and by adding sections 31506a, 31509a, 31509b, 31517a, 31518a, 31518b, 31518c, 31518d, 31528a, and 31528b.
The question being on the passage of the bill,
Senator McMorrow offered the following substitute:
Substitute (S-2).
The substitute was adopted, a majority of the members serving voting therefor.
The question being on the passage of the bill,
The bill was passed, a majority of the members serving voting therefor, as follows: