SB106: Bill Text

SB106,3,2 625.15 (1) Rate making. An insurer may itself establish rates and supplementary rate information for one or more market segments based on the factors in accordance with s. 625.12 and, if the rates are for motor vehicle liability insurance, subject to s. 632.365, or the insurer may use rates and supplementary rate information prepared by a rate service organization, with average expense factors determined by the rate service organization or with such modification for its own expense and loss experience as the credibility of that experience allows.

SB106, s. 4 Section 4. 628.34 (3) (a) of the statutes is amended to read:

SB106,3,10 628.34 (3) (a) No insurer may unfairly discriminate among policyholders by charging different premiums or by offering different terms of coverage except on the basis of classifications related to the nature and the degree of the risk covered or the expenses involved, subject to s. ss. 625.12 (2), 632.39 and 632.365. Rates are not unfairly discriminatory if they are averaged broadly among persons insured under a group, blanket or franchise policy, and terms are not unfairly discriminatory merely because they are more favorable than in a similar individual policy.

SB106, s. 5 Section 5. 632.39 of the statutes is created to read:

SB106,3,15 632.39 Setting rates for certain motor vehicle insurance policies. (1) Scope. This section applies to every motor vehicle insurance policy that is issued or delivered to an individual who resides in the federal metropolitan statistical area in this state that contains a 1st class city.

SB106,3,16 (2) Definitions. In this section:

SB106,3,19 (a) "Federal metropolitan statistical area" means an area defined by the federal office of management and budget under 44 USC 3504 (d) (3) as a metropolitan statistical area or a primary metropolitan statistical area.

SB106,3,21 (b) "Midpoint rate" means the arithmetic average of the lowest premium rate and the highest premium rate within a rate band.

SB106,4,2 (c) "Motor vehicle insurance policy" means an insurance policy issued or delivered in this state to an individual that provides motor vehicle physical damage or collision coverage or coverage for the insured's liability for loss or damage to a person or property resulting from a motor vehicle accident, or any combination of those types of coverage, and under which each motor vehicle designated as insured is any of the following types:

SB106,4,4 1. A private passenger automobile that is not used as a public or livery conveyance for passengers or rented to others.

SB106,4,6 2. Any other 4-wheel motor vehicle that is designed for travel on public roads and that has a load capacity of no more than 1,500 pounds.

SB106,4,7 3. A motorcycle or moped.

SB106,4,8 (d) "Municipality" means a city, village or town.

SB106,4,10 (3) How rates may be determined. For all types of coverage under a policy that is subject to this section, an insurer shall determine initial rates as follows:

SB106,4,14 (a) The insurer shall first divide the federal metropolitan statistical area specified in sub. (1) into separate contiguous areas. Each such contiguous area shall include one or more municipalities and may not include less than all of any municipality that is included in the contiguous area.

SB106,4,17 (b) All motor vehicle insurance policies subject to this section, of all insureds residing within a contiguous area designated by the insurer under par. (a), shall constitute a class.

SB106,4,20 (c) Except for modifications for individual risks as permitted by rule under sub. (4) (a), the insurer shall charge the same rate for the same or similar type of coverage under all policies within the same class.

SB106,4,22 (d) For each type of coverage, the insurer may establish no more than 2 rate bands for all motor vehicle insurance policies subject to this section.

SB106,4,24 (e) No rate within a rate band may vary from the midpoint rate within the rate band by more than 7.5% of that midpoint rate.

SB106,5,3 (f) If the insurer establishes 2 rate bands for a type of coverage, the highest rate within one rate band may not vary from the highest rate within the other rate band by more than 15% of the higher of those 2 rates.

SB106,5,7 (4) Rules for modifications for individual risks. (a) The commissioner shall promulgate rules specifying factors that an insurer, after determining rates as provided in sub. (3), may consider in modifying such rates for individual risks. The factors shall include all of the following:

SB106,5,9 1. Subject to s. 632.36 (1), the driving safety record, including accidents and tickets, of the drivers of the insured motor vehicle.

SB106,5,10 2. The amount of driving experience of the drivers of the insured motor vehicle.

SB106,5,11 3. The number of miles that the insured motor vehicle is driven each year.

SB106,5,12 4. The value of the insured motor vehicle.

SB106,5,14 5. Subject to par. (b), any other factors that the commissioner determines are relevant.

SB106,5,16 (b) Rates determined under sub. (3) may not be modified on the basis of the zip code of the insured or the zip code of any other driver of the insured motor vehicle.

SB106,5,19 (c) Notwithstanding sub. (3) (e) and (f), a rate determined under sub. (3) that is modified for individual risks in accordance with rules promulgated under par. (a) may fall outside a rate band established under sub. (3).

SB106,5,23 (5) Rate service organizations. If an insurer uses rates for motor vehicle insurance policies that are prepared by a rate service organization designated under s. 625.15, rates filed by the rate service organization on behalf of the insurer must comply with this section.

SB106,6,3 (6) Exceptions. This section does not apply to a motor vehicle insurance policy that insures more than 4 vehicles or that is issued under a risk-sharing plan established under s. 619.01 (1) or continued under s. 619.01 (6).

SB106, s. 6 Section 6 . Nonstatutory provisions; insurance.

SB106,6,8 (1)  The commissioner of insurance shall submit in proposed form the rules required under section 632.39 (4) (a) of the statutes, as created by this act, to the legislative council staff under section 227.15 (1) of the statutes no later than the first day of the 10th month beginning after the effective date of this subsection.

SB106, s. 7 Section 7. Initial applicability; insurance.

SB106,6,12 (1)  This act first applies to rates and premiums for motor vehicle insurance policies, as defined in section 632.39 (2) (c) of the statutes, as created by this act, that are issued or renewed on the effective date of this subsection.

SB106, s. 8 Section 8. Effective dates; insurance. This act takes effect on the first day of the 13th month beginning after publication, except as follows:

SB106,6,16 (1)  The treatment of section 632.39 (4) of the statutes and Section 6 (1) of this act take effect on the day after publication.

SB106,6,17 (End)