1999 - 2000 LEGISLATURE
May 18, 1999 - Introduced by Senator Burke, cosponsored by Representative
Cullen. Referred to Committee on Insurance, Tourism, Transportation and
Corrections.
SB160,1,3 1An Act to amend 625.12 (1) (e), 625.12 (2), 625.15 (1) and 628.34 (3) (a); and to
2create
632.39 of the statutes; relating to: setting rates for certain motor
3vehicle insurance policies and granting rule-making authority.
Analysis by the Legislative Reference Bureau
This bill specifies how an insurer must determine rates for certain motor
vehicle insurance policies. The bill applies specifically to those policies that cover
private passenger automobiles, motorcycles or mopeds, that do not cover more than
four vehicles and that are issued to individuals who reside in a federal metropolitan
statistical area in this state that contains a 1st class city (Milwaukee). The insurer
must first divide the federal metropolitan statistical area into separate contiguous
areas, each containing at least one municipality, defined in the bill as a city, village
or town. The insurer must charge the same rate for the same or similar type of
coverage under all policies to which the bill applies and that are issued to insureds
residing in the same contiguous area. The insurer may establish no more than two
rate bands for each type of coverage under all of the policies to which the bill applies.
The bill specifies restrictions on how much the rates may differ from each other
within and between rate bands. After determining the rates according to the
requirements specified in the bill, an insurer may modify the rates for individual
risks using factors specified by the commissioner by rule. The factors include the
driving safety record and experience of the drivers of the insured vehicle, the value
of the insured vehicle and the number of miles that it is driven each year and any
other factors that the commissioner determines are relevant. The zip code of the

insured or any other driver of the insured vehicle may not be a basis for modifying
a rate for individual risk.
Current law specifies factors to be considered in determining whether
insurance rates in general comply with standards related to excessiveness,
inadequacy and unfair discrimination, but does not enumerate specific factors that
may be used in determining auto insurance rates or place limits on the range of rates
that may be set. Current law, however, does prohibit an insurer from using odometer
reading data collected in the course of an emissions inspection as a factor in setting
auto insurance rates.
For further information see the local fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB160, s. 1 1Section 1. 625.12 (1) (e) of the statutes is amended to read:
SB160,2,32 625.12 (1) (e) Subject to s. ss. 632.365 and 632.39, all other relevant factors,
3including the judgment of technical personnel.
SB160, s. 2 4Section 2. 625.12 (2) of the statutes is amended to read:
SB160,2,135 625.12 (2) Classification. Risks Except as provided in s. 632.39, risks may be
6classified in any reasonable way for the establishment of rates and minimum
7premiums, except that no classifications may be based on race, color, creed or
8national origin, and classifications in automobile insurance may not be based on
9physical condition or developmental disability as defined in s. 51.01 (5). Subject to
10s. ss. 632.365 and 632.39, rates thus produced may be modified for individual risks
11in accordance with rating plans or schedules that establish reasonable standards for
12measuring probable variations in hazards, expenses, or both. Rates may also be
13modified for individual risks under s. 625.13 (2).
SB160, s. 3 14Section 3. 625.15 (1) of the statutes is amended to read:
SB160,3,515 625.15 (1) Rate making. An insurer may itself establish rates and
16supplementary rate information for one or more market segments based on the

1factors in s. 625.12 and, if the rates are for motor vehicle liability insurance, subject
2to s. ss. 632.365 and 632.39, or the insurer may use rates and supplementary rate
3information prepared by a rate service organization, with average expense factors
4determined by the rate service organization or with such modification for its own
5expense and loss experience as the credibility of that experience allows.
SB160, s. 4 6Section 4. 628.34 (3) (a) of the statutes is amended to read:
SB160,3,147 628.34 (3) (a) No insurer may unfairly discriminate among policyholders by
8charging different premiums or by offering different terms of coverage except on the
9basis of classifications related to the nature and the degree of the risk covered or the
10expenses involved, subject to ss. 625.12 (2), 632.365, 632.39, 632.746 and 632.748.
11Rates are not unfairly discriminatory if they are averaged broadly among persons
12insured under a group, blanket or franchise policy, and terms are not unfairly
13discriminatory merely because they are more favorable than in a similar individual
14policy.
SB160, s. 5 15Section 5. 632.39 of the statutes is created to read:
SB160,3,19 16632.39 Setting rates for certain motor vehicle insurance policies. (1)
17Scope. This section applies to every motor vehicle insurance policy that is issued or
18delivered to an individual who resides in the federal metropolitan statistical area in
19this state that contains a 1st class city.
SB160,3,20 20(2) Definitions. In this section:
SB160,3,2321 (a) "Federal metropolitan statistical area" means an area defined by the federal
22office of management and budget under 44 USC 3504 (d) (3) as a metropolitan
23statistical area or a primary metropolitan statistical area.
SB160,3,2524 (b) "Midpoint rate" means the arithmetic average of the lowest premium rate
25and the highest premium rate within a rate band.
SB160,4,6
1(c) "Motor vehicle insurance policy" means an insurance policy issued or
2delivered in this state to an individual that provides motor vehicle physical damage
3or collision coverage or coverage for the insured's liability for loss or damage to a
4person or property resulting from a motor vehicle accident, or any combination of
5those types of coverage, and under which each motor vehicle designated as insured
6is any of the following types:
SB160,4,87 1. A private passenger automobile that is not used as a public or livery
8conveyance for passengers or rented to others.
SB160,4,109 2. Any other 4-wheel motor vehicle that is designed for travel on public roads
10and that has a load capacity of no more than 1,500 pounds.
SB160,4,1111 3. A motorcycle or moped.
SB160,4,1212 (d) "Municipality" means a city, village or town.
SB160,4,14 13(3) Determining rates. For all types of coverage under a policy that is subject
14to this section, an insurer shall determine initial rates as follows:
SB160,4,1815 (a) The insurer shall first divide the federal metropolitan statistical area
16specified in sub. (1) into separate contiguous areas. Each such contiguous area must
17include one or more municipalities and may not include less than all of any
18municipality that is included in the contiguous area.
SB160,4,2119 (b) All motor vehicle insurance policies subject to this section, of all insureds
20residing within a contiguous area designated by the insurer under par. (a), shall
21constitute a class.
SB160,4,2422 (c) Except for modifications for individual risks as permitted by rule under sub.
23(4) (a), the insurer shall charge the same rate for the same or similar type of coverage
24under all policies within the same class.
SB160,5,2
1(d) For each type of coverage, the insurer may establish no more than 2 rate
2bands for all motor vehicle insurance policies subject to this section.
SB160,5,43 (e) No rate within a rate band may vary from the midpoint rate within the rate
4band by more than 7.5% of that midpoint rate.
SB160,5,75 (f) If the insurer establishes 2 rate bands for a type of coverage, the highest rate
6within one rate band may not vary from the highest rate within the other rate band
7by more than 15% of the higher of those 2 rates.
SB160,5,11 8(4) Rules for modifications for individual risks. (a) The commissioner shall
9promulgate rules specifying factors that an insurer, after determining rates as
10provided in sub. (3), may consider in modifying such rates for individual risks. The
11factors shall include all of the following:
SB160,5,1312 1. Subject to s. 632.36 (1), the driving safety record, including accidents and
13tickets, of the drivers of the insured motor vehicle.
SB160,5,1414 2. The amount of driving experience of the drivers of the insured motor vehicle.
SB160,5,1515 3. The number of miles that the insured motor vehicle is driven each year.
SB160,5,1616 4. The value of the insured motor vehicle.
SB160,5,1817 5. Subject to par. (b), any other factors that the commissioner determines are
18relevant.
SB160,5,2019 (b) Rates determined under sub. (3) may not be modified on the basis of the zip
20code of the insured or the zip code of any other driver of the insured motor vehicle.
SB160,5,2321 (c) Notwithstanding sub. (3) (e) and (f), a rate determined under sub. (3) that
22is modified for individual risks in accordance with rules promulgated under par. (a)
23may fall outside a rate band established under sub. (3).
SB160,6,2 24(5) Rate service organizations. If an insurer uses rates for motor vehicle
25insurance policies that are prepared by a rate service organization designated under

1s. 625.15, rates filed by the rate service organization on behalf of the insurer must
2comply with this section.
SB160,6,5 3(6) Exceptions. This section does not apply to a motor vehicle insurance policy
4that insures more than 4 vehicles or that is issued under a risk-sharing plan
5established under s. 619.01 (1) or continued under s. 619.01 (6).
SB160, s. 6 6Section 6 . Nonstatutory provisions; insurance.
SB160,6,107 (1) The commissioner of insurance shall submit in proposed form the rules
8required under section 632.39 (4) (a) of the statutes, as created by this act, to the
9legislative council staff under section 227.15 (1) of the statutes no later than the first
10day of the 10th month beginning after the effective date of this subsection.
SB160, s. 7 11Section 7. Initial applicability; insurance.
SB160,6,1412 (1) This act first applies to rates and premiums for motor vehicle insurance
13policies, as defined in section 632.39 (2) (c) of the statutes, as created by this act, that
14are issued or renewed on the effective date of this subsection.
SB160, s. 8 15Section 8. Effective dates; insurance. This act takes effect on the first day
16of the 13th month beginning after publication, except as follows:
SB160,6,1817 (1) The treatment of section 632.39 (4) (a) and (b) of the statutes and Section
186 (1 ) of this act take effect on the day after publication.
SB160,6,1919 (End)
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