SB 1013: Insurance: no-fault; price optimization use in determining insurance rates; prohibit. Amends secs. 2109 & 2119 of 1956 PA 218 (MCL 500.2109 & 500.2119). - Michigan

As Passed by the House → Substitute (S-1) · 4 edits

MODERATE

The Senate substitute broadens SB 1013 in two major ways: it extends the prohibition on price optimization from property and casualty insurers to all insurers, and it redefines 'price optimization' more broadly by removing the requirement that rate adjustments be 'not actuarially justified.' The changes make the bill's reach significantly wider and its standards easier to enforce.

SCOPE

The prohibition now applies to 'an insurer' rather than only 'a property and casualty insurer,' extending coverage to all lines of insurance including life, health, and others.

DEFINITION

The definition of 'price optimization' was rewritten. The House version required that the practice be one that 'charges based on an insured's price tolerance' AND results in adjustments 'not actuarially justified.' The Senate version simply defines it as 'establishing rates or varying premiums at any time based on factors that are unrelated to risk of loss or expense,' removing both the price-tolerance framing and the actuarial-justification requirement.

'Charging based on the insured's price tolerance' was moved from the main definitional language into a specific listed example (item i) under the price optimization definition, making it one of several enumerated examples rather than the defining characteristic.

REQUIREMENT

The prohibition now states insurers may not use price optimization 'in any way in ratemaking,' adding the phrase 'in any way' to close potential loopholes about partial or indirect use.

As Passed by the Senate → As Passed by the House · 3 edits · Aug 25, 2026

MINOR

The House narrowed the scope and definition of the price optimization ban in two significant ways. First, the prohibition was limited from all insurers to only property and casualty insurers, excluding life and health insurers entirely. Second, the definition of 'price optimization' was tightened from a broad ban on any rate-setting based on non-risk factors to a narrower ban specifically targeting practices based on an insured's price tolerance that result in adjustments not actuarially justified.

SCOPE

The ban on price optimization now applies only to property and casualty insurers instead of all insurers, removing life, health, and other types of insurers from the prohibition.

DEFINITION

The definition of 'price optimization' was narrowed. The Senate version broadly prohibited establishing rates or varying premiums at any time based on factors unrelated to risk or expense. The House version limits it to practices that charge based on an insured's price tolerance AND result in rate or premium adjustments that are not actuarially justified, making the standard for a violation more specific and harder to meet.

The standalone sub-item 'Charging based on the insured's price tolerance' was removed from the illustrative list because it is now embedded in the main definition itself.

Senate Introduced Bill → As Passed by the Senate · 5 edits · Jul 2, 2026

MODERATE

The bill was substantially narrowed from its introduced form. Instead of amending existing rate regulation and underwriting rules sections (2109 and 2119), the Senate passed version adds a single new section (2027a) that declares price optimization an unfair method of competition in insurance ratemaking. The broader framework for regulating excessive, inadequate, or discriminatory rates and the detailed underwriting rules requirements were all dropped.

Scope change

The bill shifted from a comprehensive rate regulation and underwriting rules framework affecting all automobile and home insurance to a single targeted prohibition on price optimization in ratemaking, applicable as an unfair trade practice rather than through the rate-filing process.

SCOPE

The bill no longer amends sections 2109 and 2119 of the Insurance Code. It now adds a new standalone section 2027a instead, making it a much narrower piece of legislation focused solely on prohibiting price optimization.

REQUIREMENT

All provisions requiring insurers to put underwriting rules in writing, apply them uniformly, file them with the director for public inspection, and not use multiple rating plans for identical coverages were removed entirely.

DEFINITION

The detailed definitions of excessive, inadequate, and unfairly discriminatory rates that were part of section 2109 were removed. The competitive analysis framework (number of insurers, market availability, underwriting returns, barriers to entry) was also dropped.

The definition of 'price optimization' was slightly broadened to cover factors unrelated to 'risk of loss or expense' (adding 'or expense'), and example (i) was changed from 'charging each insured the highest price that the market will bear' to 'charging based on the insured's price tolerance.'

ENFORCEMENT

Price optimization is now explicitly declared an 'unfair method of competition and an unfair or deceptive act or practice in the business of insurance,' which subjects it to existing enforcement mechanisms for unfair trade practices rather than the rate-filing framework that was in the introduced version.

Substitute (S-1) - 5 → As Passed by the Senate · 3 edits · Jul 2, 2026

MINOR

The bill was reformatted from a substitute version to its final Senate passage, correcting a typo in the enacting clause and reorganizing the text layout. The substantive policy content regarding the prohibition of price optimization in insurance ratemaking and the definition of policy turnover activities remains identical to the previous version.

TECHNICAL

Corrected a typo in the enacting clause from 'peoplE' to 'People' and 'michigan' to 'Michigan'.

Reformatted the layout and removed page tracking numbers and draft identifiers.

Added blank lines between sections for improved readability.

Senate Introduced Bill → Substitute (S-1) · 4 edits

MODERATE

The bill was completely rewritten to replace a broad, multi-section amendment with a single new section (2027a) that strictly prohibits insurers from using 'price optimization' in rate-making. The definition of 'price optimization' was narrowed to specifically ban charging based on price tolerance or predicting customer behavior like shopping for lower premiums, rather than the previous broad ban on any non-risk factor. This change shifts the focus from general rate fairness to explicitly outlawing specific consumer-centric pricing strategies.

Scope change

The bill's scope changed from amending existing sections 2109 and 2119 to adding a new, standalone section 2027a. The applicability of the prohibition was also narrowed; the original bill banned price optimization for all rates, while the new version specifically targets the use of these factors in 'ratemaking' (setting rates).

DEFINITION

The definition of 'price optimization' was significantly narrowed. The original bill banned using any factor unrelated to loss risk, whereas the new bill specifically lists 'charging based on price tolerance' and 'predicting customer behavior' as prohibited factors.

REQUIREMENT

The requirement to amend existing sections was replaced with the addition of a new section (2027a) that creates a specific prohibition against using price optimization in ratemaking.

The original requirement to amend Section 2119, which mandated that insurers apply underwriting rules uniformly and file them for public inspection, was removed entirely from this specific bill.

A new explicit prohibition was added stating that using price optimization in any way for setting rates constitutes an unfair method of competition.

Insurance: no-fault; price optimization use in determining insurance rates; prohibit. Amends secs. 2109 & 2119 of 1956 PA 218 (MCL 500.2109 & 500.2119).

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