A Michigan bill would strip a key protection that currently shields auto and home insurers from excessive-rate findings by state regulators.
Senate Bill 1154, introduced on September 9 by Senator Irwin, would amend Section 2109 of the Michigan Insurance Code (MCL 500.2109) to eliminate the competition-based safe harbor for excessive rates. Under the current statute, a rate cannot be held excessive if a reasonable degree of competition exists in the relevant market. The bill would strike that condition.
SB 1154 would also remove the entire framework used to assess whether reasonable competition exists. That multi-factor test currently requires consideration of the number of insurers actively writing in a market, present availability compared with past periods, underwriting returns over a reliable time horizon, and the difficulty new carriers face entering the market. The bill would delete the subsection in full.
If enacted, the change would mean state regulators could find an auto or home insurance rate excessive based solely on whether it is unreasonably high - regardless of how many carriers compete in the market.
The bill would also replace "shall" with "must" throughout the section. The change reflects a broader Michigan legislative drafting convention and is generally treated as non-substantive.
Key rate-setting guardrails would remain in place. Rates would still need to be neither inadequate nor unfairly discriminatory. The existing actuarial-justification requirements - including the need for reasonable classification systems and credible loss and expense statistics - would carry over unchanged.
SB 1154 has been referred to the Senate Committee on Finance, Insurance, and Consumer Protection.
