RECOMMENDATIONS WITH COMMENT

320RECOMMENDATIONS WITH COMMENT 1. Enact a definition of premium affordability which assures that auto insurance rates are available to Michigan consumers at fair and reasonable rates. Comment: This definition of “affordability” (“excessive” under the Insurance Code), is outlined in Shavers, where the court required a balancing of the “interests” of consumers, with the “needs” of insurers. The present definition of “reasonable competition among insurers” has no such balance, and defines affordability exclusively from the insurers’ point of view. The Shavers opinion further requires “fair and reasonable” rates. [Source: Shavers v. Attorney General, p. 606]. Chief Justice G. Mennen Williams outlined a four (4) part test for auto No Fault compliance with the constitution. The second prong of the test specifically provides for “[p]remiums reasonable to insured and insurer for the specific insurance coverage . . .” [Source: Shavers v. Attorney General, p. 607]. 2. Require insurance companies to obtain the Insurance Commissioner’s approval, prior to raising their rates. Comment: Insurers should not be able to grant themselves a pay raise whenever they choose, as they can with the present “file and use” system. Now, companies simply “file” the rate increase they want, and are then able to “use” that filed rate increase, immediately. The Supreme Court implicitly requires prior approval of rates in section III(3) of the Shavers opinion ...