Law / United States / 
Michigan
Insurance Code of 1956, rate-making standards, rates not unfairly discriminatory (Act 218 of 1956)
In force since .
An AI sector rules rule binding private bodies.
- Instrument type
- an act of a legislature
- Obligation class
- Prohibition
As of .
What it requires
- If you set insurance rates subject to section 2403 of the Insurance Code, do not use rates that are excessive, inadequate, or unfairly discriminatory, whatever method produced them (MCL 500.2403(1)(d)).
- Justify a rate differential for the same coverage by differences in losses, expenses, or both, or in the uncertainty of loss, supported by a reasonable classification system, sound actuarial principles when applicable, and actual and credible loss and expense statistics (MCL 500.2403(1)(d)).
These lines are LexLint's reading of the law's text, as of . Also read by: Michigan DIFS Bulletin 2024-20-INS, Use of Artificial Intelligence Systems by Insurers (guidance from the Michigan Department of Insurance and Financial Services, issued ).
What this law does
Section 2403 of the Insurance Code of 1956 requires that all rates be made in accordance with the section and the standards it lists. Under subsection (1)(d), rates shall not be excessive, inadequate, or unfairly discriminatory.
A rate for a coverage is unfairly discriminatory in relation to another rate for the same coverage if the differential between the rates is not reasonably justified by differences in losses, expenses, or both, or by differences in the uncertainty of loss for the individuals or risks to which the rates apply.
A reasonable justification must be supported by a reasonable classification system, by sound actuarial principles when applicable, and by actual and credible loss and expense statistics or, for new coverages and classifications, by reasonably anticipated loss and expense experience. The section took effect on with the Insurance Code of 1956 and has been amended several times since.
Guidance on this law
How the bodies that enforce this law read it. Guidance binds nobody by itself, so LexLint never raises a finding from it; the duty is this law's.
- Michigan DIFS Bulletin 2024-20-INS, Use of Artificial Intelligence Systems by Insurers, the Michigan Department of Insurance and Financial Services
When LexLint raises it
When your app profile says your app is an insurer.