Sections amended. Section added. Rating division. experts, etc. [No. 12.] AN ACT to amend sections one, two, three, four, seven, eight, nine, ten, eleven, twelve and thirteen of chapter four of part one of act number two hundred fifty-six of the public acts of nineteen hundred seventeen, entitled "An act to revise, consolidate and classify the laws of the state of Michigan relating to the insurance and surety business; to regulate the incorporation of domestic insurance and surety companies and associations and the admission of foreign companies; and to provide for the departmental supervision and regulation of the insurance and surety business within this state," approved May tenth, nineteen hundred seventeen, and to add a new section thereto to stand as section four-a. The People of the State of Michigan enact: SECTION 1. Sections one, two, three, four, seven, eight, nine, ten, eleven, twelve and thirteen of chapter four of part one of act number two hundred fifty-six of the public acts of nineteen hundred seventeen, entitled "An act to revise, consolidate and classify the laws of the state of Michigan relating to the insurance and surety business; to regulate the incorporation of domestic insurance and surety companies and associations and the admission of foreign companies; and to provide for the departmental supervision and regulation of the insurance and surety business within this state," approved May tenth, nineteen hundred seventeen, are hereby amended, and a new section is hereby added thereto to stand as section four-a, said amended sections and added section to read as follows: CHAPTER IV Rating Bureaus SECTION 1. It shall be the duty of the commissioner of insurance to establish a rating division for fire insurance May employ within his department. For this purpose the insurance commissioner may employ not to exceed three experts and assistants, having experience in the operation of the fire insurance business and fire insurance rating and the use and application of schedules used in such rating, to take charge of such division, and such clerical help as may be necessary to maintain the work of such division. The number and compensation of such experts, assistants and clerks shall be fixed and determined by the state administrative board. The compensation and necessary expenses occasioned by the employment and duties imposed by this chapter shall be payable out of the appropriation for the insurance department. Compensation, number, etc., who to fix. fire insurance SEC. 2. It shall be the duty of the commissioner of in- To investigate surance to thoroughly investigate the subject of fire insurance rates. rates in this state, through the rating division hereby created, and to keep such information in convenient form in his office for the public use. Such investigation shall include the study of scientific methods of estimating fire hazards, fire protection, prevention of fires, cost of operation of insurance. companies, the experience of insurers both within and without this state, and the methods or systems in use for determining fire insurance rates and ratings. determine substitute SEC. 3. The commissioner of insurance through said rating May division shall have authority to determine the adequacy or adequacy, the excessiveness of any rate charged by any fire insurance etc., of. company on Michigan risks, on complaint of any individual or class of individuals or corporation, private or municipal, or on his own initiative, and may suspend any rate being charged, published, or put in force by any insurance company on Michigan risks, without prejudice to any particular policy or contract party, when it shall be made to appear that such May rate is excessive, and the commissioner shall fix and order rate. substituted a just and reasonable rate therefor, which substituted rate shall be based upon relative hazards, local conditions and all other reasonable elements entering into fire insurance ratings and rates. No order by the commissioner Hearing. of insurance substituting any rate shall be taken until after a hearing in which the immediate parties at interest are represented, or given due notice of the same. The determina- Review by tion of the commissioner shall be subject to court review, in the manner hereinafter provided in section thirteen. court. maintain membership. SEC. 4. Nothing in this chapter contained shall be con- Company strued as prohibiting any insurance company from main-main taining its own rating bureau or the maintenance of bureaus bureau. on the part of fire insurance companies in common with each other, subject to the antimonopoly laws of this state, or writing any insurance independent of bureau ratings subject to the provisions of section eleven of this chapter, but Liability. each fire insurance company shall be held individually liable for the rates adopted by it resulting in any violation of this chapter: Provided always, That any fire insurance company, Proviso. on application and the payment of its reasonable share of maintenance thereof, shall be admitted to membership in any such bureau: And provided further, That no person, firm or Further corporation, or association of insurance companies or their proviso, agents or representatives shall, after this amending act takes effect, establish or maintain any such rating bureau without first obtaining a license therefor, and for any branch thereof, from the commissioner of insurance of this state, nor without otherwise complying with the provisions of this chapter respecting such license. The term "rating bureau" within the "Rating meaning of this act shall be deemed to mean and include defined. any person, firm, corporation, or association of insurance companies, engaged in the business of fixing, establishing, license. bureau Further publishing or promulgating rates for fire insurance to any insurance company or companies, by inspecting risks, or estimating the hazards, upon which fire insurance rates are based: Provided further, That no such bureau shall be government. governed, directed or its manager or management be chosen by or be subject to, any board, body, or directorate, composed in the majority of persons not residents of this state. proviso, License. form, etc. What to show. Fee. Proviso, when license refused. Revocation. Hearing. Inspectors, licensing of. Application for license. SEC. 4-a. Each rating bureau desiring to engage in such business shall, through its owner or its authorized agent, apply to the commissioner of insurance for a license for that purpose, upon a form to be made and supplied by such commissioner. Such application shall show: The name by which the bureau is to be known in law, and the owner or owners of, and the insurance companies contributing to the same, with their addresses, and the location of the chief and branch offices of such bureau; that such bureau agrees to comply with the insurance laws of this state and any lawful order of the commissioner of insurance relative to such bureau and particularly with provisions of this chapter; that it will not employ unlicensed raters within this state; and such further declarations or statements as may be required by the commissioner of insurance by virtue of this act. Each such application shall be accompanied by a license fee in the sum of two hundred fifty dollars for the main or head bureau and fifty dollars for each branch office thereof. Upon receipt of such application and license fees the commissioner of insurance shall issue licenses in accordance therewith to such applicant for the term of one year from the date of issuance: Provided, however, That the commissioner may refuse such license to any bureau maintained in whole or in part by any insurance company or similar bureau not licensed to do business in this state, or which is under the management of any officer or employe not licensed as a rater in this state or which is in default in complying with any order issued by said commissioner. Every such license shall be revocable by the commissioner of insurance for any violation of the provisions of this act committed by any officer or manager of the licensee, or such license may be temporarily suspended pending the rectification of the matter or things committed in violation of the terms of such license, in the discretion of said commissioner. No such license shall be suspended or revoked, however, without first giving such bureau a hearing upon the complaint against it, which hearing shall be held before the commissioner upon such reasonable notice as he may determine. No person employed by any rating bureau shall engage in the business of inspecting fire insurance risks or property, or in the estimating of or the computation of fire insurance rates in this state without first being licensed therefor by the commissioner of insurance as a rater. Each applicant for such license shall apply to the commissioner of insurance upon a blank application to be prescribed by him, setting forth his name, residence, length of experience as a rater revocation of. what All licenses issued hereunder shall be renewable at the ex- How renewed. piration thereof upon the same terms and upon the payment of the same fees as are herein prescribed for the first license. Any person operating any bureau, either as owner, prin- Misdemeanor, cipal, or manager, or any person engaging in the business of a deemed. rater, without having a valid license therefor, shall be deemed guilty of a misdemeanor, and shall upon conviction thereof Penalty. be subject to imprisonment in the county jail for the term of not exceeding ninety days, or a fine of not exceeding one hundred dollars, or to both such fine and imprisonment in the discretion of the court; and each day of such operation or engaging shall be deemed a separate offense hereunder. SEC. 7. Every rating bureau making rates on or for prop- office within erty located in Michigan shall maintain an office within this state, and every fire insurance company or other insurer aforesaid shall in its annual application for a license specify each rating bureau making rates upon property located within this state of which it is a member, and, during the year, shall file notice of any other such rating bureaus of which it has become a member. state. inspected, whom SEC. 8. Every rating bureau engaged in making rates or Risks, how estimates for rates for fire insurance on property in this etc. state shall inspect every risk specifically rated by it upon schedule, and make a written survey of such risks which shall Survey. be filed as a permanent record in the office of such bureau. A true copy of each such survey shall be furnished to the Copy of, to owner upon his request, and to the commissioner of insurance furnished. within ten days after such schedule has been completed. Such schedules, so filed, shall be deemed confidential records in Deemed the insurance department, and no person not employed in such department shall have access thereto without the written consent of the owner of the property scheduled and upon express authority of the commissioner. Every such schedule What to shall show the name or names of the rater or raters who inspected the risk and who figured the rates. Every such Filing. bureau shall file with the commissioner of insurance at the time of applying for its license a true copy of all basic confidential. show. Approval. May require filing of schedules. May examine bureau. Powers of commissioner. Refusal to furnish information a misdemeanor. Excessive rates prohibited. schedules used by it in figuring rates and of all rules or practices pertaining to the final rate, including all amendments thereto, rules and regulations thereunder, and all interpretations thereof, and of its instructions to its agents, inspectors or other employes in relation to the application thereof; and shall also, from time to time as the same are made, furnish said commissioner with true copies of all new changes, modifications, additions thereto or interpretations thereof. No such filings shall be effective or be employed in this state unless and until approved by said commissioner, and the commissioner shall, after reasonable notice and hearing thereon, have the authority to disapprove any particular part, rule, requirement or interpretation pertaining to such filings and to approve the rest, or to revoke his approval once given to the whole or any part of such filings, upon further consideration, in which case he shall notify the bureau of his action; and no such bureau shall thereafter use or employ any schedule, rule, interpretation, or part thereof, so disapproved. SEC. 9. The commissioner of insurance may address inquiries to any rating bureau which is or has been engaged in making rates or estimates for rates for fire insurance upon property of this state, in relation to the organization, maintenance or operation, or any other matter connected with its transactions, and shall require the filing of schedules, rates. forms, rules, regulations and such other information as may be required, and it shall be the duty of each such rating bureau to promptly make such filing or reply to such inquiries in writing. The commissioner of insurance shall have the power to examine any such rating bureau as often as he deems it expedient to do so, and shall have access to all the books, determinations, documents, schedules, forms and records of such bureau for the purpose of obtaining information for the use of the state. The commissioner shall have the same power of examination and inspection of such bureaus as is vested in him by this act with respect to insurance companies. Any owner, officer, or employe of any such bureau who refuses to permit any such examination or inspection or who wilfully hinders or delays the same, or who refuses to furnish the commissioner any information in his possession or under his control, as provided for herein, shall be deemed guilty of a misdemeanor and in addition thereto the license of such bureau or the owner, officer or employe thereof, or all of them may be revoked or suspended by the commissioner as in other cases. SEC. 10. No fire insurance company or other insurer against the risk of fire or lightning shall fix or charge any rate for fire insurance upon property in this state which is excessive or which discriminates unfairly between risks in the application of like charges and credits, or which discriminates unfairly between risks of essentially the same hazards, wherever located, regard being had to the relative degree of protection against fire, or which discriminates unfairly against or in favor of classes, or communities as a whole. Every rating |