The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 5235 October 7, 1977 INSURANCE: Automobile rates. Discrimination in setting rates. Automobile insurance rates based solely on an applicant's age, sex or marital status are unlawful. Honorable Richard J. Allen State Senator State Capitol Lansing, Michigan 48909 You have requested my opinion on the legality of setting higher automobile insurance premiums solely on the basis of an applicant's age, sex or marital status. Automobile insurance rates are subject to the approval of the Insurance Commissioner under Chapter 24 of the Insurance Code of 1956, 1956 PA 218, as amended; MCLA 500.100 et seq; MSA 24.1100 et seq, which provides in pertinent part: '(1) All rates shall be made in accordance with the following provisions: '(a) Due consideration shall be given to past and prospective loss experience within and outside this state, to catastrophe hazards, if any, to a reasonable margin for underwriting profit and contingencies, to dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers, to past and prospective expenses both countrywide and those specially applicable to this state, to underwriting practice, judgment, and to all other relevant factors within and outside this state. (c) Risks may be grouped by classification for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which measure variations in hazards or expense provisions, or both. Such rating plans may measure any differences among risks that may have a probable effect upon losses or expenses as provided for in subdivision (a). '(d) Rates shall not be excessive, inadequate or unfairly discriminatory. . . .' (emphasis added) MCLA 500.2403; MSA 24.12403 In Bentley v Allstate Insurance Co, 227 Ga 708, 712; 182 SE2d 770, 773 (1971), the Georgia Supreme Court held under a similar rating law that 'unfair discrimination arises when like policy-holders are treated differently.' Thus, rate differentials which are not reasonably related to their underlying loss experience are unfairly discriminatory and are prohibited. Further, effective April 1, 1977, the Uniform Trade Practices Act, Chapter 20 of the Insurance Code of 1956, supra, provides: 'Unfair methods of competition and unfair or deceptive acts or practices in the business of insurance include: (c) Charging a different rate for the same coverage based on sex, marital status, age, residence, location of risk, handicap, or lawful occupation of the risk unless the rate differential is based on sound actuarial principles, a reasonable classification system, and is related to the actual and credible loss statistics or reasonably anticipated experience in the case of new coverages. This subdivision shall not apply if the rate has previously been approved by the commissioner.' (emphasis added) MCLA 500.2027; MSA 24.12027 The provision 'This subdivision shall not apply if the rate has previously been approved by the commissioner' does not apply to rates which have been approved by operation of law and must be read in pari materia with the authority of the Insurance Commissioner to withdraw approval of automobile insurance rates under section 2418 of the Insurance Code of 1956, supra. Thus, the Commissioner will continue to have authority to withdraw approval of any rates which are unfairly discriminatory but which have been previously approved either by action of the Commissioner or by operation of law. I would also call to your attention the following provision of the Insurance Code of 1956, supra. 'No policy including any class of motor vehicle coverage shall be cancelled by the insurer, nor shall the insurer refuse to issue a renewal policy, nor shall the premium for any such policy be increased solely because an insured has reached the age of 65 years, if the insured still have a valid Michigan motor vehicle operator's license.' (emphasis added) MCLA 500.3021; MSA 24.13021 Thus, the automobile insurance premiums may not be increased solely because an insured has reached the age of 65 years. Therefore, it is my opinion that the setting of higher automobile insurance premiums solely on the basis of an applicant's age, sex or marital status is a violation of law. Rate differentials reasonably related to underlying loss experience are permissible. Frank J. Kelley Attorney General