STATUS OF INSURANCE CREDIT SCORING RULES - November 13, 2008

On March 25, 2005, the Commissioner promulgated rules banning the use of insurance credit scoring in the rating and underwriting of automobile, home, and other personal lines of insurance. The Insurance Institute of Michigan, the Michigan Insurance Coalition, and several insurers challenged the rules in the Barry County Circuit Court.

On April 25, 2005, Judge James H. Fisher issued an opinion and order declaring the rules invalid and permanently enjoined the Commissioner from enforcing them against any Plaintiff in the action.

Commissioner Linda A. Watters immediately appealed Judge Fisher's decision to the Michigan Court of Appeals, case number 262385.  After the filing of briefs, including an amicus brief in support of the ban from the Michigan House Democratic Caucus, the Court of Appeals heard oral argument on October 10, 2006.  Both sides submitted supplemental authority to the court in September 2007.  On August 21, 2008, the three Court of Appeals judges issued a split decision and three separate opinions.  The common points among the three opinions resulted in the Court of Appeals vacating Circuit Judge Fisher’s April 25, 2005 order and injunction and lifting the stay he had imposed on the enforcement of the rules.  Under Michigan Court Rules, MCR 7.215(F)(1), a Court of Appeals Judgment is effective after the expiration of the time for filing an application for leave to appeal to the Supreme Court, or, if such an application is filed, after the disposition of the case by the Supreme Court, unless the Court orders otherwise.

On October 1, 2008, current Commissioner Ken Ross filed an application for leave to appeal and specifically asked the Supreme Court to rule that the insurance credit scoring rules are valid.  That case number is 137400.  On October 2, 2008, the insurance industry Plaintiffs filed an application for leave to appeal and specifically asked the Supreme Court to reverse the Court of Appeals and reinstate the April 25, 2005 order of Barry County Circuit Judge James H. Fisher.  That case number is 137407. 

Both sides filed briefs in support of the applications, and each responded to the brief filed by the opposing party.  The Supreme Court has taken no action yet on these counter applications for leave to appeal.  You may follow the progress of the case by typing the Court of Appeals case number – 262385 - into the case inquiry field at the Court of Appeals website: http://courtofappeals.mijud.net   The screen that appears will show all activity on the case in both appellate courts in chronological order from the initial filing in the Court of Appeals in May 2005 until present.

The challenged rules appear in the Michigan Administrative Code as R 500.2151 to R 500.2155 and are available to review under those numbers at: http://www.michigan.gov/orr