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I I -239- STATE OF MICHIGAN _V1 A, . . "~' WILLIAM G. MILLIKEN, Govemor DEPARTMENT OF COMMERCE WILLIAM F. MtLAUGHLIN. Director August 26, 1980 Dr. Maurice S. Reizen, Director Department of Public Health 3500 N. Logan Lansing, Michigan 48909 Dear Dr. Reizen: INSURANCE BUREAU 1048 PIERPONT P O. BOX 30220 tJ\NSINQ. MICHIQAl/ sa90p This letter is to assure you that the Insurance Bureau will assist your department in whatever way it can to provide information regarding smoking and insurance premiums to the panel studying the problems of smoking and health. I have asked Beverly Wiener of my staff to contact Mr. Fong immediately to see what specific questions he may have. In general terms, I can give you some indication of how insurers treat smoking as an element in determining premiums. The factors which may be used for rate classifications in auto and home insurance, including renters insurance, are specifically listed in P.A. 145 of 1979. These classifications which take effect January 1, 1981, include the use of smoking materials within the structure as an allowable rating factor for home insurance. Although the presence of smokers is not a mandatory rating factor, many insurers already offer a non-smoker's discount for home insurance, and at least as many will continue to do so after January 1. You have probably seen advertising regarding these discounts, as the companies have run national television ad compaigns marketing this feature. The classifications allowed for auto insurance rating do not include use of smoking materials, and there are presently no insurers in Michigan who charge differential auto rates for smokers and non-smokers. Based on the lack of evidence linking smoking to an increased probability of loss, I would not support amending P.A. 145 of 1979 to mandate smoking as an auto rating factor at this time. A number of life insurers do offer differential premium structures for smokers and non-smokers. A list of insurers which offer non-smoker discounts could probably be compiled by surveying the life insurance market, or perhaps obtained from a trade association s~q6,a%~e r~tc~LTH Council of Life Insurers. RECEIVED AUG26t980 v1itECTOR'S OFFICE F f I I I I I I i I- t t t L L i

I F f ~ II Dr. Maurice S. Reizen, Director Page 2 August 26, 1980 A comparable association for health insurers, the Health Insurance Association of America, may also have information regarding health insurance premiums and smoking. Though there may be some exceptions, I am not aware of any major health insurer which charges different rates for smokers. Since the majority of people are covered by employer- provided group health insurance or governmental health programs that do not surcharge for smokers, recommendations in this area will have to take into account the uneven impact that a smoker's rate for health insurance would have. These are just a few preliminary abservations regarding the treatment of smoking by insurers for various types of insurance. I am sure that Ms. Wiener will be able to provide more specific information. E. C. Mackey Acting Commissioner of Ins cc: Sunny Fong Beverly Wiener m . O~ ,.J m J -240- ,