(1) A municipality or insurer may request a variation of the application of a rule promulgated pursuant to this act by written application to the board.

    (2) The entire board shall act as a hearing body in accordance with Act No. 306 of the Public Acts of 1969, as amended, being section 24.201 to 24.315 of the Michigan Compiled Laws, to review and render decisions on the recommendations submitted to the board pursuant to section 2(5) regarding a contested case involving the application of a rule promulgated pursuant to this act to any municipality rated by the board as provided in section 6. After a hearing, the board may vary the application of the contested rule if the enforcement of the rule without the variation would do manifest injustice and would be contrary to the spirit and purpose of the rule or the public interest.

    (3) A decision of the board to vary the application of a rule shall specify in what manner the variation is made, the conditions upon which it is made, and the reasons for the variation.