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Main Body

Michigan Insurance Regulation

General State Law

The Department of Insurance and Financial Services

The Chief Executive Officer of DIFS is the Director


Director of Insurance

Directs the department

Promulgates rules and regulations to execute and enforces provisions of the insurance laws of the state

Can investigate anyone in the insurance business


Powers and Duties of the Director

Hold hearings

Levy fines

Suspension of licenses

May issue cease and desist orders

May issue subpoenas, but not enforce them


Transacting insurance

Soliciting, negotiating, or selling an insurance product

In order to receive commission, a producer must be licensed at the time of the sale

Acting without a license

-Anyone that negotiates, solicits, receives commission, or sells any insurance product must be licensed in the State of Michigan. If they act in these ways and do not have a license, they are in violation of the Michigan Insurance Code.




Exceptions ~those who do not need a license

Persons who work for an insurance company or agency who DO NOT receive commission and perform only administrative functions

Persons who enroll people in Group Plans

Persons engaged in the administration of mass marketing

So an unlicensed individual can

Set up appointments

Take information necessary to complete the application

Take claims information




In insurance, a certain percentage of premium produced that is retained as compensation by insurance agents and brokers.

Who can get a license?


Business Entities

Corporations, partnerships, LLC, and other legal entities


Resident Producer

A resident producer must

Be at least 18 years of age

Complete pre-licensing education within one year of applying for license

Apply for a license through the National Insurance Producer’s Registry

Pay the application fee

Pass the exam

Not have committed any act that is grounds for denial, suspension, or revocation

Reside in Michigan—do not need to be a US citizen

License Types

Business entity

Entity that acts as an insurance producer must have a license

Must have

  • Completed the application
  • Paid the fee
  • Designated a licensed producer to be responsible for the entity’s compliance with state insurance laws, rules, and regulations


Individual licensed in another state moves to Michigan

Show they are licensed in good standing in their home state

Apply for a Michigan license within 90 days of revoking Resident status of their current license

NOT necessary to complete the pre-licensing program of study or take the Michigan producer’s exam



Anyone who provides counsel for a fee regarding insurance policies, values, terms, or provisions must be licensed as an counselor. Does not apply to agents who give advice or lawyers

To obtain a license:

Complete application, pay fee, pass exam

Must have an agreement signed by both counselor and client

Agreement must

Outline the work to be performed and fee

Disclose if commission is to be received

Keep on file for two years



Producer Appointment Requirements

Licensed person may not engage in insurance business until an authorized insurer appoints the licensee to act as a producer

Insurer must notify state within 15 days of

First app or signing agency contract

Must file an approved Notice of Appointment

Can represent more than one insurer

No limit

Appointment in force until terminated by insurer or withdrawn by producer

Director has 30 days to approve or disapprove any Notice of Appointment

If the Director finds the producer not eligible for appointment he must notice the insurer within 5 days

Any appointment fees shall be paid by the insurance company


Producer Appointment Termination

Insurers are required to notify the Director of termination

The termination notice will take effect within 30 days of being filed

The termination of appointment should state the reason why

Insurer must inform the producer within 15 days of informing the Director

The producer has 30 days to send a response to the claims

The action only cancels the appointment; does not cancel license with state


Resident Producer info

Change name

Notify Commissioner within 30 days

Change residential or business address

Notify Commissioner within 30 days

Assumed Name

An assumed name is one that is different than the official name of the licensee as maintained in our database at the Department of Insurance and Financial Services (DIFS).



Continuing Education

Must complete 24 hours every two years

Classroom or self-study programs

Must be approved by the Director

Three of the 24 hours must be in ethics

Director can waive if hardship

Reciprocal agreements with other states


Fail to comply

90-day grace period

May not sell or act as producer except to service existing policies

If, at the end of the grace period, producer still has not meet requirements, license is cancelled

Unfair Claim Practices

An insurer must pay claims within 30 days of receipt of the loss or inform the insured what constitutes a valid proof of loss

If a proof is submitted, claim must be paid with in 60 days of receipt

If not paid, benefits must bear a simple interest from the date 60 days after satisfactory proof of loss was received by the insurer at a rate of 12% per annum

Insurers must play fair
Act in Good Faith and not compel insureds to initiate litigation to receive a rightful payment.


Misrepresent the pertinent facts of the coverage in question

Fail to acknowledge a claim in a timely manner

Fail to conduct a reasonable and prompt investigation

Fail to pay claims without conducting a reasonable investigation

Fail to affirm or deny a claim within a reasonable time

Fail to act in GOOD FAITH

Compel insured to initiate litigation to receive payment


Producer Regulations

Breach of fiduciary duty

Selling under intimidation or threat

Incorrect material on license application

Obtaining a license through misrepresentation or fraud

Forging a name to insurance document

Misrepresenting the terms of contract

Conviction of a felony

Violating the unfair trade practice act

Engaging in fraudulent transaction



Unfair and Prohibited Trade Practices


Leading someone to believe that certain benefits, conditions, or advantages exist in a policy when they do not. In short, it is a lie.


Using a misrepresentation to induce a person to drop existing insurance and purchase new insurance with a new producer or company


False information and advertising

Cannot use any untrue, deceptive, or misleading statements

Anything that is written or is said to client is considered advertisement



Making any oral or written statements that is false or derogatory as to the financial condition of any insurer and that is circulated to injure any person or company



A group that avoids a certain company or producer to steer business to another company or producer

False Financial Statements

It is prohibited to file any financial statement with any public official that contains any false information

False Statements on an Application

It is a violation of the Uniform Trade Practices Act for a produce to make a material representation on any application in order to receive any benefits including commissions.


Failure to Provide Rates to an Insured Upon Request

Producers and insurance companies must provide insurance quotes in a timely fashion from when it was requested. They will be in violation of the Uniform Trade Practices Act if they do not provide the quote in a timely manner


Rebating is an illegal inducement to purchase insurance. Rebates can include payments from a portion of the agent’s commission, gifts, shares of stock, or anything of value when the purpose is to convince a prospect to purchase insurance. Agents are also not permitted to offer a rebate of the premium payable on any policy as an inducement unless it is specified in the contract. Agents are allowed to give applicants token gifts, but these must be merchandise valued at less than $5.


Illegal inducement

Including an insured into a drawing or contest in exchange for the purchase of an insurance policy


Making or permitting any unfair discrimination between individuals of the same class and essentially the same hazard in the rate charged for a policy or in dividends, benefits, or other contract terms

Refusing to insure or charging a different rate based on

Sex, color, creed, race, or national origin

False Statements

If a producer makes a misrepresentation on an application to receive any benefit including commission, a violation has occurred.



Uniform Trade Practices Act

Fraud- lying for financial gain

False report of death

Filing an application with material misrepresentations

Making material misrepresentations involving the filing of a claim

Financial loss: loss of earnings, out of pocket, repair or replacement costs, investigative cost, and claim payments. Additional premium would not be considered a financial loss.


Immunity: Absent of true malice anyone reporting suspects is immune from civil liability

Anyone found guilty of committing fraud will be convicted of a Felony

4 years in jail and a $50,000 fine



We need to give the applicant a notice telling them:

Types of financial information we’re collecting

Other types of private information

To whom the producer discloses this information

The applicant must be notified of their right to privacy during the initial transaction

If the consumer says NO then the producer may not share the information with any non-affiliated 3rd party

We can show the underwriter or investigator looking into insurance fraud




Due Process and Disciplinary Action


If found in violation the Director could:

Issue a cease and desist

Suspend the producer’s license

Put the producer on probation

Revoke the producer’s license

Order the producer to pay restitution

Fine the producer


Licensing Law

Unknowing $ 500 per occurrence$25,000 aggregate

Knowing$2,500 per occurrence$25,000 aggregate

Violation of Cease and Desist Order

$10,000 per occurrence$50,000 aggregate
















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