HOUSE BILL No. 5313 October 23, 2001, Introduced by Rep. Sanborn and referred to the Committee on Insurance and Financial Services. A bill to amend 1956 PA 218, entitled "The insurance code of 1956," by amending sections 1201, 1202, 1203, 1204, 1204c, 1205, 1206, 1209, 1214, 1224, 1234, 1238, 1242, 1243, 1244, 1905, and 3310 (MCL 500.1201, 500.1202, 500.1203, 500.1204, 500.1204c, 500.1205, 500.1206, 500.1209, 500.1214, 500.1224, 500.1234, 500.1238, 500.1242, 500.1243, 500.1244, 500.1905, and 500.3310), section 1201 as amended by 1980 PA 340, section 1204 as amended by 1986 PA 173, section 1204c as amended by 1998 PA 540, section 1206 as amended by 1992 PA 1, section 1209 as amended by 1980 PA 461, section 1214 as amended by 1986 PA 173, section 1224 as amended by 2000 PA 35, section 1234 as amended by 1981 PA 1, section 1238 as added by 1984 PA 5, section 1243 as added by 1994 PA 409, section 1244 as amended by 1984 PA 7, section 1905 as amended by 1996 PA 548, and section 3310 as amended by 1986 03087'01 DKH2 PA 10, and by adding sections 1201a, 1204e, 1206a, 1206b, 1208a, 1208b, 1211, 1211a, 1211b, 1239, 1240, 1246, and 1247. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1201. (1) Except as provided in sections 1202 and21203 and the surplus lines insurance act, a person shall not3solicit insurance, bind coverage, or in any other manner act as4an insurance agent unless the person meets all of the following5requirements:6(a) Is authorized in writing by an insurer authorized to7transact insurance in this state, which authorization specifies8the extent of the person's authority to act for the insurer.9(b) The person is licensed to act as an insurance agent in10accordance with this chapter.11(2) Subsection (1) shall not affect the apparent authority12of an agent.13(3) Except as provided in section 1202, an insurer may not14appoint, employ, or in any manner receive the benefit of business15done or services rendered in this state by a person acting as an16agent unless that person is employed by, or is authorized to act17in writing by, the insurer and the person is licensed as an agent18in accordance with this chapter.19(4) A person who is licensed as an agent may represent,20within the lines of insurance permitted by the license, any21insurer authorized to transact insurance in this state if the22insurer has properly notified the commissioner of the appointment23or employment of that person as its agent.AS USED IN THIS 24 CHAPTER: 03087'01 3 1 (A) "AGENT" EXCEPT AS PROVIDED IN SECTION 1243 MEANS AN 2 INSURANCE PRODUCER. 3 (B) "BUSINESS ENTITY" MEANS A CORPORATION, ASSOCIATION, 4 PARTNERSHIP, LIMITED LIABILITY COMPANY, LIMITED LIABILITY PART- 5 NERSHIP, OR OTHER LEGAL ENTITY. 6 (C) "HOME STATE" MEANS THE DISTRICT OF COLUMBIA OR ANY STATE 7 OR TERRITORY OF THE UNITED STATES IN WHICH AN INSURANCE PRODUCER 8 MAINTAINS HIS OR HER PRINCIPAL PLACE OF RESIDENCE OR PRINCIPAL 9 PLACE OF BUSINESS AND IS LICENSED TO ACT AS AN INSURANCE 10 PRODUCER. 11 (D) "INSURANCE" MEANS ANY OF THE LINES OF AUTHORITY IN CHAP- 12 TER 6. 13 (E) "INSURANCE PRODUCER" MEANS A PERSON REQUIRED TO BE 14 LICENSED UNDER THE LAWS OF THIS STATE TO SELL, SOLICIT, OR NEGO- 15 TIATE INSURANCE. 16 (F) "LICENSE" MEANS A DOCUMENT ISSUED BY THIS STATE'S COM- 17 MISSIONER AUTHORIZING A PERSON TO ACT AS AN INSURANCE PRODUCER 18 FOR THE QUALIFICATIONS SPECIFIED IN THE DOCUMENT. THE LICENSE 19 ITSELF DOES NOT CREATE ANY ACTUAL, APPARENT, OR INHERENT AUTHOR- 20 ITY IN THE HOLDER TO REPRESENT OR COMMIT AN INSURER. 21 (G) "LIMITED LINE CREDIT INSURANCE" INCLUDES CREDIT LIFE, 22 CREDIT DISABILITY, CREDIT PROPERTY, CREDIT UNEMPLOYMENT, INVOLUN- 23 TARY UNEMPLOYMENT, MORTGAGE LIFE, MORTGAGE GUARANTY, MORTGAGE 24 DISABILITY, GUARANTEED AUTOMOBILE PROTECTION INSURANCE, AND ANY 25 OTHER FORM OF INSURANCE OFFERED IN CONNECTION WITH AN EXTENSION 26 OF CREDIT THAT IS LIMITED TO PARTIALLY OR WHOLLY EXTINGUISHING 03087'01 4 1 THAT CREDIT OBLIGATION THAT THE COMMISSIONER DETERMINES SHOULD BE 2 DESIGNATED A FORM OF LIMITED LINE CREDIT INSURANCE. 3 (H) "LIMITED LINE CREDIT INSURANCE PRODUCER" MEANS A PERSON 4 WHO SELLS, SOLICITS, OR NEGOTIATES 1 OR MORE FORMS OF LIMITED 5 LINE CREDIT INSURANCE COVERAGE TO INDIVIDUALS THROUGH A MASTER, 6 CORPORATE, GROUP, OR INDIVIDUAL POLICY. 7 (I) "LIMITED LINES INSURANCE" MEANS ANY OF THE FOLLOWING: 8 (i) MARINE INSURANCE AS DEFINED IN SECTION 614. 9 (ii) CREDIT INSURANCE AS DESCRIBED IN SECTION 624(1)(E). 10 (iii) SURETY AND FIDELITY INSURANCE AS DEFINED IN 11 SECTION 628. 12 (iv) LEGAL EXPENSE INSURANCE AS DEFINED IN SECTION 618. 13 (v) LIVESTOCK INSURANCE AS DESCRIBED IN SECTION 624(1)(G). 14 (vi) MALPRACTICE INSURANCE AS DESCRIBED IN 15 SECTION 624(1)(H). 16 (vii) PLATE GLASS INSURANCE AS DESCRIBED IN 17 SECTION 624(1)(C). 18 (viii) ANY OTHER MISCELLANEOUS INSURANCE DESCRIBED IN 19 SECTION 624(1)(I). 20 (ix) ANY OTHER LINE OF INSURANCE THAT THE COMMISSIONER CON- 21 SIDERS NECESSARY TO RECOGNIZE FOR THE PURPOSES OF COMPLYING WITH 22 SECTION 1206A(5). 23 (J) "LIMITED LINES PRODUCER" MEANS A PERSON AUTHORIZED BY 24 THE COMMISSIONER TO SELL, SOLICIT, OR NEGOTIATE LIMITED LINES 25 INSURANCE. 26 (K) "NEGOTIATE" MEANS THE ACT OF CONFERRING DIRECTLY WITH OR 27 OFFERING ADVICE DIRECTLY TO A PURCHASER OR PROSPECTIVE PURCHASER 03087'01 5 1 OF A PARTICULAR CONTRACT OF INSURANCE CONCERNING ANY OF THE 2 SUBSTANTIVE BENEFITS, TERMS, OR CONDITIONS OF THE CONTRACT, PRO- 3 VIDED THAT THE PERSON ENGAGED IN THAT ACT EITHER SELLS INSURANCE 4 OR OBTAINS INSURANCE FROM INSURERS FOR PURCHASERS. 5 (l) "SELL" MEANS TO EXCHANGE A CONTRACT OF INSURANCE BY ANY 6 MEANS, FOR MONEY OR ITS EQUIVALENT, ON BEHALF OF AN INSURANCE 7 COMPANY. 8 (M) "SOLICIT" MEANS ATTEMPTING TO SELL INSURANCE OR ASKING 9 OR URGING A PERSON TO APPLY FOR A PARTICULAR KIND OF INSURANCE 10 FROM A PARTICULAR COMPANY. 11 (N) "TERMINATE" MEANS THE CANCELLATION OF THE RELATIONSHIP 12 BETWEEN AN INSURANCE PRODUCER AND THE INSURER OR THE TERMINATION 13 OF A PRODUCER'S AUTHORITY TO TRANSACT INSURANCE. 14 SEC. 1201A. (1) A PERSON SHALL NOT SELL, SOLICIT, OR NEGO- 15 TIATE INSURANCE IN THIS STATE FOR ANY LINE OF INSURANCE UNLESS 16 THE PERSON IS LICENSED FOR THAT QUALIFICATION IN ACCORDANCE WITH 17 THIS CHAPTER. 18 (2) THIS CHAPTER DOES NOT APPLY TO EXCESS AND SURPLUS LINES 19 AGENTS AND BROKERS LICENSED UNDER CHAPTER 19 EXCEPT AS PROVIDED 20 IN SECTIONS 1204E AND 1206A. 21 Sec. 1202.(1) A natural person resident in this state may22solicit applications for insurance and collect premiums on behalf23of a licensed agent resident in this state if he is so authorized24to act by a written contract with the agent, and the contract25specifies the extent of his authority to act, he is licensed to26act as a solicitor in accordance with this chapter and the agent27has notified the commissioner of the contract.03087'01 6 1(2) A clerical or administrative employee of an insurance2agent may take insurance applications or receive premiums in the3office of his employer if the activities are incidental to cleri-4cal or administrative duties and the employee's compensation does5not vary with the volume of the applications or premiums.6(3) A clerical or administrative employee of an insurance7agent may bind coverage only within the confines of the agent's8main office.9(4) A regular salaried officer of an insurer or a manager of10an insurer may act as an agent without being licensed as an agent11in the transaction of insurance for his insurer if his compensa-12tion does not vary with the amount of insurance transacted.13 (1) THIS CHAPTER SHALL NOT BE CONSTRUED TO REQUIRE AN 14 INSURER TO OBTAIN AN INSURANCE PRODUCER LICENSE. AS USED IN THIS 15 SECTION, THE TERM "INSURER" DOES NOT INCLUDE AN INSURER'S OFFI- 16 CERS, DIRECTORS, EMPLOYEES, SUBSIDIARIES, OR AFFILIATES. 17 (2) A LICENSE AS AN INSURANCE PRODUCER IS NOT REQUIRED OF 18 ANY OF THE FOLLOWING: 19 (A) AN OFFICER, DIRECTOR, OR EMPLOYEE OF AN INSURER OR OF AN 20 INSURANCE PRODUCER, PROVIDED THAT THE OFFICER, DIRECTOR, OR 21 EMPLOYEE DOES NOT RECEIVE ANY COMMISSION ON POLICIES WRITTEN OR 22 SOLD TO INSURE RISKS RESIDING, LOCATED, OR TO BE PERFORMED IN 23 THIS STATE AND MEETS 1 OR MORE OF THE FOLLOWING: 24 (i) THE OFFICER'S, DIRECTOR'S, OR EMPLOYEE'S ACTIVITIES ARE 25 EXECUTIVE, ADMINISTRATIVE, MANAGERIAL, CLERICAL, OR A COMBINATION 26 OF THESE, AND ARE ONLY INDIRECTLY RELATED TO THE SALE, 27 SOLICITATION, OR NEGOTIATION OF INSURANCE. 03087'01 7 1 (ii) THE OFFICER'S, DIRECTOR'S, OR EMPLOYEE'S FUNCTION 2 RELATES TO UNDERWRITING, LOSS CONTROL, INSPECTION, OR THE PRO- 3 CESSING, ADJUSTING, INVESTIGATING, OR SETTLING OF A CLAIM ON A 4 CONTRACT OF INSURANCE. 5 (iii) THE OFFICER, DIRECTOR, OR EMPLOYEE IS ACTING IN THE 6 CAPACITY OF A SPECIAL AGENT OR AGENCY SUPERVISOR ASSISTING INSUR- 7 ANCE PRODUCERS WHERE THE PERSON'S ACTIVITIES ARE LIMITED TO PRO- 8 VIDING TECHNICAL ADVICE AND ASSISTANCE TO LICENSED INSURANCE PRO- 9 DUCERS AND DO NOT INCLUDE THE SALE, SOLICITATION, OR NEGOTIATION 10 OF INSURANCE. 11 (B) A PERSON WHO PERFORMS AND RECEIVES NO COMMISSION FOR ANY 12 OF THE FOLLOWING SERVICES: 13 (i) SECURING AND FURNISHING INFORMATION FOR THE PURPOSE OF 14 GROUP LIFE INSURANCE, GROUP PROPERTY AND CASUALTY INSURANCE, 15 GROUP ANNUITIES, OR GROUP OR BLANKET ACCIDENT AND HEALTH 16 INSURANCE. 17 (ii) SECURING AND FURNISHING INFORMATION FOR THE PURPOSE OF 18 ENROLLING INDIVIDUALS UNDER PLANS, ISSUING CERTIFICATES UNDER 19 PLANS, OR OTHERWISE ASSISTING IN ADMINISTERING PLANS. 20 (iii) PERFORMING ADMINISTRATIVE SERVICES RELATED TO MASS 21 MARKETED PROPERTY AND CASUALTY INSURANCE. 22 (C) AN EMPLOYER OR ASSOCIATION OR ITS OFFICERS, DIRECTORS, 23 EMPLOYEES, OR THE TRUSTEES OF AN EMPLOYEE TRUST PLAN, TO THE 24 EXTENT THAT THE EMPLOYERS, OFFICERS, EMPLOYEES, DIRECTORS, OR 25 TRUSTEES ARE ENGAGED IN THE ADMINISTRATION OR OPERATION OF A PRO- 26 GRAM OF EMPLOYEE BENEFITS FOR THE EMPLOYER'S OR ASSOCIATION'S OWN 27 EMPLOYEES OR THE EMPLOYEES OF ITS SUBSIDIARIES OR AFFILIATES, 03087'01 8 1 WHICH PROGRAM INVOLVES THE USE OF INSURANCE ISSUED BY AN INSURER, 2 AS LONG AS THE EMPLOYERS, ASSOCIATIONS, OFFICERS, DIRECTORS, 3 EMPLOYEES, OR TRUSTEES ARE NOT IN ANY MANNER COMPENSATED, 4 DIRECTLY OR INDIRECTLY, BY THE COMPANY ISSUING THE CONTRACTS. 5 (D) EMPLOYEES OF INSURERS OR ORGANIZATIONS EMPLOYED BY 6 INSURERS WHO ARE ENGAGING IN THE INSPECTION, RATING, OR CLASSIFI- 7 CATION OF RISKS, OR IN THE SUPERVISION OF THE TRAINING OF INSUR- 8 ANCE PRODUCERS AND WHO ARE NOT INDIVIDUALLY ENGAGED IN THE SALE, 9 SOLICITATION, OR NEGOTIATION OF INSURANCE. 10 (E) A PERSON WHOSE ACTIVITIES IN THIS STATE ARE LIMITED TO 11 ADVERTISING WITHOUT THE INTENT TO SOLICIT INSURANCE IN THIS STATE 12 THROUGH COMMUNICATIONS IN PRINTED PUBLICATIONS OR OTHER FORMS OF 13 ELECTRONIC MASS MEDIA WHERE DISTRIBUTION IS NOT LIMITED TO RESI- 14 DENTS OF THE STATE, PROVIDED THAT THE PERSON DOES NOT SELL, 15 SOLICIT, OR NEGOTIATE INSURANCE THAT WOULD INSURE RISKS RESIDING, 16 LOCATED, OR TO BE PERFORMED IN THIS STATE. 17 (F) A PERSON WHO IS NOT A RESIDENT OF THIS STATE WHO SELLS, 18 SOLICITS, OR NEGOTIATES A CONTRACT OF INSURANCE FOR COMMERCIAL 19 PROPERTY AND CASUALTY RISKS TO AN INSURED WITH RISKS LOCATED IN 20 MORE THAN 1 STATE INSURED UNDER THAT CONTRACT, PROVIDED THAT THAT 21 PERSON IS OTHERWISE LICENSED AS AN INSURANCE PRODUCER TO SELL, 22 SOLICIT, OR NEGOTIATE THAT INSURANCE IN THE STATE WHERE THE 23 INSURED MAINTAINS ITS PRINCIPAL PLACE OF BUSINESS AND THE CON- 24 TRACT OF INSURANCE INSURES RISKS LOCATED IN THAT STATE. 25 (G) A SALARIED FULL-TIME EMPLOYEE WHO COUNSELS OR ADVISES 26 HIS OR HER EMPLOYER CONCERNING THE INSURANCE INTERESTS OF THE 27 EMPLOYER OR OF THE SUBSIDIARIES OR BUSINESS AFFILIATES OF THE 03087'01 9 1 EMPLOYER PROVIDED THAT THE EMPLOYEE DOES NOT SELL OR SOLICIT 2 INSURANCE OR RECEIVE A COMMISSION. 3 Sec. 1203.(1) A newsboy or a manager of a newspaper dis-4tribution office may take applications for newspaper subscriber5limited personal accident insurance policies and may collect pre-6miums for the policies if these activities are incidental to his7duties as a newsboy or manager.8 (1)(2)A person may act as anagentINSURANCE PRODUCER 9 only for a fraternal benefit society authorized to transact 10 insurance in this state without being licensed as an insurance 11agentPRODUCER ifhe devotesless than 50% of his OR HER time 12 IS DEVOTED to the solicitation and procurement of insurance con- 13 tracts for the society. A person who in the preceding calendar 14 year solicits or procures life insurance contracts on behalf of 15 any society in an amount of insurance in excess of $50,000.00, 16 or, in case of any other kind of insurancewhichTHAT the soci- 17 ety might write, on the persons of more than 25 individuals and 18 who has received a commission or other compensationtherefor19 FOR THE SALE OF THAT INSURANCE is conclusively presumed to be 20 devoting 50% of his OR HER time to the solicitation or procure- 21 ment of insurance contracts for the society. AN INSURANCE 22 PRODUCER FOR A FRATERNAL BENEFIT SOCIETY AUTHORIZED TO TRANSACT 23 INSURANCE IN THIS STATE BEFORE MARCH 1, 2002 MAY, UPON APPLICA- 24 TION TO THE COMMISSIONER BEFORE MARCH 1, 2003, BE LICENSED AS AN 25 INSURANCE PRODUCER TO REPRESENT THAT FRATERNAL BENEFIT SOCIETY 26 WITHOUT WRITTEN EXAMINATION. 03087'01 10 1 (2)(3)An attorney-in-fact of a reciprocal or of an 2 inter-insurance exchange may act as anagentINSURANCE PRODUCER 3 for the reciprocal or exchange. 4 Sec. 1204. (1)An application for a license to act as an5agent shall be made to the commissioner and be accompanied by a6notice of appointment from the sponsoring insurer. The applica-7tion and the notice of appointment shall be on forms prescribed8by the commissioner.A RESIDENT INDIVIDUAL APPLYING FOR AN 9 INSURANCE PRODUCER LICENSE SHALL PASS A WRITTEN EXAMINATION 10 UNLESS EXEMPT PURSUANT TO SECTION 1206B. 11 (2) Within a reasonable time after receipt of a properly 12 completed application,and notice of appointment forms,the 13 commissioner shall subject the applicant to a written 14 examination.Beginning July 1, 1987, anAN applicant shall not 15 be given an examination unless the applicant has completedan16insurance agentA program of study registered with the commis- 17 sioner pursuant to section 1204a.AAN APPLICANT SHALL FILE A 18 certificate of completion of the registered program of study 19shall be filedwith the commissioner on a form prescribed by 20 the commissionerand shall indicateINDICATING that the course 21 of study was completed by the applicant not more than 6 months 22 before the application is received by the commissioner. The com- 23 missioner may waive the applicable examination or program of 24 study requirements of this section for a person who applies for a 25 limited license as designated by the commissioner; for a person 26 who has been a licensedagent or solicitorINSURANCE PRODUCER 27 within the preceding2412 months; for a person who has 03087'01 11 1 obtained the chartered property and casualty underwriter 2 designation, the chartered life underwriter designation, certi- 3 fied insurance counselor designation, accredited advisor in 4 insurance designation, or the chartered financial consultant des- 5 ignation; or for a person who has an associate's, bachelor's, or 6 master's degree with a concentration in insurance from an insti- 7 tution approved by the commissioner.An applicant who fails to8pass an examination may take subsequent examinations pursuant to9rules promulgated by the commissioner.10(3) The commissioner may conduct investigations and pro-11pound interrogatories concerning the applicant's qualifications,12residence, business affiliations which are relevant to the13applicant's qualifications as an agent, and any other matter14which the commissioner considers necessary or advisable to deter-15mine compliance with this chapter, or for protection of the16public.17(4) After examination, investigation, and interrogatories,18the commissioner shall license an applicant if the commissioner19determines that the applicant is an employee of, or is authorized20in writing to represent, an insurer which is authorized to trans-21act insurance in this state, and the applicant possesses reason-22able understanding of the provisions, terms, and conditions of23the insurance the applicant will be licensed to solicit, pos-24sesses reasonable understanding of the insurance laws of this25state, intends in good faith to act as an agent, is honest and26trustworthy, possesses a good business reputation, and possesses27good moral character to act as an agent. The commissioner shall03087'01 12 1make a decision on an application within 60 days after the2applicant passes the examination or, if the examination has been3waived, within 60 days after receipt of a properly completed4application and notice of appointment forms.5(5) A license to act as an agent in this state in compliance6with the laws of this state shall be issued to an insurance agent7who is not a resident of this state. The license may be issued8subject to any additional restrictions under which a resident of9this state would be licensed in the jurisdiction in which the10applicant resides.11 (3) THE EXAMINATION SHALL TEST THE KNOWLEDGE OF THE INDIVID- 12 UAL CONCERNING THE QUALIFICATIONS FOR WHICH APPLICATION IS MADE, 13 THE DUTIES AND RESPONSIBILITIES OF AN INSURANCE PRODUCER, AND THE 14 INSURANCE LAWS AND REGULATIONS OF THIS STATE. EXAMINATIONS 15 REQUIRED BY THIS SECTION SHALL BE DEVELOPED AND CONDUCTED AS PRE- 16 SCRIBED BY THE COMMISSIONER. 17 (4) THE COMMISSIONER MAY MAKE ARRANGEMENTS, INCLUDING CON- 18 TRACTING WITH AN OUTSIDE TESTING SERVICE, FOR ADMINISTERING EXAM- 19 INATIONS UNDER THIS SECTION AND COLLECTING THE NONREFUNDABLE FEE 20 IN SECTION 240(1)(H) OR (4). 21 (5) EACH INDIVIDUAL APPLYING FOR AN EXAMINATION UNDER THIS 22 SECTION SHALL REMIT A NONREFUNDABLE FEE AS PRESCRIBED IN SECTION 23 240(1)(H) OR (4). 24 (6) AN INDIVIDUAL WHO FAILS TO APPEAR FOR THE EXAMINATION 25 REQUIRED UNDER THIS SECTION AS SCHEDULED OR FAILS TO PASS THE 26 EXAMINATION SHALL REAPPLY FOR AN EXAMINATION AND REMIT ALL 03087'01 13 1 REQUIRED EXAMINATION FEES AND FORMS TO BE RESCHEDULED FOR ANOTHER 2 EXAMINATION. 3 Sec. 1204c. (1) As used in this section: 4(a) "Agent" means a life-health agent or property-casualty5agent licensed under this chapter.6 (A)(b)"Hour" means a period of time of not less than 50 7 minutes. 8 (B) "INSURANCE PRODUCER" MEANS A LIFE-HEALTH AGENT OR 9 PROPERTY-CASUALTY AGENT. 10 (c) "Life-health agent" means a resident or nonresident 11agentINDIVIDUAL INSURANCE PRODUCER licensed for life, limited 12 life,credit life,mortgage redemption, accident and health, or 13 any combination thereof. 14 (d) "Property-casualty agent" means a resident or nonresi- 15 dentagentINDIVIDUAL INSURANCE PRODUCER or solicitor licensed 16 for automobile, fire, multiple lines, any limited or minor prop- 17 erty and casualty line, or any combination thereof. 18 (2) Unless theagentINSURANCE PRODUCER has renewed his or 19 her license pursuant to subsection (4), anagent'sINSURANCE 20 PRODUCER'S hours of study accrued under this section shall be 21 reviewed for license continuance as follows: 22 (a) If theagent'sINSURANCE PRODUCER'S license number 23 ends in "1" as follows: 24 (i) If theagent'sINSURANCE PRODUCER'S last name starts 25 with A to L, on January 1, 1995 and on January 1 every 2 years 26 thereafter. 03087'01 14 1 (ii) If theagent'sINSURANCE PRODUCER'S last name starts 2 with M to Z, on January 1, 1996 and on January 1 every 2 years 3 thereafter. 4 (b) If theagent'sINSURANCE PRODUCER'S license number 5 ends in "2" as follows: 6 (i) If theagent'sINSURANCE PRODUCER'S last name starts 7 with A to L, on February 1, 1995 and on February 1 every 2 years 8 thereafter. 9 (ii) If theagent'sINSURANCE PRODUCER'S last name starts 10 with M to Z, on February 1, 1996 and on February 1 every 2 years 11 thereafter. 12 (c) If theagent'sINSURANCE PRODUCER'S license number 13 ends in "3" as follows: 14 (i) If theagent'sINSURANCE PRODUCER'S last name starts 15 with A to L, on March 1, 1995 and on March 1 every 2 years 16 thereafter. 17 (ii) If theagent'sINSURANCE PRODUCER'S last name starts 18 with M to Z, on March 1, 1996 and on March 1 every 2 years 19 thereafter. 20 (d) If theagent'sINSURANCE PRODUCER'S license number 21 ends in "4" as follows: 22 (i) If theagent'sINSURANCE PRODUCER'S last name starts 23 with A to L, on June 1, 1995 and on June 1 every 2 years 24 thereafter. 25 (ii) If theagent'sINSURANCE PRODUCER'S last name starts 26 with M to Z, on June 1, 1996 and on June 1 every 2 years 27 thereafter. 03087'01 15 1 (e) If theagent'sINSURANCE PRODUCER'S license number 2 ends in "5" as follows: 3 (i) If theagent'sINSURANCE PRODUCER'S last name starts 4 with A to L, on July 1, 1995 and on July 1 every 2 years 5 thereafter. 6 (ii) If theagent'sINSURANCE PRODUCER'S last name starts 7 with M to Z, on July 1, 1996 and on July 1 every 2 years 8 thereafter. 9 (f) If theagent'sINSURANCE PRODUCER'S license number 10 ends in "6" as follows: 11 (i) If theagent'sINSURANCE PRODUCER'S last name starts 12 with A to L, on August 1, 1995 and on August 1 every 2 years 13 thereafter. 14 (ii) If theagent'sINSURANCE PRODUCER'S last name starts 15 with M to Z, on August 1, 1996 and on August 1 every 2 years 16 thereafter. 17 (g) If theagent'sINSURANCE PRODUCER'S license number 18 ends in "7" as follows: 19 (i) If theagent'sINSURANCE PRODUCER'S last name starts 20 with A to L, on September 1, 1995 and on September 1 every 2 21 years thereafter. 22 (ii) If theagent'sINSURANCE PRODUCER'S last name starts 23 with M to Z, on September 1, 1996 and on September 1 every 2 24 years thereafter. 25 (h) If theagent'sINSURANCE PRODUCER'S license number 26 ends in "8" as follows: 03087'01 16 1 (i) If theagent'sINSURANCE PRODUCER'S last name starts 2 with A to L, on October 1, 1995 and on October 1 every 2 years 3 thereafter. 4 (ii) If theagent'sINSURANCE PRODUCER'S last name starts 5 with M to Z, on October 1, 1996 and on October 1 every 2 years 6 thereafter. 7 (i) If theagent'sINSURANCE PRODUCER'S license number 8 ends in "9" as follows: 9 (i) If theagent'sINSURANCE PRODUCER'S last name starts 10 with A to L, on November 1, 1995 and on November 1 every 2 years 11 thereafter. 12 (ii) If theagent'sINSURANCE PRODUCER'S last name starts 13 with M to Z, on November 1, 1996 and on November 1 every 2 years 14 thereafter. 15 (j) If theagent'sINSURANCE PRODUCER'S license number 16 ends in "0" as follows: 17 (i) If theagent'sINSURANCE PRODUCER'S last name starts 18 with A to L, on December 1, 1995 and on December 1 every 2 years 19 thereafter. 20 (ii) If theagent'sINSURANCE PRODUCER'S last name starts 21 with M to Z, on December 1, 1996 and on December 1 every 2 years 22 thereafter. 23 (3) If anagent'sINSURANCE PRODUCER'S hours of study 24 would be reviewed according to the schedule under subsection (2) 25 within 23 months after issuance of the initial license, the hours 26 shall not be reviewed on the first scheduled date following the 27 issuance of the initial license and shall be reviewed on the next 03087'01 17 1 scheduled review date following the first review date according 2 to the schedule under subsection (2), unless theagent3 INSURANCE PRODUCER has renewed his or her license pursuant to 4 subsection (4). 5 (4) Except as provided in subsections (11) to (14), before 6 the review date of each applicable 2-year period provided for 7 under subsection (2) or (3), anagentINSURANCE PRODUCER wish- 8 ing to renew his or her license shall renew his or her license by 9 attending or instructing not less than 30 hours of continuing 10 education classes approved by the commissioner or 30 hours of 11 home study if evidenced by successful completion of course work 12 approved by the commissioner. Of the 30 hours of continuing edu- 13 cation required, a life-health agent shall attend or instruct not 14 less than 15 hours in a program of study approved for life-health 15 agents and a property-casualty agent shall attend or instruct not 16 less than 15 hours in a program of study approved for 17 property-casualty agents. 18 (5) After reviewing recommendations made by the council 19 under section 1204b, the commissioner shall approve a program of 20 study if the commissioner determines that the program increases 21 knowledge of insurance and related subjects as follows: 22 (a) For a life-health agent program of study, the program 23 offers instruction in 1 or more of the following: 24 (i) The fundamental considerations and major principles of 25 life insurance. 26 (ii) The fundamental considerations and major principles of 27 health insurance. 03087'01 18 1 (iii) Estate planning and taxation as related to insurance. 2 (iv) Industry and legal standards concerning ethics in 3 insurance. 4 (v) Legal, legislative, and regulatory matters concerning 5 insurance, the insurance code, and the insurance industry. 6 (vi) Principal provisions used in life insurance contracts, 7 health insurance contracts, or annuity contracts and differences 8 in types of coverages. 9 (vii) Accounting and actuarial considerations in insurance. 10 (viii) Principles of agency management, excluding telemarke- 11 ting or other marketing instruction. 12 (b) For a property-casualty agent program of study, the pro- 13 gram offers instructions in 1 or more of the following: 14 (i) The fundamental considerations and major principles of 15 property insurance. 16 (ii) The fundamental considerations and major principles of 17 casualty insurance. 18 (iii) Basic principles of risk management. 19 (iv) Industry and legal standards concerning ethics in 20 insurance. 21 (v) Legal, legislative, and regulatory matters concerning 22 insurance, the insurance code, and the insurance industry. 23 (vi) Principal provisions used in casualty insurance con- 24 tracts, no-fault insurance contracts, or property insurance con- 25 tracts and differences in types of coverages. 26 (vii) Accounting and actuarial considerations in insurance. 03087'01 19 1 (viii) Principles of agency management, excluding 2 telemarketing or other marketing instruction. 3 (6) A provider of a program of study foragentsINSURANCE 4 PRODUCERS applying for approval or reapproval from the commis- 5 sioner under this section shall file, on a form provided by the 6 commissioner, a description of the course of study including a 7 description of the subject matter and course materials, hours of 8 instruction, location of classroom, qualifications of instruc- 9 tors, and maximum student-instructor ratio and shall pay a nonre- 10 fundable $25.00 filing fee. Any material change in a program of 11 study shall require reapproval by the commissioner. If the 12 information in an application for approval or reapproval is 13 insufficient for the commissioner to determine whether the pro- 14 gram of study meets the requirements under subsection (5), the 15 commissioner shall give written notice to the provider, within 15 16 days after the provider's filing of the application for approval 17 or reapproval, of the additional information needed by the 18 commissioner. An application for approval or reapproval shall be 19 considered approved unless disapproved by the commissioner within 20 90 days after the application for approval or reapproval is 21 filed, or within 90 days after the receipt of additional informa- 22 tion if the information was requested by the commissioner, which- 23 ever is later. 24 (7) A provider of a program of study approved by the commis- 25 sioner under this section shall pay a provider authorization fee 26 of $500.00 for the first year the provider's program of study was 27 approved under this section and a $100.00 provider renewal fee 03087'01 20 1 for each year thereafter that the provider offers the approved 2 program of study. 3 (8) A person dissatisfied with an approved program of study 4 may petition the commissioner for a hearing on the program or the 5 commissioner on his or her own initiative may request a hearing 6 on a program of study. If the commissioner finds the petition to 7 have been submitted in good faith, that the petition if true 8 shows the program of study does not satisfy the criteria in sub- 9 section (5), or that the petition otherwise justifies holding a 10 hearing, the commissioner shall hold a hearing pursuant to chap- 11 ter 4 of the administrative procedures act of 1969, 1969 PA 306, 12 MCL 24.271 to 24.287, within 30 days after receipt of the peti- 13 tion and upon not less than 10 days' written notice to the peti- 14 tioner and the provider of the program of study. If the commis- 15 sioner requests a hearing on a program of study on his or her own 16 initiative, the commissioner shall hold a hearing pursuant to 17 chapter 4 of the administrative procedures act of 1969, 1969 18 PA 306, MCL 24.271 to 24.287, upon not less than 10 days' written 19 notice to the provider of the program of study. 20 (9) If after a hearing under subsection (8) the commissioner 21 finds that the program of study does not satisfy the requirements 22 under subsection (5), the commissioner shall state, in a written 23 order mailed first class to the petitioner and provider of the 24 program of study, his or her findings and the date upon which the 25 commissioner will revoke approval of the program of study which 26 date shall be within a reasonable time of the issuance of the 27 order. 03087'01 21 1 (10) A certificate of attendance or instruction of an 2 approved program of study or a certificate of successful comple- 3 tion of course work shall be filed as directed by the commis- 4 sioner on a form prescribed by the commissioner and shall indi- 5 cate the name and number of the course of study, the number of 6 hours, dates of completion, and the name and number of schools 7 attended or taught by theagentINSURANCE PRODUCER or the evi- 8 dence of successful completion of course work. A representative 9 of the approved program of study shall file the form and a fee of 10 $1.00 per hour for course credit for eachagentINSURANCE 11 PRODUCER license renewal as directed by the commissioner within 12 30 days after theagentINSURANCE PRODUCER completes the 13 program. A copy of the form shall also be mailed first-class to 14 theagentINSURANCE PRODUCER who attended, taught, or success- 15 fully completed the program of study. The commissioner may enter 16 into contracts to provide for the administrative functions of 17 this subsection. 18 (11) The commissioner may waive the continuing education 19 requirements of this section for anagentINSURANCE PRODUCER if 20 the commissioner determines that enforcement of the requirements 21 would cause a severe hardship. The commissioner shall waive the 22 continuing education requirements of this section for anagent23 INSURANCE PRODUCER who is licensed to write only travel or bag- 24 gage insurance policies and whose employment is for a purpose 25 other than the sale of those policies. 26 (12) The commissioner may enter into reciprocal continuing 27 education agreements with insurance commissioners from other 03087'01 22 1 states.A person who is licensed pursuant to section 1204(5) is2not subject to the continuing education requirements under this3section if there is a reciprocal insurance continuing education4agreement with the insurance commissioner of the state of the5applicant's principal residence and there are continuing educa-6tion requirements in the state of the applicant's residence.7 (13) If anagentINSURANCE PRODUCER has not met his or her 8 continuing education requirements by the expiration date of his 9 or her license, theagentINSURANCE PRODUCER shall have a 10 90-day grace period in which to meet the continuing education 11 requirements of this section. During the 90-day grace period, 12 theagentINSURANCE PRODUCER shall not solicit or sell new pol- 13 icies of insurance, bind coverage, or otherwise act as anagent14 INSURANCE PRODUCER except that theagentINSURANCE PRODUCER may 15 continue to service policies previously sold and may receive com- 16 missions on policies previously sold. If theagentINSURANCE 17 PRODUCER has not met his or her continuing education requirements 18 by the expiration of the 90-day grace period, theagent's19 INSURANCE PRODUCER'S license shall be canceled. Anagent20 INSURANCE PRODUCER whose license has been canceled under this 21 section may reapply for license to act as anagentINSURANCE 22 PRODUCER under section 1204, except that the program of study 23 requirements under section 1204 shall not be waived. 24 (14) AnagentINSURANCE PRODUCER who has sold his or her 25 insurance business and who has not met the continuing education 26 requirements of this section shall not solicit or sell new 27 policies of insurance, bind coverage, or otherwise act as an 03087'01 23 1agentINSURANCE PRODUCER except that theagentINSURANCE 2 PRODUCER may continue to service policies previously sold and may 3 receive commissions on policies previously sold as well as 4 receive partial commissions on policies of insurance sold by a 5 purchasingagentINSURANCE PRODUCER. AnagentINSURANCE 6 PRODUCER who is in the process of selling his or her insurance 7 business and who has not met the continuing education require- 8 ments of this section shall not solicit or sell new policies of 9 insurance, bind coverage, or otherwise act as anagent10 INSURANCE PRODUCER except that theagentINSURANCE PRODUCER may 11 continue to service policies previously sold and may receive com- 12 missions on policies previously sold as well as receive partial 13 commissions on policies of insurance sold by a purchasingagent14 INSURANCE PRODUCER, for a period not to exceed 12 months after 15 the sellingagent'sINSURANCE PRODUCER'S license review date 16 under subsection (2). AnagentINSURANCE PRODUCER whose 17 license has been canceled and who wishes to resume soliciting or 18 selling new policies of insurance, bind coverage, or otherwise 19 act as anagentINSURANCE PRODUCER and who has not met the con- 20 tinuing education requirements within the immediately preceding 21 2-year period may reapply for license to act as anagent22 INSURANCE PRODUCER under section 1204., except that the program23of study requirements under section 1204 shall not be waived.24 SEC. 1204E. (1) THE COMMISSIONER SHALL WAIVE ANY REQUIRE- 25 MENTS FOR A NONRESIDENT LICENSE APPLICANT WITH A VALID LICENSE 26 FROM HIS OR HER HOME STATE, EXCEPT THE REQUIREMENTS UNDER SECTION 03087'01 24 1 1206A, IF THE APPLICANT'S HOME STATE AWARDS NONRESIDENT LICENSES 2 TO RESIDENTS OF THIS STATE ON THE SAME BASIS. 3 (2) A NONRESIDENT INSURANCE PRODUCER'S SATISFACTION OF HIS 4 OR HER HOME STATE'S CONTINUING EDUCATION REQUIREMENTS FOR 5 LICENSED INSURANCE PRODUCERS SHALL CONSTITUTE SATISFACTION OF 6 THIS STATE'S CONTINUING EDUCATION REQUIREMENTS IF THE NONRESIDENT 7 PRODUCER'S HOME STATE RECOGNIZES THE SATISFACTION OF ITS CONTINU- 8 ING EDUCATION REQUIREMENTS IMPOSED UPON PRODUCERS FROM THIS STATE 9 ON THE SAME BASIS. 10 Sec. 1205.(1) The commissioner may require an applicant11or a licensed agent to disclose fully the identity of its stock-12holders, officers, partners and employees; may propound reason-13able interrogatories; and may refuse to issue or to continue a14license if he is satisfied that any stockholder, officer, partner15or employee who can materially influence the applicant or the16agent is not a fit and proper person under the standards of this17chapter and that such action reasonably is necessary to protect18the public.19(2) An applicant may represent his sponsoring insurer after20receipt of the license from the commissioner. A licensed agent21who is otherwise qualified may represent an additional insurer22after mailing of a notice of appointment from that insurer.23(3) A written examination need not be required of an appli-24cant for a license to write only limited personal accident insur-25ance policies or baggage insurance policies, whose employment is26for a purpose other than the sale of such policies, and who does27not receive any commission or other compensation directly03087'01 25 1dependent on the amount of insurance written. However, the2commissioner may make any investigation or propound any interrog-3atories which he deems necessary or advisable to determine the4qualifications of the applicant and for protection of the5public.6(4) An agent for a fraternal benefit society authorized to7transact insurance in this state on the effective date of this8act, upon application to the commissioner, may be licensed as an9insurance agent to represent that fraternal benefit society with-10out written examination.11 (1) A PERSON APPLYING FOR A RESIDENT INSURANCE PRODUCER 12 LICENSE SHALL FILE WITH THE COMMISSIONER THE UNIFORM APPLICATION 13 REQUIRED BY THE COMMISSIONER AND SHALL DECLARE UNDER PENALTY OF 14 REFUSAL, SUSPENSION, OR REVOCATION OF THE LICENSE THAT THE STATE- 15 MENTS MADE IN THE APPLICATION ARE TRUE, CORRECT, AND COMPLETE TO 16 THE BEST OF THE INDIVIDUAL'S KNOWLEDGE AND BELIEF. AN APPLICA- 17 TION FOR A RESIDENT INSURER PRODUCER LICENSE SHALL NOT BE 18 APPROVED UNLESS THE COMMISSIONER FINDS THAT THE INDIVIDUAL MEETS 19 ALL OF THE FOLLOWING: 20 (A) IS AT LEAST 18 YEARS OF AGE. 21 (B) HAS NOT COMMITTED ANY ACT THAT IS A GROUND FOR DENIAL, 22 SUSPENSION, OR REVOCATION UNDER SECTION 1239. 23 (C) AS REQUIRED UNDER SECTION 1204(2), HAS COMPLETED A PRE- 24 LICENSING COURSE OF STUDY FOR THE QUALIFICATIONS FOR WHICH THE 25 PERSON HAS APPLIED. 26 (D) HAS PAID THE FEES APPLICABLE TO THE INDIVIDUAL UNDER 27 SECTION 240. 03087'01 26 1 (E) HAS SUCCESSFULLY PASSED THE EXAMINATION REQUIRED FOR 2 EACH QUALIFICATION FOR WHICH THE PERSON HAS APPLIED. 3 (2) A BUSINESS ENTITY ACTING AS AN INSURANCE PRODUCER SHALL 4 OBTAIN AN INSURANCE PRODUCER LICENSE. A BUSINESS ENTITY APPLYING 5 FOR AN INSURANCE PRODUCER LICENSE SHALL FILE WITH THE COMMIS- 6 SIONER THE UNIFORM BUSINESS ENTITY APPLICATION REQUIRED BY THE 7 COMMISSIONER. AN APPLICATION FOR AN INSURANCE PRODUCER LICENSE 8 UNDER THIS SUBSECTION SHALL NOT BE APPROVED UNLESS THE COMMIS- 9 SIONER FINDS ALL OF THE FOLLOWING: 10 (A) THE BUSINESS ENTITY HAS PAID THE FEES UNDER SECTION 11 240(1)(D). 12 (B) THE BUSINESS ENTITY HAS DESIGNATED AN INDIVIDUAL 13 LICENSED PRODUCER RESPONSIBLE FOR THE BUSINESS ENTITY'S COMPLI- 14 ANCE WITH THIS STATE'S INSURANCE LAWS, RULES, AND REGULATIONS. 15 (C) THE BUSINESS ENTITY HAS NOT COMMITTED ANY ACT THAT IS 16 GROUNDS FOR DENIAL, SUSPENSION, OR REVOCATION UNDER SECTION 17 1239. 18 (3) THE COMMISSIONER MAY REQUIRE THE PRODUCTION OF ANY DOCU- 19 MENTS REASONABLY NECESSARY TO VERIFY THE INFORMATION CONTAINED IN 20 AN APPLICATION. 21 (4) EACH INSURER THAT SELLS, SOLICITS, OR NEGOTIATES ANY 22 FORM OF LIMITED LINE CREDIT INSURANCE SHALL PROVIDE TO EACH INDI- 23 VIDUAL WHOSE DUTIES WILL INCLUDE SELLING, SOLICITING, OR NEGOTI- 24 ATING LIMITED LINE CREDIT INSURANCE A PROGRAM OF INSTRUCTION THAT 25 MAY BE APPROVED BY THE COMMISSIONER. 26 Sec. 1206.(1) A license document issued by the27commissioner shall set forth the name of the agent and the lines03087'01 27 1of insurance permitted by the license. A person who is licensed2to act as an agent for life or disability insurance or for casu-3alty insurance is permitted to act as an agent for legal expense4insurance without obtaining additional authorization or licensure5from the commissioner. The agent shall display the license docu-6ment in his or her principal place of business.7(2) The license shall continue in effect unless suspended or8revoked by the commissioner, is voluntarily surrendered by the9licensee, or terminates because of lack of authority or appoint-10ment to act as an agent in this state from an admitted insurer.11If the commissioner's records indicate that an agent has no valid12or active appointment from an admitted insurer, the commissioner13shall notify the agent that the agent has no valid or active14appointment. The agent shall have 60 days from the date notice15is sent by the commissioner to secure a valid appointment and16have notice of the appointment filed with the commissioner. If17notice of appointment is not received by the commissioner within18the 60-day period, the agent's licensing authority shall be con-19sidered terminated for failure to comply with the licensing20requirements of this act.21(3) The commissioner may reexamine a licensed agent at any22time upon written notice with stated reasons.23(4) The commissioner, without examination, may issue a tem-24porary license to a natural person who demonstrates to the satis-25faction of the commissioner that the death or physical or mental26incapacity of an agent makes the action reasonably necessary to27assure continued operation of the agent's business. The03087'01 28 1temporary license shall be effective for 90 days, and may be2extended for additional periods of 90 days in the discretion of3the commissioner.4(5) The commissioner may issue a temporary license permit-5ting collection of premiums on industrial insurance contracts to6an applicant for a license to act as an insurance agent whom he7or she determines to be honest and trustworthy. The temporary8license shall be effective for 90 days, renewable for 1 addi-9tional period of 90 days, or until disposition of the application10to act as an insurance agent, whichever occurs first. If the11commissioner does not notify the applicant of action on the12request for a temporary license within 15 days after mailing of13the application, the request for a temporary license shall be14considered granted. For purposes of this subsection, an15"industrial insurance contract" means a contract for which premi-16ums are payable at monthly or more frequent intervals directly to17a representative of the insurer by the person insured or by a18person representing the person insured.19 (1) UNLESS DENIED LICENSURE UNDER SECTION 1239, PERSONS WHO 20 HAVE MET THE REQUIREMENTS OF SECTIONS 1204 AND 1205 SHALL BE 21 ISSUED AN INSURANCE PRODUCER LICENSE. AN INDIVIDUAL INSURANCE 22 PRODUCER MAY RECEIVE A LICENSE FOR A QUALIFICATION IN 1 OR MORE 23 OF THE FOLLOWING LINES OF INSURANCE: 24 (A) LIFE -- INSURANCE COVERAGE ON HUMAN LIVES INCLUDING BEN- 25 EFITS OF ENDOWMENT AND ANNUITIES, AND MAY INCLUDE BENEFITS IN THE 26 EVENT OF DEATH OR DISMEMBERMENT BY ACCIDENT AND BENEFITS FOR 27 DISABILITY INCOME. 03087'01 29 1 (B) ACCIDENT AND HEALTH OR SICKNESS -- INSURANCE COVERAGE 2 FOR SICKNESS, BODILY INJURY, OR ACCIDENTAL DEATH AND MAY INCLUDE 3 BENEFITS FOR DISABILITY INCOME. 4 (C) PROPERTY -- INSURANCE COVERAGE FOR THE DIRECT OR CONSE- 5 QUENTIAL LOSS OR DAMAGE TO PROPERTY OF EVERY KIND. 6 (D) CASUALTY -- INSURANCE COVERAGE AGAINST LEGAL LIABILITY, 7 INCLUDING THAT FOR DEATH, INJURY, OR DISABILITY OR DAMAGE TO REAL 8 OR PERSONAL PROPERTY. 9 (E) VARIABLE LIFE AND VARIABLE ANNUITY PRODUCTS -- INSURANCE 10 COVERAGE PROVIDED UNDER VARIABLE LIFE INSURANCE CONTRACTS AND 11 VARIABLE ANNUITIES. 12 (F) PERSONAL LINES -- PROPERTY AND CASUALTY INSURANCE COVER- 13 AGE SOLD TO INDIVIDUALS AND FAMILIES FOR PRIMARILY NONCOMMERCIAL 14 PURPOSES. 15 (G) CREDIT -- LIMITED LINE CREDIT INSURANCE. 16 (H) ANY OTHER LINE OF INSURANCE PERMITTED UNDER STATE LAWS 17 OR RULES. 18 (2) AN INSURANCE PRODUCER LICENSE SHALL REMAIN IN EFFECT 19 UNLESS REVOKED OR SUSPENDED AS LONG AS EDUCATION REQUIREMENTS FOR 20 RESIDENT INDIVIDUAL PRODUCERS ARE MET BY THE DUE DATE. 21 (3) AN INDIVIDUAL INSURANCE PRODUCER WHO ALLOWS HIS OR HER 22 LICENSE TO LAPSE FOR A REASON OTHER THAN NOT MEETING THE REQUIRE- 23 MENTS OF SECTION 1204C MAY REINSTATE THE SAME LICENSE WITHOUT THE 24 NECESSITY OF PASSING A WRITTEN EXAMINATION IF HE OR SHE DOES SO 25 NOT LATER THAN 12 MONTHS AFTER THE DATE OF THE LAPSE. 26 (4) A LICENSE UNDER SUBSECTION (1) SHALL CONTAIN THE 27 LICENSEE'S NAME, ADDRESS, PERSONAL IDENTIFICATION NUMBER, AND THE 03087'01 30 1 DATE OF ISSUANCE, THE QUALIFICATIONS, THE EXPIRATION DATE, AND 2 ANY OTHER INFORMATION THE COMMISSIONER CONSIDERS NECESSARY. 3 (5) LICENSEES SHALL INFORM THE COMMISSIONER BY ANY MEANS 4 ACCEPTABLE TO THE COMMISSIONER OF A CHANGE OF LEGAL NAME OR 5 ADDRESS WITHIN 30 DAYS OF THE CHANGE. 6 (6) THE COMMISSIONER MAY CONTRACT WITH NONGOVERNMENTAL ENTI- 7 TIES TO PERFORM ANY MINISTERIAL FUNCTIONS, INCLUDING THE COLLEC- 8 TION OF FEES, RELATED TO PRODUCER LICENSING THAT THE COMMISSIONER 9 CONSIDERS APPROPRIATE. 10 SEC. 1206A. (1) UNLESS DENIED LICENSURE UNDER SECTION 1239, 11 A NONRESIDENT PERSON SHALL RECEIVE A NONRESIDENT INSURANCE 12 PRODUCER LICENSE IF HE OR SHE MEETS ALL OF THE FOLLOWING: 13 (A) IS CURRENTLY LICENSED AS A RESIDENT AND IN GOOD STANDING 14 IN HIS OR HER HOME STATE. 15 (B) HAS SUBMITTED THE PROPER REQUEST FOR LICENSURE AND HAS 16 PAID THE APPLICABLE FEES REQUIRED BY SECTION 240. 17 (C) HAS SUBMITTED OR TRANSMITTED TO THE COMMISSIONER THE 18 APPLICATION FOR LICENSURE THAT THE PERSON SUBMITTED TO HIS OR HER 19 HOME STATE OR A COMPLETED UNIFORM APPLICATION AS REQUIRED BY THE 20 COMMISSIONER. 21 (D) THE PERSON'S HOME STATE AWARDS NONRESIDENT PRODUCER 22 LICENSES TO RESIDENTS OF THIS STATE ON THE SAME BASIS. 23 (2) THE COMMISSIONER MAY VERIFY THE INSURANCE PRODUCER'S 24 LICENSING STATUS THROUGH THE PRODUCER DATABASE MAINTAINED BY THE 25 NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS OR ITS AFFILIATES 26 OR SUBSIDIARIES. 03087'01 31 1 (3) A NONRESIDENT INSURANCE PRODUCER WHO MOVES FROM 1 STATE 2 TO ANOTHER STATE OR A RESIDENT INSURANCE PRODUCER WHO MOVES FROM 3 THIS STATE TO ANOTHER STATE SHALL FILE A CHANGE OF ADDRESS AND 4 PROVIDE CERTIFICATION FROM THE NEW RESIDENT STATE WITHIN 30 DAYS 5 OF THE CHANGE OF LEGAL RESIDENCE. NO FEE OR LICENSE APPLICATION 6 IS REQUIRED. 7 (4) NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER, A 8 PERSON LICENSED AS A SURPLUS LINES INSURANCE PRODUCER IN HIS OR 9 HER HOME STATE SHALL RECEIVE A NONRESIDENT SURPLUS LINES INSUR- 10 ANCE PRODUCER LICENSE PURSUANT TO SUBSECTION (1). EXCEPT AS OTH- 11 ERWISE PROVIDED IN SUBSECTION (1), THIS SECTION DOES NOT OTHER- 12 WISE AMEND OR SUPERSEDE ANY PROVISION OF CHAPTER 19. 13 (5) NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER, A 14 PERSON LICENSED AS A LIMITED LINE CREDIT INSURANCE OR OTHER TYPE 15 OF LIMITED LINES INSURANCE PRODUCER IN HIS OR HER HOME STATE 16 SHALL RECEIVE A NONRESIDENT LIMITED LINES INSURANCE PRODUCER 17 LICENSE, PURSUANT TO SUBSECTION (1), GRANTING THE SAME SCOPE OF 18 AUTHORITY AS GRANTED UNDER THE LICENSE ISSUED BY THE PRODUCER'S 19 HOME STATE. FOR THE PURPOSES OF THIS SUBSECTION, LIMITED LINES 20 INSURANCE IS ANY AUTHORITY GRANTED BY THE HOME STATE THAT 21 RESTRICTS THE AUTHORITY OF THE LICENSE TO LESS THAN THE TOTAL 22 AUTHORITY PRESCRIBED IN THE ASSOCIATED MAJOR LINES UNDER SECTION 23 1206(1)(A) TO (F). 24 SEC. 1206B. (1) AN INDIVIDUAL WHO APPLIES FOR AN INSURANCE 25 PRODUCER LICENSE IN THIS STATE WHO WAS PREVIOUSLY LICENSED FOR 26 THE SAME QUALIFICATIONS IN ANOTHER STATE IS NOT REQUIRED TO 27 COMPLETE ANY PRELICENSING EDUCATION OR EXAMINATION. THIS 03087'01 32 1 EXEMPTION IS ONLY AVAILABLE IF THE PERSON IS CURRENTLY LICENSED 2 IN THAT STATE OR IF THE APPLICATION IS RECEIVED WITHIN 90 DAYS OF 3 THE CANCELLATION OF THE APPLICANT'S PREVIOUS LICENSE AND IF THE 4 PRIOR STATE ISSUES A CERTIFICATION THAT, AT THE TIME OF CANCELLA- 5 TION, THE APPLICANT WAS IN GOOD STANDING IN THAT STATE OR THE 6 STATE'S PRODUCER DATABASE RECORDS, MAINTAINED BY THE NATIONAL 7 ASSOCIATION OF INSURANCE COMMISSIONERS, ITS AFFILIATES, OR ITS 8 SUBSIDIARIES, INDICATE THAT THE PRODUCER IS OR WAS LICENSED IN 9 GOOD STANDING FOR THE QUALIFICATION REQUESTED. 10 (2) A PERSON LICENSED AS AN INSURANCE PRODUCER IN ANOTHER 11 STATE WHO MOVES TO THIS STATE SHALL APPLY WITHIN 90 DAYS AFTER 12 ESTABLISHING LEGAL RESIDENCE TO BECOME A RESIDENT LICENSEE PURSU- 13 ANT TO SECTION 1205. PRELICENSING EDUCATION OR EXAMINATION IS 14 NOT REQUIRED OF THAT PERSON TO OBTAIN ANY QUALIFICATION PREVI- 15 OUSLY HELD IN THE PRIOR STATE EXCEPT WHERE THE COMMISSIONER 16 DETERMINES OTHERWISE BY RULE. 17 SEC. 1208A. (1) AN INSURANCE PRODUCER SHALL NOT ACT AS AN 18 AGENT OF AN INSURER UNLESS THE INSURANCE PRODUCER BECOMES AN 19 APPOINTED AGENT OF THAT INSURER. AN INSURANCE PRODUCER WHO IS 20 NOT ACTING AS AN AGENT OF AN INSURER IS NOT REQUIRED TO BECOME 21 APPOINTED. 22 (2) TO APPOINT A PRODUCER AS ITS AGENT, THE APPOINTING 23 INSURER SHALL FILE, IN A FORMAT APPROVED BY THE COMMISSIONER, A 24 NOTICE OF APPOINTMENT FOR THE QUALIFICATIONS HELD BY THAT INSUR- 25 ANCE PRODUCER WITHIN 15 DAYS FROM THE DATE THE AGENCY CONTRACT IS 26 EXECUTED OR THE FIRST INSURANCE APPLICATION IS SUBMITTED. AN 27 INSURER MAY ALSO ELECT TO APPOINT AN INSURANCE PRODUCER TO ALL OR 03087'01 33 1 SOME INSURERS WITHIN THE INSURER'S HOLDING COMPANY SYSTEM OR 2 GROUP BY THE FILING OF A SINGLE APPOINTMENT REQUEST. 3 (3) UPON RECEIPT OF THE NOTICE OF APPOINTMENT, THE COMMIS- 4 SIONER SHALL VERIFY WITHIN A REASONABLE TIME NOT TO EXCEED 30 5 DAYS THAT THE INSURANCE PRODUCER IS ELIGIBLE FOR APPOINTMENT. IF 6 THE INSURANCE PRODUCER IS DETERMINED TO BE INELIGIBLE FOR 7 APPOINTMENT, THE COMMISSIONER SHALL NOTIFY THE INSURER WITHIN 5 8 DAYS OF THAT DETERMINATION. 9 (4) AN INSURER SHALL PAY AN APPOINTMENT FEE AND A RENEWAL 10 APPOINTMENT FEE AS PROVIDED UNDER SECTION 240(1)(C) FOR EACH 11 INSURANCE PRODUCER APPOINTED OR RENEWED BY THE INSURER. 12 SEC. 1208B. (1) AN INSURER OR AUTHORIZED REPRESENTATIVE OF 13 THE INSURER THAT TERMINATES THE APPOINTMENT, EMPLOYMENT, CON- 14 TRACT, OR OTHER INSURANCE BUSINESS RELATIONSHIP WITH AN INSURANCE 15 PRODUCER SHALL NOTIFY THE COMMISSIONER USING A FORMAT PRESCRIBED 16 BY THE COMMISSIONER OF THE TERMINATION WITHIN 30 DAYS FOLLOWING 17 THE EFFECTIVE DATE OF THE TERMINATION IF THE REASON FOR TERMINA- 18 TION IS 1 OF THE REASONS LISTED IN SECTION 1239 OR THE INSURER 19 HAS KNOWLEDGE THE PRODUCER WAS FOUND BY A COURT, GOVERNMENT BODY, 20 OR SELF-REGULATORY ORGANIZATION AUTHORIZED BY LAW TO HAVE ENGAGED 21 IN ANY OF THE ACTIVITIES LISTED IN SECTION 1239. UPON THE WRIT- 22 TEN REQUEST OF THE COMMISSIONER, THE INSURER SHALL PROVIDE ADDI- 23 TIONAL INFORMATION, DOCUMENTS, RECORDS, OR OTHER DATA PERTAINING 24 TO THE TERMINATION OR ACTIVITY OF THE PRODUCER. 25 (2) AN INSURER OR AUTHORIZED REPRESENTATIVE OF THE INSURER 26 THAT TERMINATES THE APPOINTMENT, EMPLOYMENT, OR CONTRACT WITH A 27 PRODUCER FOR ANY REASON NOT LISTED IN SECTION 1239 SHALL NOTIFY 03087'01 34 1 THE COMMISSIONER USING A FORMAT PRESCRIBED BY THE COMMISSIONER OF 2 THE TERMINATION WITHIN 30 DAYS FOLLOWING THE EFFECTIVE DATE OF 3 THE TERMINATION. UPON WRITTEN REQUEST OF THE COMMISSIONER, THE 4 INSURER SHALL PROVIDE ADDITIONAL INFORMATION, DOCUMENTS, RECORDS, 5 OR OTHER DATA PERTAINING TO THE TERMINATION. 6 (3) THE INSURER OR THE AUTHORIZED REPRESENTATIVE OF THE 7 INSURER SHALL PROMPTLY NOTIFY THE COMMISSIONER IN A FORMAT 8 ACCEPTABLE TO THE COMMISSIONER IF, UPON FURTHER REVIEW OR INVES- 9 TIGATION, THE INSURER DISCOVERS ADDITIONAL INFORMATION THAT WOULD 10 HAVE BEEN REPORTABLE TO THE COMMISSIONER IN ACCORDANCE WITH SUB- 11 SECTION (1) HAD THE INSURER THEN KNOWN OF ITS EXISTENCE. 12 (4) NOT LATER THAN 15 DAYS AFTER MAKING THE NOTIFICATION 13 REQUIRED BY SUBSECTION (1), (2), OR (3), THE INSURER SHALL MAIL A 14 COPY OF THE NOTIFICATION TO THE PRODUCER AT HIS OR HER LAST KNOWN 15 ADDRESS. IF THE PRODUCER IS TERMINATED FOR CAUSE FOR ANY OF THE 16 REASONS LISTED IN SECTION 1239, THE INSURER SHALL PROVIDE A COPY 17 OF THE NOTIFICATION TO THE PRODUCER AT HIS OR HER LAST KNOWN 18 ADDRESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PRE- 19 PAID OR BY OVERNIGHT DELIVERY USING A NATIONALLY RECOGNIZED 20 CARRIER. WITHIN 30 DAYS AFTER THE INSURANCE PRODUCER HAS 21 RECEIVED THE ORIGINAL OR ADDITIONAL NOTIFICATION, THE INSURANCE 22 PRODUCER MAY FILE WRITTEN COMMENTS CONCERNING THE SUBSTANCE OF 23 THE NOTIFICATION WITH THE COMMISSIONER. THE INSURANCE PRODUCER 24 SHALL, BY THE SAME MEANS, SIMULTANEOUSLY SEND A COPY OF THE COM- 25 MENTS TO THE REPORTING INSURER, AND THE COMMENTS SHALL BECOME A 26 PART OF THE COMMISSIONER'S FILE AND ACCOMPANY EVERY COPY OF A 03087'01 35 1 REPORT DISTRIBUTED OR DISCLOSED FOR ANY REASON ABOUT THE PRODUCER 2 AS PERMITTED UNDER SECTION 1246. 3 (5) IN THE ABSENCE OF ACTUAL MALICE, AN INSURER, THE AUTHO- 4 RIZED REPRESENTATIVE OF THE INSURER, AN INSURANCE PRODUCER, THE 5 COMMISSIONER, OR AN ORGANIZATION OF WHICH THE COMMISSIONER IS A 6 MEMBER AND THAT COMPILES THE INFORMATION AND MAKES IT AVAILABLE 7 TO OTHER COMMISSIONERS OR REGULATORY OR LAW ENFORCEMENT AGENCIES 8 IS NOT SUBJECT TO CIVIL LIABILITY, AND A CIVIL CAUSE OF ACTION OF 9 ANY NATURE SHALL NOT ARISE AGAINST THESE ENTITIES OR THEIR 10 RESPECTIVE REPRESENTATIVES OR EMPLOYEES, AS A RESULT OF ANY 11 STATEMENT OR INFORMATION REQUIRED BY OR PROVIDED PURSUANT TO THIS 12 SECTION OR ANY INFORMATION RELATING TO ANY STATEMENT THAT MAY BE 13 REQUESTED IN WRITING BY THE COMMISSIONER, FROM AN INSURER OR 14 INSURANCE PRODUCER; OR A STATEMENT BY A TERMINATING INSURER OR 15 INSURANCE PRODUCER TO AN INSURER OR INSURANCE PRODUCER LIMITED 16 SOLELY AND EXCLUSIVELY TO WHETHER A TERMINATION FOR CAUSE UNDER 17 SUBSECTION (1) WAS REPORTED TO THE COMMISSIONER, PROVIDED THAT 18 THE PROPRIETY OF ANY TERMINATION FOR CAUSE UNDER SUBSECTION (1) 19 IS CERTIFIED IN WRITING BY AN OFFICER OR AUTHORIZED REPRESENTA- 20 TIVE OF THE INSURER OR INSURANCE PRODUCER TERMINATING THE 21 RELATIONSHIP. IN ANY ACTION BROUGHT AGAINST A PERSON THAT MAY 22 HAVE IMMUNITY UNDER THIS SUBSECTION FOR MAKING ANY STATEMENT 23 REQUIRED BY THIS SECTION OR PROVIDING ANY INFORMATION RELATING TO 24 ANY STATEMENT THAT MAY BE REQUESTED BY THE COMMISSIONER, THE 25 PARTY BRINGING THE ACTION SHALL PLEAD SPECIFICALLY IN ANY ALLEGA- 26 TION THAT THE IMMUNITY PERMITTED UNDER THIS SUBSECTION DOES NOT 27 APPLY BECAUSE THE PERSON MAKING THE STATEMENT OR PROVIDING THE 03087'01 36 1 INFORMATION DID SO WITH ACTUAL MALICE. THIS SUBSECTION DOES NOT 2 ABROGATE OR MODIFY ANY EXISTING STATUTORY OR COMMON LAW PRIVI- 3 LEGES OR IMMUNITIES. 4 Sec. 1209.(1) An insurer shall give to the commissioner5and the agent immediate written notice of the termination of an6agent's authority to represent the insurer. The notice shall7include the full disclosure, with supporting evidence, of acts or8omissions by the agent which reasonably may be construed to be a9violation of this act, or of any other statute, and acts or omis-10sions which may reflect on the agent's qualifications as an agent11or which may adversely affect the public interest. There shall12not be liability on the part of, and a cause of action of any13nature shall not arise against, the commissioner, an insurer, or14an authorized representative of either for any statement made or15evidence provided pursuant to this section.16 (1)(2) When an agent'sIF AN INSURANCE PRODUCER'S author- 17 ity to represent an insurer is terminated, the responsibility of 18 anagentINSURANCE PRODUCER having property rights in the 19 renewal shall continue until the existing policies of insurance 20 are canceled, replaced, or have expired. Theagent'sINSURANCE 21 PRODUCER'S authority during the period following notice of termi- 22 nation shall be governed by the written agreement between the 23agentINSURANCE PRODUCER and the insurer. An insurer shall not 24 cancel or refuse to renew the policy of an insured because of the 25 termination of anagent'sINSURANCE PRODUCER'S contract. If 26 the written agreement does not cover theagent'sINSURANCE 27 PRODUCER'S authority during this period, theagentINSURANCE 03087'01 37 1 PRODUCER may continue to represent the insurer in servicing 2 existing policies, but theagentINSURANCE PRODUCER shall not 3 bind a new risk, renew a policy, nor increase the obligation of 4 the insurer under the policy without the approval of the 5 insurer. This subsectionshallDOES not apply to a life insur- 6 er, anagentINSURANCE PRODUCER of a life insurer, anagent7 INSURANCE PRODUCER who is an employee of an insurer, or to an 8agentINSURANCE PRODUCER who by contractual agreement repre- 9 sents only 1 insurer or group of affiliated insurers, if the 10 property rights in the renewal are owned by the insurer or group 11 of affiliated insurers and the alteration of theagent's12 INSURANCE PRODUCER'S contract does not result in the cancellation 13 or nonrenewal of any insurance policy. 14 (2)(3)As a condition of maintaining its authority to 15 transact insurance in this state, an insurer transacting automo- 16 bile insurance or home insurance in this state shall not cancel 17 anagent'sINSURANCE PRODUCER'S contract or otherwise terminate 18 anagent'sINSURANCE PRODUCER'S authority to represent the 19 insurer with respect to automobile insurance or home insurance, 20 except for 1 or more of the following reasons: 21 (a) Malfeasance. 22 (b) Breach of fiduciary duty or trust. 23 (c) A violation of this act. 24 (d) Failure to perform as provided by the contract between 25 the parties. 03087'01 38 1 (e) Submission of less than 25 applications for home 2 insurance and automobile insurance within the immediately 3 preceding 12-month period. 4 (3)(4)Subsection(3)(2) shall not be construed as 5 permitting a termination of anagent'sINSURANCE PRODUCER'S 6 authority based primarily upon any of the following: 7 (a) The geographic location of theagent'sINSURANCE 8 PRODUCER'S home insurance or automobile insurance business. 9 (b) The actual or expected loss experience of theagent's10 INSURANCE PRODUCER'S automobile or home insurance business, 11 related in whole or in part to the geographical location of that 12 business. 13 (c) The performance of theagent'sINSURANCE PRODUCER'S 14 obligations under chapter 21. 15 (4)(5)Subsection(3)(2) and the written notice 16 requirementprescribed in subsection (1) shallUNDER SECTION 17 1208B(4) DO not apply with respect to anagentINSURANCE 18 PRODUCER who is an employee of an insurer or to anagent19 INSURANCE PRODUCER who by contractual agreement represents only 1 20 insurer or group of affiliated insurers, if the property rights 21 in the renewal are owned by the insurer or group of affiliated 22 insurers and the cancellation or termination of theagent's23 INSURANCE PRODUCER'S contract does not result in the cancellation 24 or nonrenewal of any home or automobile insurance policy. 25 (5)(6)As used in this section, "automobile insurance" 26 and "home insurance" mean those terms as defined in chapter 21. 03087'01 39 1 SEC. 1211. A NATURAL PERSON RESIDENT IN THIS STATE MAY 2 SOLICIT APPLICATIONS FOR INSURANCE AND COLLECT PREMIUMS ON BEHALF 3 OF A LICENSED INSURANCE PRODUCER RESIDENT IN THIS STATE IF HE OR 4 SHE IS SO AUTHORIZED TO ACT BY A WRITTEN CONTRACT WITH THE INSUR- 5 ANCE PRODUCER, AND THE CONTRACT SPECIFIES THE EXTENT OF HIS OR 6 HER AUTHORITY TO ACT, HE OR SHE IS LICENSED TO ACT AS A SOLICITOR 7 IN ACCORDANCE WITH THIS CHAPTER, AND THE INSURANCE PRODUCER HAS 8 NOTIFIED THE COMMISSIONER OF THE CONTRACT. 9 SEC. 1211A. AN INSURANCE PRODUCER DOING BUSINESS UNDER ANY 10 NAME OTHER THAN THE PRODUCER'S LEGAL NAME SHALL NOTIFY THE COM- 11 MISSIONER PRIOR TO USING THE ASSUMED NAME. 12 SEC. 1211B. (1) THE COMMISSIONER MAY ISSUE A TEMPORARY 13 INSURANCE PRODUCER LICENSE FOR A PERIOD NOT TO EXCEED 180 DAYS 14 WITHOUT REQUIRING AN EXAMINATION IF THE COMMISSIONER CONSIDERS 15 THAT THE TEMPORARY LICENSE IS NECESSARY FOR THE SERVICING OF AN 16 INSURANCE BUSINESS IN THE FOLLOWING CASES: 17 (A) TO THE SURVIVING SPOUSE OR COURT-APPOINTED PERSONAL REP- 18 RESENTATIVE OF A LICENSED INSURANCE PRODUCER WHO DIES OR BECOMES 19 MENTALLY OR PHYSICALLY DISABLED TO ALLOW ADEQUATE TIME FOR THE 20 SALE OF THE INSURANCE BUSINESS OWNED BY THE PRODUCER OR FOR THE 21 RECOVERY OR RETURN OF THE PRODUCER TO THE BUSINESS OR TO PROVIDE 22 FOR THE TRAINING AND LICENSING OF NEW PERSONNEL TO OPERATE THE 23 PRODUCER'S BUSINESS. 24 (B) TO A MEMBER OR EMPLOYEE OF A BUSINESS ENTITY LICENSED AS 25 AN INSURANCE PRODUCER, UPON THE DEATH OR DISABILITY OF AN INDI- 26 VIDUAL DESIGNATED IN THE BUSINESS ENTITY APPLICATION OR THE 27 LICENSE. 03087'01 40 1 (C) TO THE DESIGNEE OF A LICENSED INSURANCE PRODUCER 2 ENTERING ACTIVE SERVICE IN THE ARMED FORCES OF THE UNITED STATES 3 OF AMERICA. 4 (D) IN ANY OTHER CIRCUMSTANCE WHERE THE COMMISSIONER CONSID- 5 ERS THAT THE PUBLIC INTEREST WILL BEST BE SERVED BY THE ISSUANCE 6 OF THIS LICENSE. 7 (2) THE COMMISSIONER MAY BY ORDER LIMIT THE AUTHORITY OF ANY 8 TEMPORARY LICENSEE IF HE OR SHE CONSIDERS IT NECESSARY TO PROTECT 9 INSUREDS AND THE PUBLIC. THE COMMISSIONER MAY REQUIRE THE TEMPO- 10 RARY LICENSEE TO HAVE A SUITABLE SPONSOR WHO IS A LICENSED 11 PRODUCER OR INSURER AND WHO ASSUMES RESPONSIBILITY FOR ALL ACTS 12 OF THE TEMPORARY LICENSEE AND MAY IMPOSE OTHER SIMILAR REQUIRE- 13 MENTS DESIGNED TO PROTECT INSUREDS AND THE PUBLIC. THE COMMIS- 14 SIONER MAY BY ORDER REVOKE A TEMPORARY LICENSE IF THE INTEREST OF 15 INSUREDS OR THE PUBLIC IS ENDANGERED. A TEMPORARY LICENSE MAY 16 NOT CONTINUE AFTER THE OWNER OR THE PERSONAL REPRESENTATIVE DIS- 17 POSES OF THE BUSINESS. 18 Sec. 1214. (1) An application for a license to act as a 19 solicitor shall be made to the commissioner and shall be accom- 20 panied by a notice of appointment from the sponsoring licensed 21agentINSURANCE PRODUCER. The application and the notice of 22 appointment shall be on forms prescribed by the commissioner. 23 (2) Within a reasonable time after receipt of a properly 24 completed application and notice of appointment forms, the com- 25 missioner shall subject the applicant to a written examination. 26Beginning July 1, 1987, theTHE examination shall be given only 27 after the applicant has completed a program of study registered 03087'01 41 1 with the commissioner as provided in section 1204a. A 2 certificate of completion of the registered program of study 3 shall be filed with the commissioner on a form prescribed by the 4 commissioner and shall indicate that the course of study was com- 5 pleted by the applicant not more than 6 months before the appli- 6 cation is received by the commissioner. An applicant who has 7 failed to pass the examination may take subsequent examinations 8 as determined by rules promulgated by the commissioner. The com- 9 missioner may waive the examination or program of study require- 10 ments of this section for a person who applies for a limited 11 lines license as designated by the commissioner or for a person 12 who has been licensed as anagentINSURANCE PRODUCER or solici- 13 tor within the preceding2412 months. The commissioner may 14 conduct investigations and propound interrogatories concerning 15 the applicant's qualifications, residence, business affiliations 16whichTHAT are relevant to the applicant's qualifications as a 17 solicitor, and any other matterwhichthe commissioner consid- 18 ers necessary or advisable to determine compliance with this 19 chapter, or for protection of the public. The commissioner shall 20 make a decision on the application within 60 days after the 21 applicant passes the examination or within 60 days after receipt 22 of a properly completed application and notice of appointment 23 forms. 24 (3) After examination, investigation, and interrogatories, 25 the commissioner shall license an applicant if the commissioner 26 determines that the applicant meets all of the following: 03087'01 42 1 (a) Is authorized by written contract to act on behalf of a 2 licensedagentINSURANCE PRODUCER. 3 (b) Possesses reasonable understanding of the provisions, 4 terms, and conditions of the insurance the applicant will be 5 licensed to solicit. 6 (c) Possesses reasonable understanding of the insurance laws 7 of this state. 8 (d) Intends in good faith to act as a solicitor. 9 (e) Is honest and trustworthy. 10 (f) Possesses a good business reputation. 11 (g) Possesses good moral character to act as a solicitor. 12 (4) The commissioner may require an applicant or a licensed 13 solicitor to disclose fully the identity of his or her employers, 14 partners, and employees, may propound reasonable interrogatories, 15 and may refuse to issue or to continue a license if the commis- 16 sioner is satisfied that any employer, partner, or employee who 17 can materially influence the applicant or the solicitor is not a 18 fit and proper person under the standards of this chapter and 19 that the action reasonably is necessary to protect the public. 20 (5) An applicant may act on behalf of the applicant's spon- 21 soringagentINSURANCE PRODUCER after receipt of a license from 22 the commissioner. 23 (6) The license shall set forth the name of the solicitor 24 and the lines of insurance permitted by the license. A person 25 who is licensed to act as a solicitor for casualty insurance is 26 permitted to act as a solicitor for legal expense insurance 03087'01 43 1 without obtaining additional authorization or licensure from the 2 commissioner. 3 (7) The license shall continue in effect until suspended or 4 revoked by the commissioner or voluntarily surrendered by the 5 licensee. The commissioner shall demand that the licensee sur- 6 render the license when the commissioner's records indicate that 7 the licensee is without authority from anyagentINSURANCE 8 PRODUCER to act as a solicitor. 9 (8) The commissioner may reexamine a licensed solicitor at 10 any time upon written notice with stated reasons. 11 Sec. 1224. (1) An application for a license to act as an 12 adjuster shall be made to the commissioner on forms prescribed by 13 the commissioner. 14 (2) Within a reasonable time after receipt of a properly 15 completed application form, the commissioner may subject the 16 applicant to a written examination, and may conduct investiga- 17 tions and propound interrogatories concerning the applicant's 18 qualifications, residence, business affiliations, and any other 19 matter that the commissioner considers necessary or advisable to 20 determine compliance with this chapter, or for the protection of 21 the public. THE COMMISSIONER MAY WAIVE THE EXAMINATION REQUIRE- 22 MENTS OF THIS SUBSECTION FOR A PERSON WHO HAS BEEN LICENSED AS AN 23 ADJUSTER WITHIN THE PRECEDING 12 MONTHS. The commissioner shall 24 make a decision on the application within 60 days after receipt 25 of a properly completed application form. 26 (3) After examination, investigation, and interrogatories, 27 the commissioner shall issue a license to an applicant if the 03087'01 44 1 commissioner determines that the applicant possesses reasonable 2 understanding of the provisions, terms, and conditions of the 3 insurance with which the applicant will deal, possesses reason- 4 able understanding of the insurance laws of this state, intends 5 in good faith to act as an adjuster, possesses a good business 6 reputation, and possesses good moral character to act as an 7 adjuster. Persons currently licensed and new licenses issued are 8 subject to any additional restrictions under which a resident of 9 this state would be licensed in the jurisdiction in which the 10 applicant resides. Any such restriction shall be imposed by the 11 commissioner upon the date set for payment of the license fee. 12 The commissioner shall not issue a new license or accept an 13 annual license fee continuing a current license to either of the 14 following: 15 (a) A person residing in a state that denies a comparable 16 license to a resident of this state solely because of residency. 17 (b) A person who is employed either directly or indirectly 18 by an adjuster that is a resident of a state, or by an adjuster's 19 business that has a majority of shareholders, members, officers, 20 directors, or owners that are residents of a state, that denies a 21 comparable license to a resident of this state solely because of 22 residency. An affidavit from an applicant establishing compli- 23 ance with this subdivision may be relied on by the commissioner 24 to show compliance with this subdivision. 25 (4) The commissioner shall not issue a license to act as an 26 adjuster to a person who is employed by, owns stock in, is an 03087'01 45 1 officer or director of, or in any other manner is connected with, 2 a fire repair contractor. 3 Sec. 1234. (1) An application for a license to act as an 4 insurance counselor shall be made to the commissioner on forms 5 prescribed by the commissioner. 6 (2) Within a reasonable time after receipt of a properly 7 completed application form, the commissioner shall subject the 8 applicant to a written examination, and may conduct investiga- 9 tions and propound interrogatories concerning the applicant's 10 qualifications, residence, business affiliations, and any other 11 matterwhichTHAT the commissioner considers necessary or 12 advisable to determine compliance with this chapter, or for the 13 protection of the public. THE COMMISSIONER MAY WAIVE THE EXAMI- 14 NATION REQUIREMENTS OF THIS SUBSECTION FOR A PERSON WHO HAS BEEN 15 LICENSED AS AN INSURANCE COUNSELOR WITHIN THE PRECEDING 12 16 MONTHS. The commissioner shall make a decision on the application 17 within 60 days after receipt of a properly completed application 18 form. 19 (3) After examination, investigation, and interrogatories, 20 the commissioner shall issue a license to an applicant if the 21 commissioner determines that the applicant possesses reasonable 22 understanding of the provisions, terms, and conditions of the 23 insurance concerningwhichTHAT the applicant will counsel, 24 possesses reasonable understanding of the insurance laws of this 25 state, intends in good faith to act as an insurance counselor, 26 possesses a good business reputation, and possesses good moral 27 character to act as an insurance counselor. 03087'01 46 1 Sec. 1238. (1) When applying for a license to act asan2agent,A solicitor, counselor, or adjuster, each applicant shall 3 report his or her mailing address to the commissioner.An4agent,A solicitor, counselor, or adjuster shall notify the com- 5 missioner of any change in his or her mailing address within 30 6 days of such change.A fee of $3.00 shall accompany each change7of address to cover costs of recording such change. A fee col-8lected under this subsection shall be turned over to the state9treasurer and credited to the general fund of the state.The 10 commissioner shall maintain the mailing address of eachagent,11 solicitor, counselor, or adjuster on file. 12 (2) A notice of hearing or service of process may be served 13 uponan agent,A solicitor, counselor, or adjuster in any 14 action or proceeding for a violation of this act by mailing 15suchTHE notice or process by first-class mail to the 16agent's,solicitor's, counselor's, or adjuster's mailing 17 addresswhich has beenreported to the commissionerpursuant18toUNDER subsection (1). 19 SEC. 1239. (1) IN ADDITION TO ANY OTHER POWERS UNDER THIS 20 ACT, THE COMMISSIONER MAY PLACE ON PROBATION, SUSPEND, REVOKE, OR 21 REFUSE TO ISSUE AN INSURANCE PRODUCER'S LICENSE OR MAY LEVY A 22 CIVIL FINE UNDER SECTION 1244 OR ANY COMBINATION OF ACTIONS FOR 23 ANY 1 OR MORE OF THE FOLLOWING CAUSES: 24 (A) PROVIDING INCORRECT, MISLEADING, INCOMPLETE, OR MATERI- 25 ALLY UNTRUE INFORMATION IN THE LICENSE APPLICATION. 03087'01 47 1 (B) VIOLATING ANY INSURANCE LAWS OR VIOLATING ANY 2 REGULATION, SUBPOENA, OR ORDER OF THE COMMISSIONER OR OF ANOTHER 3 STATE'S INSURANCE COMMISSIONER. 4 (C) OBTAINING OR ATTEMPTING TO OBTAIN A LICENSE THROUGH MIS- 5 REPRESENTATION OR FRAUD. 6 (D) IMPROPERLY WITHHOLDING, MISAPPROPRIATING, OR CONVERTING 7 ANY MONEY OR PROPERTY RECEIVED IN THE COURSE OF DOING INSURANCE 8 BUSINESS. 9 (E) INTENTIONALLY MISREPRESENTING THE TERMS OF AN ACTUAL OR 10 PROPOSED INSURANCE CONTRACT OR APPLICATION FOR INSURANCE. 11 (F) HAVING BEEN CONVICTED OF A FELONY. 12 (G) HAVING ADMITTED OR BEEN FOUND TO HAVE COMMITTED ANY 13 INSURANCE UNFAIR TRADE PRACTICE OR FRAUD. 14 (H) USING FRAUDULENT, COERCIVE, OR DISHONEST PRACTICES OR 15 DEMONSTRATING INCOMPETENCE, UNTRUSTWORTHINESS, OR FINANCIAL IRRE- 16 SPONSIBILITY IN THE CONDUCT OF BUSINESS IN THIS STATE OR 17 ELSEWHERE. 18 (I) HAVING AN INSURANCE PRODUCER LICENSE OR ITS EQUIVALENT 19 DENIED, SUSPENDED, OR REVOKED IN ANY OTHER STATE, PROVINCE, DIS- 20 TRICT, OR TERRITORY. 21 (J) FORGING ANOTHER'S NAME TO AN APPLICATION FOR INSURANCE 22 OR TO ANY DOCUMENT RELATED TO AN INSURANCE TRANSACTION. 23 (K) IMPROPERLY USING NOTES OR ANY OTHER REFERENCE MATERIAL 24 TO COMPLETE AN EXAMINATION FOR AN INSURANCE LICENSE. 25 (l) KNOWINGLY ACCEPTING INSURANCE BUSINESS FROM AN INDIVID- 26 UAL WHO IS NOT LICENSED. 03087'01 48 1 (M) FAILING TO COMPLY WITH AN ADMINISTRATIVE OR COURT ORDER 2 IMPOSING A CHILD SUPPORT OBLIGATION. 3 (N) FAILING TO PAY SINGLE BUSINESS TAX OR COMPLY WITH ANY 4 ADMINISTRATIVE OR COURT ORDER DIRECTING PAYMENT OF SINGLE BUSI- 5 NESS TAX. 6 (2) BEFORE THE COMMISSIONER DENIES AN APPLICATION FOR A 7 LICENSE, THE COMMISSIONER SHALL NOTIFY IN WRITING THE APPLICANT 8 OR LICENSEE OF THE DENIAL AND OF THE REASON FOR THE DENIAL. NOT 9 LATER THAN 30 DAYS AFTER THIS WRITTEN DENIAL, THE APPLICANT OR 10 LICENSEE MAY MAKE WRITTEN DEMAND UPON THE COMMISSIONER FOR A 11 HEARING BEFORE THE COMMISSIONER TO DETERMINE THE REASONABLENESS 12 OF THE COMMISSIONER'S ACTION. A HEARING UNDER THIS SUBSECTION 13 SHALL BE HELD PURSUANT TO THE ADMINISTRATIVE PROCEDURES ACT OF 14 1969, 1969 PA 306, MCL 24.201 TO 24.328. 15 (3) THE LICENSE OF A BUSINESS ENTITY MAY BE SUSPENDED, 16 REVOKED, OR REFUSED IF THE COMMISSIONER FINDS, AFTER HEARING, 17 THAT AN INDIVIDUAL LICENSEE'S VIOLATION WAS KNOWN OR SHOULD HAVE 18 BEEN KNOWN BY 1 OR MORE OF THE PARTNERS, OFFICERS, OR MANAGERS 19 ACTING ON BEHALF OF THE PARTNERSHIP OR CORPORATION AND THE VIOLA- 20 TION WAS NEITHER REPORTED TO THE COMMISSIONER NOR CORRECTIVE 21 ACTION TAKEN. 22 (4) IN ADDITION TO OR IN LIEU OF ANY APPLICABLE DENIAL, SUS- 23 PENSION, OR REVOCATION OF A LICENSE, A PERSON MAY, AFTER HEARING, 24 BE SUBJECT TO A CIVIL FINE UNDER SECTION 1244. 25 (5) IN ADDITION TO THE PENALTIES UNDER THIS SECTION, THE 26 COMMISSIONER MAY ENFORCE THE PROVISIONS OF AND IMPOSE ANY PENALTY 27 OR REMEDY AUTHORIZED BY THIS ACT AGAINST ANY PERSON WHO IS UNDER 03087'01 49 1 INVESTIGATION FOR OR CHARGED WITH A VIOLATION OF THIS ACT EVEN IF 2 THE PERSON'S LICENSE OR REGISTRATION HAS BEEN SURRENDERED OR HAS 3 LAPSED BY OPERATION OF LAW. 4 SEC. 1240. (1) AN INSURER OR INSURANCE PRODUCER SHALL NOT 5 PAY A COMMISSION, SERVICE FEE, OR OTHER VALUABLE CONSIDERATION TO 6 A PERSON FOR SELLING, SOLICITING, OR NEGOTIATING INSURANCE IN 7 THIS STATE IF THAT PERSON IS REQUIRED TO BE LICENSED UNDER THIS 8 CHAPTER AND IS NOT SO LICENSED. 9 (2) A PERSON SHALL NOT ACCEPT A COMMISSION, SERVICE FEE, OR 10 OTHER VALUABLE CONSIDERATION FOR SELLING, SOLICITING, OR NEGOTI- 11 ATING INSURANCE IN THIS STATE IF THAT PERSON IS REQUIRED TO BE 12 LICENSED UNDER THIS CHAPTER AND IS NOT LICENSED. 13 (3) RENEWAL OR OTHER DEFERRED COMMISSIONS MAY BE PAID TO A 14 PERSON FOR SELLING, SOLICITING, OR NEGOTIATING INSURANCE IN THIS 15 STATE IF THE PERSON WAS REQUIRED TO BE LICENSED UNDER THIS CHAP- 16 TER AT THE TIME OF THE SALE, SOLICITATION, OR NEGOTIATION AND WAS 17 LICENSED AT THAT TIME. 18 (4) AN INSURER OR INSURANCE PRODUCER MAY PAY OR ASSIGN COM- 19 MISSIONS, SERVICE FEES, OR OTHER VALUABLE CONSIDERATION TO AN 20 INSURANCE AGENCY OR TO PERSONS WHO DO NOT SELL, SOLICIT, OR NEGO- 21 TIATE INSURANCE IN THIS STATE, UNLESS THE PAYMENT WOULD VIOLATE 22 SECTION 2024. 23 Sec. 1242. (1) The commissioner shall refuse to grant a 24 license to act asan agent,a solicitor, an insurance 25 counselor, or an adjuster to an applicant who fails to meet the 26 requirements of this chapter. Notice of the refusal shall be in 27 writing and shall set forth the basis for the refusal. If the 03087'01 50 1 applicant submits a written request within 30 days after mailing 2 of the notice of refusal, the commissioner shall promptly conduct 3 a hearing in which the applicant shall be given an opportunity to 4 show compliance with the requirements of this chapter. 5 (2) The commissioner, after notice and opportunity for a 6 hearing, may suspend or revoke the license ofan agent,A 7 solicitor, insurance counselor, or adjuster who fails to maintain 8 the standards required for initial licensing or who violates any 9 provision of this act. 10 (3) After notice and opportunity for a hearing, the commis- 11 sioner may refuse to grant or renew a license to act asan12agent,A solicitor, adjuster, or insurance counselor if he OR 13 SHE determines by a preponderance of the evidence, that it is 14 probable that the business or primary occupation of the applicant 15 will give rise to coercion, indirect rebating of commissions, or 16 other practices in the sale of insurancewhichTHAT are prohib- 17 ited by law. 18 (4) Without prior hearing, the commissioner may order sum- 19 mary suspension of a license if he OR SHE finds that protection 20 of the public requires emergency action and incorporates this 21 finding in his OR HER order. The suspension shall be effective 22 on the date specified in the order or upon service of a certified 23 copy of the order on the licensee, whichever is later. If 24 requested, the commissioner shall conduct a hearing on the sus- 25 pension within a reasonable time but not later than 20 days after 26 the effective date of the summary suspension unless the person 27 whose license is suspended requests a later date. At the 03087'01 51 1 hearing, the commissioner shall determine if the suspension 2 should be continued or if the suspension should be withdrawn, 3 and, if proper notice is given, may determine if the license 4 should be revoked. The commissioner shall announce his OR HER 5 decision within 30 days after conclusion of the hearing. The 6 suspension shall continue until the decision is announced. 7 (5) The commissioner, or his OR HER designated deputy, may 8 issue subpoenaswith the approval of a circuit court judge of9the circuit court of Ingham countyto require the attendance and 10 testimony of witnesses and the production of documents necessary 11 to the conduct of the hearing and may designate anemployee of12the insurance bureauOFFICE OF FINANCIAL AND INSURANCE SERVICES 13 EMPLOYEE to make service.thereof.The subpoenas issued by the 14 commissioner, or his OR HER designated deputy, may be enforced 15 uponapplication by themPETITION to the circuit court of 16 Ingham countyby proceedings in contempt thereofTO SHOW CAUSE 17 WHY A CONTEMPT ORDER SHOULD NOT BE ISSUED, as provided by law. 18 Sec. 1243. (1) As used in this section: 19 (a) "Act" means the insurance code of 1956,Act No. 218 of20the Public Acts of 1956, being sections 500.100 to 500.8302 of21the Michigan Compiled Laws1956 PA 218, MCL 500.100 TO 22 500.8302. 23 (b) "Affiliate" means a person that directly or indirectly 24 or through 1 or more intermediaries, controls or is controlled by 25 another or is under common control with another. An affiliate 26 includes a person who for any 12-month period makes a monthly 27 average of 10 or more referrals to lenders for the purpose of 03087'01 52 1 procuring a loan and the person receives consideration for making 2suchTHOSE referrals. 3 (c) "Agent" means an individual licensed as anagent4 INSURANCE PRODUCER, broker, solicitor, or insurance counselor 5 under this act. 6 (d) "Agency" means an insurance agency licensed under this 7 act. 8 (e) "Control" means control as defined in section 115. 9 (f) "Insurance product" means any product or service regu- 10 lated, in whole or in part, by the commissioner. 11 (g) "Lender" means a person or entity who directly or indi- 12 rectly, in the ordinary course of business regularly makes, 13 arranges, offers to make, or purchases and services a loan as 14 defined by subdivision (h). A lender includes a mortgage 15 broker. If a person purchases an interest in but does not serv- 16 ice a loan, that person is not a lender under this section for 17 the purposes of that loan. 18 (h) "Loan" means an agreement to lend money or to finance 19 goods or services. Loan does not include any of the following: 20 (i) The financing of insurance premiums. 21 (ii) A loan from the cash value of an insurance policy. 22 (iii) A home improvement charge agreement or a home improve- 23 ment installment contract made under the home improvement finance 24 act,Act No. 332 of the Public Acts of 1965, being sections25445.1101 to 445.1431 of the Michigan Compiled Laws1965 PA 332, 26 MCL 445.1101 TO 445.1431. 03087'01 53 1 (iv) A retail installment contract of $10,000.00 or less or 2 a retail charge agreement made under the retail installment sales 3 act,Act No. 224 of the Public Acts of 1966, being sections4445.851 to 445.873 of the Michigan Compiled Laws1966 PA 224, 5 MCL 445.851 TO 445.873. 6 (i) "Loan representative" means an employee or representa- 7 tive of a lender that deals directly with loan applicants in 8 accepting loan applications or approving or closing a loan. 9 (j) "Person" means an individual, corporation, partnership, 10 association, or any other legal entity. 11 (k) "Required insurance" means any insurance product that a 12 borrower is required to obtain as a condition of closing a loan. 13 (2) The commissioner shall issue an insurance agency license 14 to an affiliate of a lender or an agent license to an individual 15 who is an employee of the affiliate if the commissioner deter- 16 mines that the affiliate or employee has met the prerequisites 17 for licensure under this act and that the affiliate and the 18 lender will conduct the sale of insurance in compliance with this 19 section. If a lender acquires ownership in or becomes affiliated 20 with an agency with an existing license under this act, an appli- 21 cation for a new license is not required. The commissioner may 22 issue an insurance agency or agent license directly to a lender 23 or an employee of the lender who is not an employee of an affili- 24 ated agency if the commissioner determines that the lender or 25 employee has met the prerequisites for licensure and will conduct 26 the sale of insurance in substantial compliance with this 27 section. 03087'01 54 1 (3) This section applies to all of the following: 2 (a) A lender that has been affiliated with a licensed agency 3 or has employed a licensed agent beforethe effective date of4this sectionMARCH 30, 1995 and that affiliation or employment 5 continues or is renewed ON AND afterthe effective date of this6sectionMARCH 30, 1995. 7 (b) A lender, affiliate, or employee of a lender that has 8 been licensed as an agency or agent beforethe effective date of9this sectionMARCH 30, 1995 and maintains that licensure ON AND 10 afterthe effective date of this sectionMARCH 30, 1995, to the 11 extent that the provisions of this section apply. 12 (c) A person affiliated with a lender that receives an 13 agency license or an individual employed by the lender who 14 receives an agent license. 15 (d) A lender that is licensed as an agency, to the extent 16 that the provisions of this section apply. 17 (e) A lender that acquires ownership in an agency or other- 18 wise becomes affiliated with a licensed insurance agency. 19 (f) A lender that employs a licensed insurance agent. 20 (4) A lender, an agency affiliated with a lender, or an 21 agent employed by a lender may be licensed to sell any insurance 22 product. 23 (5) A lender may own an insurance agency in whole or in part 24 and shall provide notice to the commissioner and the commissioner 25 of the financial institutions bureau of any acquisition, in whole 26 or in part, of an insurance agency. 03087'01 55 1 (6) Applications for insurance agency or agent licenses 2 under this act shall be promptly reviewed by the commissioner. 3 An application shall be considered approved by the commissioner 4 if the commissioner has not denied the application for good cause 5 within 60 days after the date the application is filed.An6application filed before November 1, 1994 shall be considered7approved by the commissioner if the commissioner has not denied8the application for good cause within 10 days after the effective9date of this section.The commissioner shall issue the insurance 10 agency or agent license within 10 days of approval. 11 (7) Interrogatories propounded by the commissionerpursuant12to section 1204(3)regarding the proposed business conduct 13 between a lender and an affiliated insurance agency shall be 14 limited to questions pertaining to compliance with this section. 15 (8) There is no limit on the percentage of insurance busi- 16 ness sold to customers of a lender through an insurance agency 17 affiliated with the lender or agent employed by the lender if 18 sold in compliance with this act. 19 (9) A lender shall not do either of the following: 20 (a) Require a borrower to purchase any policy or contract of 21 insurance through a particular agency or agent or with a particu- 22 lar insurer or fix or vary the terms or conditions of a loan as 23 an inducement to purchase insurance. This subdivision does not 24 prohibit a lender from requiring a borrower to purchase a 25 required insurance policy that conforms to the requirements, if 26 any, of the loan. 03087'01 56 1 (b) Except as otherwise provided by law, require a person to 2 purchase any insurance product from the lender or an affiliate as 3 a condition of making a loan. 4 (10) The board of directors of an insurance agency affili- 5 ated with a lender shall act separately from the board of direc- 6 tors of the lender. A director of a lender may also serve as a 7 director of an affiliated agency, except that a majority of 8 directors of the affiliated agency shall not be directors of the 9 lender. This subsection does not apply to a lender that is also 10 the licensed agency. 11 (11) An officer or employee of a lender may be an officer or 12 employee of an affiliated agency. However, except as otherwise 13 provided by this section, for purposes of soliciting or selling 14 insurance products, such officer or employee shall not use or 15 disclose information that the lender may not disclose to the 16 affiliated agency. 17 (12) An officer or employee of a lender shall not directly 18 or indirectly delay or impede the completion of a loan transac- 19 tion for the purpose of influencing a consumer's selection or 20 purchase of insurance products from an agent, solicitor, agency, 21 or insurer that is not affiliated with the lender. 22 (13) A loan representative may not act as an agent or solic- 23 itor for the sale or provision of required insurance related to 24 an application, approval, commitment, or closing of a loan if the 25 loan representative participated in the application, approval, 26 commitment, or closing of that loan. 03087'01 57 1 (14) A lender or its employees shall not knowingly initiate 2 a discussion concerning the availability of insurance products 3 from the lender or an affiliated agency to or with a person in 4 response to an inquiry about credit made by the person or to a 5 loan applicant prior to the loan applicant being notified of the 6 disposition of a loan application. This subsection does not pro- 7 hibit a lender or its employees from discussing with the person 8 making the inquiry or loan applicant that certain required insur- 9 ance must be maintained as a condition of obtaining a loan. 10 (15) If asked about the availability of insurance products 11 by a person inquiring about a loan or a loan applicant, the 12 lender may indicate that insurance products are available from 13 the lender or an affiliated agency and may provide instruction 14 about how to obtain further information concerning the agency or 15 agent and available insurance products. 16 (16) If insurance is required as a condition of obtaining a 17 loan, and if the required insurance is available through the 18 lender or an affiliate of the lender, the lender shall disclose 19 to the applicant all of the following: 20 (a) That the lender will not require the borrower to pur- 21 chase any policy or contract of insurance through a particular 22 agent, agency, or with a particular insurer. 23 (b) Except as otherwise provided by law, that the lender 24 will not require the borrower to purchase any insurance product 25 from the lender or an affiliate as a condition of the loan. 03087'01 58 1 (c) That the purchase of any insurance product from the 2 lender or its affiliated agency is optional and will not in any 3 way affect current or future credit decisions. 4 (17) The disclosure required by subsection (16) shall be 5 made to a loan applicant at the time the loan applicant inquires 6 about the availability of required insurance or at such time as 7 the lender advises the loan applicant that the required insurance 8 is available through the lender or an affiliate of the lender, 9 whichever is earlier. The disclosure shall be confirmed in writ- 10 ing, dated, and signed by the applicant no later than the closing 11 of the loan. 12 (18) If insurance is required as a condition of obtaining a 13 loan, the credit and insurance transactions shall be completed 14 independently and through separate documents. A loan for premi- 15 ums on required insurance shall not be included in the primary 16 credit without the written consent of the customer. 17 (19) The offering of a loan by a lender and the sale or pro- 18 vision of insurance products by the lender or an affiliated 19 agency shall be made in different areas that are clearly and con- 20 spicuously signed and separated so as to preclude confusion on 21 the part of customers. However, in the limited situation where 22 physical or employee considerations prevent lending and the sale 23 of insurance products from being conducted in different areas, 24 the lender shall take appropriate measures to minimize customer 25 confusion. In unique circumstances to accommodate the needs of 26 or for the convenience of particular customers, this subsection 27 does not prohibit on an irregular basis, taking applications for 03087'01 59 1 loans, extensions of loans, and the sale of insurance products at 2 the same location. 3 (20) Signs and other informational material concerning the 4 availability of insurance products from the lender or an affili- 5 ated agency shall not be displayed in an area when loan applica- 6 tions are being taken and when loans are being closed in that 7 area. 8 (21) A lender, its employees, or its representatives may 9 advise the general public and its customers, through mailings or 10 otherwise, that insurance products are available from the lender 11 or affiliated agency and may advise the general public and its 12 customers how to obtain more information about those insurance 13 products, so long as: 14 (a) The information is not provided because of a submission 15 of any loan application until after the loan applicant has been 16 notified of the disposition of the application, or in response to 17 any inquiry about the availability, terms, and conditions of any 18 loan. 19 (b) The timing of the communications is not based on the 20 maturity or expiration date of a policy of required insurance or 21 an insurance policy in the lender's possession. 22 (c) No information concerning customers that is prohibited 23 for use in the solicitation or sale of insurance products under 24 subsections (23) and (25) is used to determine which customers 25 should receive the information. 26 (22) A lender may provide the names, addresses, telephone 27 numbers, and information related to account relationships with 03087'01 60 1 customers to an affiliated agency or an agent employed by the 2 lender so long as the lender does not disclose account balances 3 or maturity dates of certificates of deposit and does not dis- 4 close account relationships to an affiliated agency or an agent 5 employed by the lender in a manner that account balances or matu- 6 rity dates of certificates of deposit may be determined by the 7 agency or agent. This section does not prohibit disclosure of 8 minimum required balances, terms, or conditions of an account. 9 (23) A lender shall not directly or indirectly provide to an 10 affiliated agency or an agent employed by the lender the follow- 11 ing information if obtained from an insurance policy or preautho- 12 rized payment agreement that is in the possession of the lender: 13 (a) The expiration date of the insurance policy. 14 (b) The name of the insurance company that issued the 15 policy. 16 (c) The amount of the premium. 17 (d) Scheduled coverages and policy limits contained in the 18 policy. 19 (e) Any deductibles contained in the policy. 20 (f) Any information contained on the declaration sheet of 21 the policy. 22 (g) Cash or surrender values. 23 (24) A lender may disclose to an affiliated agency or an 24 agent employed by the lender information obtained from a policy 25 of required insurance that the borrower has failed to keep in 26 force, if the information is necessary to obtain the required 27 insurance through the affiliated agency, employee, or elsewhere. 03087'01 61 1 If a customer has failed to keep required insurance in force, 2 this section does not prohibit a lender from obtaining the 3 required insurance in accordance with the terms of the loan or 4 from obtaining insurance limited to repayment of the outstanding 5 balance due in the event of loss or damage to property used as 6 collateral on the loan. 7 (25) A lender shall not directly or indirectly provide to an 8 affiliated agency or agent employed by the lender the following 9 customer documents or information: 10 (a) Loan applications, except that a lender may provide to 11 an affiliated agency or agent employed by the lender the name, 12 address, telephone number, and account relationship concerning a 13 loan applicant after the applicant has been notified of the dis- 14 position of the application. 15 (b) Financial statements regarding assets, liabilities, net 16 worth, income, and expenses. 17 (c) Budgets or proposed budgets. 18 (d) Business plans. 19 (e) Contracts. 20 (f) Credit reports. 21 (g) Inventory records. 22 (h) Collateral offered as security for loans. 23 (i) Appraisals. 24 (j) Personal guarantees and related information. 25 (k) Insurance policy, certificate, or binder. 26 (26) This section does not require the lender to remove the 27 name, address, or other information concerning the customer from 03087'01 62 1 the customer list if information concerning a customer of a 2 lender is on a customer list by reason of other account relation- 3 ships with the lender and the lender is otherwise authorized to 4 disclose the list to an affiliate agency or an agent employed by 5 the lender. 6 (27) This section does not prohibit a lender from providing 7 information about the customers of the lender to an affiliated 8 agency or an agent employed by the lender if that information is 9 otherwise available from a public record. 10 (28) This section does not prohibit a lender from releasing 11 customer information in its possession to any person if the cus- 12 tomer authorizes the release of that information. The release 13 shall be in writing, dated, and signed by the customer. A lender 14 shall not knowingly ask a loan applicant to release such informa- 15 tion prior to the applicant being notified of the disposition of 16 the application unless the applicant has asked about the avail- 17 ability of insurance products as provided under subsection (15). 18 A lender shall not require the release as a condition of applying 19 for the loan. 20 (29) The use or disclosure of information allowed under this 21 section is not a violation of the use or disclosure of informa- 22 tion under section 2077. 23 (30) Except as provided in subsection (31), an insurance 24 agency or agent shall not reward or remunerate an affiliated 25 lender for procuring or inducing insurance product business for 26 the agency or agent or for furnishing leads and prospects or 27 acting in any other manner as an agent. This subsection does not 03087'01 63 1 preclude an affiliated agency from compensating its employees, 2 who may also be employees of the lender, or reimbursing its 3 affiliated lender at fair market value for any goods, services, 4 or facilities that the lender may provide to the agency or for 5 expense incurred by the lender in advising its customers and the 6 general public of the agency's services. 7 (31) An insurance agency may pay dividends and make other 8 distributions of assets to the agency's shareholders, including 9 an affiliated lender, as a return on the capital invested and 10 risks assumed by the shareholders or in conjunction with a 11 merger, liquidation, or other corporate transaction. 12 (32) This section does not prohibit a lender, or a manufac- 13 turer or an affiliate of a manufacturer acting as a lender, from 14 soliciting or selling insurance products to a closed dealership, 15 designated family member, new motor vehicle dealer, or proposed 16 new motor vehicle dealer. This subsection shall not be construed 17 to include customers of motor vehicle dealers. 18 (33) As used in subsection (32): 19 (a) "Closed dealership" means a closed dealership as defined 20 in section 2 ofAct No. 118 of the Public Acts of 1981, being21section 445.1562 of the Michigan Compiled Laws1981 PA 118, 22 MCL 445.1562. 23 (b) "Designated family member" means a designated family 24 member as defined in section 2 ofAct No. 118 of the Public Acts25of 19811981 PA 118, MCL 445.1562. 26 (c) "Manufacturer" means a manufacturer as defined in 27 section 4 ofAct No. 118 of the Public Acts of 1981, being03087'01 64 1section 445.1564 of the Michigan Compiled Laws1981 PA 118, 2 MCL 445.1564. 3 (d) "New motor vehicle dealer" means a new motor vehicle 4 dealer as defined in section 5 ofAct No. 118 of the Public Acts5of 1981, being section 445.1565 of the Michigan Compiled laws6 1981 PA 118, MCL 445.1565. 7 (e) "Proposed new motor vehicle dealer" means a proposed new 8 motor vehicle dealer as defined in section 5 ofAct No. 118 of9the Public Acts of 19811981 PA 118, MCL 445.1565. 10 (34) This section does not apply to insurance products 11 offered under the credit insurance act,Act No. 173 of the12Public Acts of 1958, being sections 550.601 to 550.624 of the13Michigan Compiled Laws1958 PA 173, MCL 550.601 TO 550.624. 14 (35) This section does not apply to the offering of life 15 insurance by a lender under section 4418. 16 (36) Notwithstanding section 4418, payment by an insurer of 17 consideration to an agency or agent licensed under this act for 18 an individual policy of insurance on the life of the borrower 19 issued in connection with a loan on a dwelling or mobile home 20 made or serviced by an affiliated lender is not considered a mon- 21 etary or financial benefit to the lender as a result of the 22 insurance. 23 (37) If after an opportunity for a hearing pursuant to the 24 administrative procedures act of 1969,Act No. 306 of the Public25Acts of 1969, being sections 24.201 to 24.328 of the Michigan26Compiled Laws1969 PA 306, MCL 24.201 TO 24.328, the 27 commissioner finds that a person has violated this section, the 03087'01 65 1 commissioner shall reduce the findings and decision to writing 2 and serve upon the person charged with the violation a copy of 3 the decision and an order requiring the person to cease and 4 desist from the violation. In addition, the commissioner may 5 order any of the following: 6 (a) For all violations committed in a 6-month period, the 7 payment of a civil fine of not more than $1,000.00 for each vio- 8 lation but not to exceed an aggregate civil penalty of 9 $30,000.00, unless the person knew or reasonably should have 10 known the person was in violation of this section, in which case 11 the civil fine shall not be more than $5,000.00 for each viola- 12 tion and shall not exceed an aggregate civil fine of 13 $150,000.00. A fine collected under this subdivision shall be 14 turned over to the state treasurer and credited to the general 15 fund of the state. 16 (b) That restitution be made to the insured or any other 17 person, including a customer claimant, to cover actual damages 18 directly attributable to the acts that are found to be in viola- 19 tion of this section by a person that knew or reasonably should 20 have known the acts were in violation of this section. 21 (c) The suspension or revocation of the person's license 22 under this act. 23 (38) If a person knowingly violates a cease and desist order 24 under this section and has been given notice and an opportunity 25 for a hearing as provided by this section, the commissioner may 26 order a civil fine of not more than $25,000.00 for each 27 violation, or a suspension or revocation of the person's license 03087'01 66 1 under this act, or both. However, an order issued by the 2 commissioner pursuant to this subsection shall not require the 3 payment of civil fines exceeding $250,000.00. A fine collected 4 under this subsection shall be turned over to the state treasurer 5 and credited to the general fund of the state. 6 (39) The commissioner may apply to the circuit court of 7 Ingham county for an order of the court enjoining a violation of 8 this section. 9 (40) An action under this section shall not be brought more 10 than 5 years after the occurrence of the violation that is the 11 basis of the action. 12 Sec. 1244. (1) If the commissioner finds that a person has 13 violated this chapter, after an opportunity for a hearing pursu- 14 ant to the administrative procedures act of 1969,Act No. 306 of15the Public Acts of 1969, being sections 24.201 to 24.315 of the16Michigan Compiled Laws1969 PA 306, MCL 24.201 TO 24.328, the 17 commissioner shall reduce the findings and decision to writing 18 and shall issue and cause to be served upon the person charged 19 with the violation a copy of the findings and an order requiring 20 the person to cease and desist from the violation. In addition, 21 the commissioner may order any of the following: 22 (a) Payment of a civil fine of not more than$300.0023 $500.00 for each violation. However, if the person knew or rea- 24 sonably should have known that he or she was in violation of this 25 chapter, the commissioner may order the payment of a civil fine 26 of not more than$1,500.00$2,500.00 for each violation. 27However, anAN order of the commissioner under this subsection 03087'01 67 1 shall not require the payment of civil fines exceeding 2$10,000.00$25,000.00. A fine collected under this subdivision 3 shall be turned over to the state treasurer and credited to the 4 general fund of the state. 5 (b) A refund of any overcharges. 6 (c) That restitution be made to the insured or other claim- 7 ant to cover incurred losses, damages, or other harm attributable 8 to the acts of the personwhich arefound to be in violation of 9 this chapter. 10 (d) The suspension or revocation of the person's license. 11 (2) The commissioner may by order, after notice and opportu- 12 nity for hearing, reopen and alter, modify, or set aside, in 13 whole or in part, an order issued under this section, if in the 14 opinion of the commissioner conditions of fact or of law have 15 changed to require that action, or if the public interest 16 requires that action. 17 (3) If a person knowingly violates a cease and desist order 18 under this chapter and has been given notice and an opportunity 19 for a hearing held pursuant to the administrative procedures act 20 of 1969,Act No. 306 of the Public Acts of 19691969 PA 306, 21 MCL 24.201 TO 24.328, the commissioner may order a civil fine of 22 not more than $10,000.00 for each violation, or a suspension or 23 revocation of the person's license, or both.However, anAN 24 order issued by the commissioner pursuant to this subsection 25 shall not require the payment of civil fines exceeding 26 $50,000.00. A fine collected under this subsection shall be 03087'01 68 1 turned over to the state treasurer and credited to the general 2 fund of the state. 3 (4) The commissioner may apply to the circuit court of 4 Ingham county for an order of the court enjoining a violation of 5 this chapter. 6 SEC. 1246. (1) ANY DOCUMENTS, MATERIALS, OR OTHER INFORMA- 7 TION IN THE CONTROL OR POSSESSION OF THE OFFICE OF FINANCIAL AND 8 INSURANCE SERVICES THAT IS FURNISHED BY AN INSURER, AN INSURANCE 9 PRODUCER, OR AN EMPLOYEE OR REPRESENTATIVE ACTING ON BEHALF OF 10 THE INSURER OR INSURANCE PRODUCER, OR OBTAINED BY THE COMMIS- 11 SIONER IN AN INVESTIGATION PURSUANT TO THIS SECTION IS CONFIDEN- 12 TIAL BY LAW AND PRIVILEGED, IS NOT SUBJECT TO THE FREEDOM OF 13 INFORMATION ACT, 1976 PA 442, MCL 15.231 TO 15.246, IS NOT 14 SUBJECT TO SUBPOENA, AND IS NOT SUBJECT TO DISCOVERY OR ADMISSI- 15 BLE IN EVIDENCE IN ANY PRIVATE CIVIL ACTION. HOWEVER, THE COM- 16 MISSIONER IS AUTHORIZED TO USE THE DOCUMENTS, MATERIALS, OR OTHER 17 INFORMATION IN THE FURTHERANCE OF ANY REGULATORY OR LEGAL ACTION 18 BROUGHT AS A PART OF THE COMMISSIONER'S DUTIES. 19 (2) NEITHER THE COMMISSIONER NOR ANY PERSON WHO RECEIVED 20 DOCUMENTS, MATERIALS, OR OTHER INFORMATION WHILE ACTING UNDER THE 21 COMMISSIONER'S AUTHORITY IS PERMITTED OR REQUIRED TO TESTIFY IN 22 ANY PRIVATE CIVIL ACTION CONCERNING ANY CONFIDENTIAL DOCUMENTS, 23 MATERIALS, OR INFORMATION UNDER SUBSECTION (1). 24 (3) IN ORDER TO ASSIST IN THE PERFORMANCE OF THE 25 COMMISSIONER'S DUTIES UNDER THIS CHAPTER, THE COMMISSIONER MAY DO 26 ANY OF THE FOLLOWING: 03087'01 69 1 (A) SHARE DOCUMENTS, MATERIALS, OR OTHER INFORMATION, 2 INCLUDING THE CONFIDENTIAL AND PRIVILEGED DOCUMENTS, MATERIALS, 3 OR INFORMATION SUBJECT TO SUBSECTION (1), WITH OTHER STATE, FED- 4 ERAL, AND INTERNATIONAL REGULATORY AGENCIES, WITH THE NATIONAL 5 ASSOCIATION OF INSURANCE COMMISSIONERS, ITS AFFILIATES OR SUBSID- 6 IARIES, AND WITH STATE, FEDERAL, AND INTERNATIONAL LAW ENFORCE- 7 MENT AUTHORITIES, PROVIDED THAT THE RECIPIENT AGREES TO MAINTAIN 8 THE CONFIDENTIALITY AND PRIVILEGED STATUS OF THE DOCUMENT, MATE- 9 RIAL, OR OTHER INFORMATION. 10 (B) RECEIVE DOCUMENTS, MATERIALS, OR INFORMATION, INCLUDING 11 OTHERWISE CONFIDENTIAL AND PRIVILEGED DOCUMENTS, MATERIALS, OR 12 INFORMATION, FROM THE NATIONAL ASSOCIATION OF INSURANCE COMMIS- 13 SIONERS, ITS AFFILIATES OR SUBSIDIARIES, AND FROM REGULATORY AND 14 LAW ENFORCEMENT OFFICIALS OF OTHER FOREIGN OR DOMESTIC JURISDIC- 15 TIONS, AND SHALL MAINTAIN AS CONFIDENTIAL OR PRIVILEGED ANY DOCU- 16 MENT, MATERIAL, OR INFORMATION RECEIVED WITH NOTICE OR THE UNDER- 17 STANDING THAT IT IS CONFIDENTIAL OR PRIVILEGED UNDER THE LAWS OF 18 THE JURISDICTION THAT IS THE SOURCE OF THE DOCUMENT, MATERIAL, OR 19 INFORMATION. 20 (C) ENTER INTO AGREEMENTS GOVERNING SHARING AND USE OF 21 INFORMATION CONSISTENT WITH THIS SUBSECTION. 22 (4) NO WAIVER OF ANY APPLICABLE PRIVILEGE OR CLAIM OF CONFI- 23 DENTIALITY IN THE DOCUMENTS, MATERIALS, OR INFORMATION SHALL 24 OCCUR AS A RESULT OF DISCLOSURE TO THE COMMISSIONER UNDER SECTION 25 1208B OR THIS SECTION, OR AS A RESULT OF SHARING AS AUTHORIZED 26 UNDER SUBSECTION (3). 03087'01 70 1 (5) THIS CHAPTER DOES NOT PROHIBIT THE COMMISSIONER FROM 2 RELEASING FINAL, ADJUDICATED ACTIONS INCLUDING FOR CAUSE 3 TERMINATIONS THAT ARE OPEN TO PUBLIC INSPECTION PURSUANT TO THE 4 FREEDOM OF INFORMATION ACT, 1976 PA 442, MCL 15.231 TO 15.246, TO 5 A DATABASE OR OTHER CLEARINGHOUSE SERVICE MAINTAINED BY THE 6 NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS OR ITS AFFILIATES 7 OR SUBSIDIARIES. 8 (6) AN INSURER, THE AUTHORIZED REPRESENTATIVE OF THE INSUR- 9 ER, OR AN INSURANCE PRODUCER THAT FAILS TO REPORT AS REQUIRED 10 UNDER SECTION 1208B OR THIS SECTION OR THAT IS FOUND TO HAVE 11 REPORTED WITH ACTUAL MALICE BY A COURT OF COMPETENT JURISDICTION 12 MAY, AFTER NOTICE AND HEARING, HAVE ITS LICENSE OR CERTIFICATE OF 13 AUTHORITY SUSPENDED OR REVOKED AND MAY BE FINED UNDER SECTION 14 1244. 15 SEC. 1247. (1) AN INSURANCE PRODUCER SHALL REPORT TO THE 16 COMMISSIONER ANY ADMINISTRATIVE ACTION TAKEN AGAINST THE INSUR- 17 ANCE PRODUCER IN ANOTHER JURISDICTION OR BY ANOTHER GOVERNMENTAL 18 AGENCY IN THIS STATE WITHIN 30 DAYS AFTER THE FINAL DISPOSITION 19 OF THE MATTER. THIS REPORT SHALL INCLUDE A COPY OF THE ORDER, 20 CONSENT TO ORDER, OR OTHER RELEVANT LEGAL DOCUMENTS. 21 (2) WITHIN 30 DAYS AFTER THE INITIAL PRETRIAL HEARING DATE, 22 AN INSURANCE PRODUCER SHALL REPORT TO THE COMMISSIONER ANY CRIMI- 23 NAL PROSECUTION OF THE INSURANCE PRODUCER TAKEN IN ANY 24 JURISDICTION. THE REPORT SHALL INCLUDE A COPY OF THE INITIAL 25 COMPLAINT FILED, THE ORDER RESULTING FROM THE HEARING, AND ANY 26 OTHER RELEVANT LEGAL DOCUMENTS. 03087'01 71 1 Sec. 1905. (1) A person shall not solicit insurance, bind 2 coverage, or in any other manner act as an agent or broker in the 3 transaction of surplus lines insurance unless licensed under this 4 chapter AND SECTION 1206A. 5 (2) A person shall not offer, solicit, make a quotation on, 6 sell, or issue a policy of insurance, binder, or any other evi- 7 dence of insurance with an unauthorized insurer except in compli- 8 ance with this chapter. 9 (3)A person licensed as a resident agent in this state10mayTO obtain a surplus lines licenseby doingUNDER SUBSEC- 11 TION (1), A PERSON SHALL DO all of the following: 12 (a)FilingFILE an application in the form and with the 13 information as the commissioner may reasonably require to deter- 14 mine the ability of the applicant to satisfactorily act in 15 accordance with this chapter. 16 (b)CompletingCOMPLETE an examination testing the 17 applicant's understanding of this chapter, the surplus lines 18 insurance business, and other chapters of this act, if required 19 by the commissioner. THE COMMISSIONER MAY WAIVE THE EXAMINATION 20 REQUIREMENTS FOR A PERSON WHO HAS BEEN LICENSED AS A SURPLUS 21 LINES LICENSEE WITHIN THE PRECEDING 12 MONTHS. 22 (c)ComplyingCOMPLY with sections 1204 to 1206. 23 (d)AgreeingAGREE to file with the commissioner, not 24 later than February 15 and August 15 annually, a sworn statement 25 of the charges for insurance procured or placed, and the amounts 26 returned on the insurance canceled, under the license, for the 27 preceding 6-month period ending December 31 and June 30, 03087'01 72 1 respectively; and at the time of filing the statement, paying to 2 the commissioner the 2% tax on premiums written and, instead of 3 the costs and expenses that may be imposed by the commissioner 4 pursuant to this chapter, a 0.5% regulatory fee on premiums writ- 5 ten as required by section 451. 6 (4) A surplus lines licensee may do any or all of the 7 following: 8 (a) Place insurance on risks in this state with eligible 9 unauthorized insurers. 10 (b) Act in the capacity of an agent or broker, as determined 11 by the contractual relationship with the eligible unauthorized 12 insurer or that insurer's legal representative. 13 (c) Place insurance on risks in this state, with unautho- 14 rized insurers that are not eligible unauthorized insurers, in 15 strict compliance with section 1950. If the insurance is pro- 16 vided through the participation of several insurers and the 17 licensee has reason to believe that a substantial portion of the 18 insurance would be assumed by authorized or eligible unauthorized 19 insurers, then, with respect to the unauthorized insurers not 20 eligible, the insured or the insured's representative shall be 21 informed as provided in section 1950(a). 22 (d) Engage in any other acts expressly and implicitly autho- 23 rized by this chapter and this act. 24 (5) Before placement of insurance with an eligible unautho- 25 rized insurer, a licensee shall inform an insured or the 26 insured's representative that coverage is being placed with an 27 insurer not licensed in this state and that payment of loss may 03087'01 73 1 not be guaranteed in the event of insolvency of the eligible 2 unauthorized insurer. 3 Sec. 3310. (1)Beginning January 1, 1985, theTHE board 4 of governors of the facility shall consist of 11 governors. 5 Seven of the governors shall be elected as provided in the plan 6 of operation. Four governors shall be appointed by the commis- 7 sioner, of which 2 shall represent insurance agents subject to 8 section1209(2)1209(1) and 2 shall represent the general 9 public. Each governor appointed by the commissioner pursuant to 10 this subsection shall serve an annual term. The 7 elected mem- 11 bers of the board of governors of the facility shall be elected 12 to serve annual terms commencing within 45 days after the annual 13 determination of participation ratios. Vacancies shall be filled 14 as provided for in the plan of operation. 15 (2) The facility committee shall adopt a plan of operation 16 by majority vote of the committee and shall submit it to the com- 17 missioner for his or her approval. If the commissioner finds 18 that the plan meets the requirements of this chapter, he or she 19 shall approve it. If the commissioner finds that the plan fails 20 to meet the requirements of this chapter, he or she shall state 21 in what respects the plan is deficient and shall afford the 22 facility committee 10 days within which to correct the 23 deficiency. If the commissioner and the facility committee fail 24 to agree that the provisions of the plan so submitted meet the 25 requirements of this chapter, either party to the controversy may 26 submit the issue to the circuit court for Ingham county for a 27 determination. If the commissioner fails to render a written 03087'01 74 1 decision on the plan of operation within 30 days after receipt of 2 the plan, the plan shall bedeemedCONSIDERED approved. 3(3) If the facility committee fails to submit a plan of4operation within 120 days after April 1, 1970, the commissioner5shall prepare and promulgate a plan of operation in accordance6with the requirements of this chapter, which shall continue in7force until superseded by a plan of operation made effective in8accordance with the provisions of this section, but without9regard to the time limitations prescribed in this section.10 (3)(4)Amendments to the plan of operation shall be 11 subject to majority approval by the board of governors and rati- 12 fied by majority of the membership vote. The membership vote 13 shall be determined as defined in section 3303(e)(iii). 14 Amendments to the plan of operation shall be subject to the 15 approval of the commissioner, as provided in subsection (2). 16 (4)(5)Every insurer authorized to write automobile 17 insurance in this state shall adhere to the plan of operation. 18 Enacting section 1. This amendatory act takes effect March 19 1, 2002. 03087'01 Final page. DKH