HB-6444, As Passed House, December 4, 2018

SUBSTITUTE FOR

HOUSE BILL NO. 6444

     A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

by amending sections 1201, 1207, 1208a, and 1211 (MCL 500.1201,

500.1207, 500.1208a, and 500.1211), section 1201 as amended by 2012

PA 462, section 1207 as amended by 1993 PA 200, and sections 1208a

and 1211 as added by 2001 PA 228.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 1201. As used in this chapter:

     (a) "Agent" except as provided in section 1243 means an

insurance producer.

     (b) "Agent of the insured" means an insurance producer who is

not an appointed insurance producer of the insurer with which the

insurance policy is placed. An agent of the insured is treated as

representing the insured or the insured's beneficiary and not the

insurer.

     (c) "Agent of the insurer" means an insurance producer who

sells, solicits, or negotiates an application for insurance as a

representative of the insurer and not the insured or the insured's

beneficiary. Agent of the insurer does not include a health benefit

agent as that term is defined in section 2 of the health benefit

agent act, 1986 PA 252, MCL 550.1002.

(d) (b) "Business entity" means a corporation, association,

partnership, limited liability company, limited liability

partnership, or other legal entity.

(e) (c) "Home state", except as provided in section 1224,

means the District of Columbia or any state or territory of the

United States in which an insurance producer maintains his or her

principal place of residence or principal place of business and is

licensed to act as an insurance producer.

(f) (d) "Insurance" means any of the lines of authority in

chapter 6.

(g) (e) "Insurance producer" means a person required to be

licensed under the laws of this state to sell, solicit, or

negotiate insurance.

(h) (f) "License" means a document issued by this state's

commissioner the director authorizing a person to act as an

insurance producer for the qualifications specified in the

document. The license itself does not create any actual, apparent,

or inherent authority in the holder to represent or commit an

insurer.

(i) (g) "Limited line credit insurance" includes credit life,

credit disability, credit property, credit unemployment,

involuntary unemployment, mortgage life, mortgage guaranty,

mortgage disability, guaranteed automobile protection insurance,

and any other form of insurance offered in connection with an

extension of credit that is limited to partially or wholly

extinguishing that credit obligation that the commissioner director

determines should be designated a form of limited line credit

insurance.

(j) (h) "Limited line credit insurance producer" means a

person who sells, solicits, or negotiates 1 or more forms of

limited line credit insurance coverage to individuals through a

master, corporate, group, or individual policy.

(k) (i) "Limited lines insurance" means any of the following:

     (i) Marine insurance as defined in section 614.

     (ii) Credit insurance as described in section 624(1)(e).

     (iii) Surety and fidelity insurance as defined in section 628.

     (iv) Legal expense insurance as defined in section 618.

     (v) Livestock insurance as described in section 624(1)(g).

     (vi) Malpractice insurance as described in section 624(1)(h).

     (vii) Plate glass insurance as described in section 624(1)(c).

     (viii) Any other miscellaneous insurance described in section

624(1)(i).

     (ix) Any other line of insurance that the commissioner

director considers necessary to recognize to comply with section

1206a(5).

(l) (j) "Limited lines producer" means a person authorized by

the commissioner director to sell, solicit, or negotiate limited

lines insurance.

(m) (k) "Negotiate" means the act of conferring directly with

or offering advice directly to a purchaser or prospective purchaser

of a particular contract of insurance concerning any of the

substantive benefits, terms, or conditions of the contract,

provided that if the person engaged in that act either sells

insurance or obtains insurance from insurers for purchasers.

(n) (l) "Sell" means to exchange a contract of insurance by

any means, for money or its equivalent, on behalf of an insurance

company.

(o) (m) "Solicit" means attempting to sell insurance or asking

or urging a person to apply for a particular kind of insurance from

a particular company.

(p) (n) "Terminate" means the cancellation of the relationship

between an insurance producer and the insurer or the termination of

a producer's authority to transact insurance.

Sec. 1207. (1) An agent shall be is a fiduciary for all money

received or held by the agent in his or her capacity as an agent.

Failure by an agent in a timely manner to turn over the money which

that he or she holds in a fiduciary capacity to the persons to whom

they are it is owed is prima facie evidence of violation of the

agent's fiduciary responsibility. An agent shall not accept payment

of a premium for a medicare supplemental policy or certificate in

the form of a check or money order made payable to the agent

instead of the insurer. Upon On receiving payment of a premium for

a medicare supplemental policy or certificate, an agent shall

immediately provide a written receipt to the insured.

     (2) An agent shall use reasonable accounting methods to record

funds received in his or her fiduciary capacity including the

receipt and distribution of all premiums due each of his or her

insurers. An agent shall record return premiums received by or

credited to him or her which that are due an insured on policies

reduced or canceled or which that are due a prospective purchaser

of insurance as a result of a rejected or declined application.

Records required by this section shall must be open to examination

by the commissioner.director.

     (3) Except as provided in section sections 1211, 1212, and

subsection (4), an agent shall not reward or remunerate any person

for procuring or inducing business in this state, furnishing leads

or prospects, or acting in any other manner as an agent.

     (4) If an agent is unable to immediately provide, through his

or her insurers that are authorized to underwrite the coverage, all

or a part of the coverage requested on a risk, the agent may obtain

the part of the coverage refused by his or her insurers through

another licensed agent or through a risk sharing plan permitted by

state law. An agent who attempts to place the refused part of the

coverage through another licensed agent shall advise the buyer in

writing that the refused part of the coverage is not in effect

until the buyer receives written evidence of insurance.

     (5) A person may shall not sell or attempt to sell insurance

by means of intimidation or threats, whether express or implied.

Except as provided in section 2077(4), a person may not induce the

purchase of insurance through a particular agent or from a

particular insurer by means of a promise to sell goods, to lend

money, to or provide services, or by a threat to refuse to sell

goods, to refuse to lend money, or to refuse to provide services.

     (6) After January 1, 1973, an insurer or an agent may not be a

party to a contract under which the agent assumes any

responsibility or obligation for payment, from his or her

commission or any allocation of premium to him or her by the

insurer, of any losses on insurance policies sold by the agent

unless the claim adjusting is done by insurance company adjusters

or licensed independent adjusters.

     Sec. 1208a. (1) An insurance producer shall not act as an the

agent of an insurer unless the insurance producer becomes an

appointed agent of that insurer. An insurance producer who is not

acting as an agent of an the insurer is not required to become

appointed.

     (2) An insurance producer shall not bind coverage for an

insurer unless the insurance producer is appointed by the insurer.

(3) (2) To appoint a producer as its agent, the appointing

insurer shall file, in a format approved by the commissioner,

director, a notice of appointment for the qualifications held by

that insurance producer within 15 days from the date the agency

contract is executed or the first insurance application is

submitted. An insurer may also elect to appoint an insurance

producer to all or some insurers within the insurer's holding

company system or group by the filing of a single appointment

request.

(4) (3) Upon On receipt of the notice of appointment, the

commissioner director shall verify within a reasonable time not to

exceed 30 days that the insurance producer is eligible for

appointment. If the insurance producer is determined to be

ineligible for appointment, the commissioner director shall notify

the insurer within 5 days of that determination.

(5) (4) An insurer shall pay an appointment fee and a renewal

appointment fee as provided under section 240(1)(c) for each

insurance producer appointed or renewed by the insurer.

     Sec. 1211. (1) A natural person may solicit applications for

insurance and collect premiums on behalf of a licensed insurance

producer resident in this state if he or she is so authorized to

act by a written contract with the insurance producer, and the

contract specifies the extent of his or her authority to act, he or

she is licensed to act as a solicitor in accordance with this

chapter, and the insurance producer has notified the commissioner

director of the contract.

     (2) An agent of the insured may obtain coverage for a consumer

through an agent of the insurer if both of the following apply:

     (a) The agent of the insured is licensed to act as an

insurance producer in accordance with this chapter.

     (b) The agent of the insured has a relationship with the agent

of the insurer under a written contract. The written contract under

this subdivision must specify the extent of the agent of the

insured's authority to act and require the maintenance of an amount

of professional liability insurance, commonly known as errors and

omissions insurance.