Michigan Insurance Regulations (p68-76)

Question 1

A producer

Answer 1

A licensed person who has the authority to sell, solicit, or negotiate insurance contracts (upon passing the license exam)

Question 2

Agent

Answer 2

A person or a corporation, authorized in writing, to solicit insurance, collect premiums and to transact insurance business on behalf of an insurance company. *** A producer is appointed as an agent to represent the insurer to the buyer of insurance

Question 3

Commissioner of Insurance

Answer 3

Chief executive officer of the department of insurance and financial services (DIFS). Appointed by the Governor, with the consent of the Senate, for a term of 4 years. They implement and enforce the insurance regulations.

Question 4

Licensed Insurance Counselor (LIC)

Answer 4

An agent licensed to give insurance advice to client and charges a fee for such services. **Advice + Fees= Life insurance counselor license

Question 5

Insurance Transaction

Answer 5

Soliciting insurance, collecting premiums, and delivering policies

Question 6

Anyone involved in transacting insurance must be licensed except for…

Answer 6

Employees of the Home Office (provided they are salaried individuals who do not share in any commissions)

Question 7

Notice of Appointment

Answer 7

The insurer must file this with the Commissioner for the lines of insurance held by the producer within 15 days of the agency agreement. The Commissioner then has up to 30 days to verify eligibility

Question 8

Termination of an agent’s appointment

Answer 8

Requires that the insurer notify the Commissioner within 30 days following the effective date of the cancellation of appointment. Within 15 days of the notification to the Commissioner, the agent must be notified of the cancellation appointment by the insurer.

Question 9

Who can cancel a license?

Answer 9

Only the Commissioner.

Question 10

Who cancels appointments?

Answer 10

The insurer

Question 11

A resident producer’s license

Answer 11

Issued to a resident of Michigan who satisfies the state’s requirements.

Question 12

Non-resident producer’s license

Answer 12

May be issued to a producer in another state who wishes to sell insurance in MI. If both states have reciprocity , it can be as simple as filling a form and license fee.

Question 13

Reciprocity

Answer 13

A mutual exchange of privilege between two parties.

Question 14

Exceptions to licensing laws

Answer 14

1)Administrative employees 2)a company officer or home office employees 3)A newspaper carrier 3)A fraternal benefit society 4)an attorney-in-fact 5)Persons who provide admin services for employee benefit plans. see page 72

Question 15

Prelicensing education requirements

Answer 15

Each applicant complete 40 hours of approved pre-licensing education for life and health. Only 20 hours if only life. 20 hours if only health.

Question 16

Continuing education requirement

Answer 16

A producer must earn 24 hours of approved CE credit every two years on their compliance date. At least 3/24 credits earned must be an approved ethics course. They can carry over 12 credits to the next CE term. Failure to comply will result in a 90 day license suspension.

Question 17

Exempt to CE requirement

Answer 17

1) Cannot complete the required hours due to hardship, granted approval. 2) A person licensed to sell only travel or baggage insurance 3) a person licensed to sell only credit insurance

Question 18

Change of name or address

Answer 18

Must notify DIFS within 30 days of the change. Fines range from $50-$300

Question 19

Fiduciary Responsibility

Answer 19

A person in a position of financial trust. ***An agent does not have a fiduciary responsibility to the insurance commissioner.

Question 20

Commission Sharing

Answer 20

Can only be shared with another licensed agent. Requires two licensed individuals, licensed in the same line of insurance.