Keeping a Michigan License: Appointments, Renewal and Continuing Education

Passing the examination starts a set of continuing duties under chapter 12.

Appointments

A license lets you act as a producer, but it gives you no authority to represent any insurer (MCL 500.1201(h)). That comes from appointment. Chapter 12 separates two roles:

Definitions

Agent of the insurer

A producer who sells, solicits or negotiates an application as a representative of the insurer, not of the insured or the insured’s beneficiary (MCL 500.1201(c)).

Agent of the insured

A producer who is not an appointed producer of the insurer with which the policy is placed. This producer is treated as representing the insured or the insured’s beneficiary, not the insurer (MCL 500.1201(b)).

You may not act as an insurer’s agent unless appointed by that insurer, and you may not bind coverage for an insurer that hasn’t appointed you (MCL 500.1208a(1), (2)). A producer who isn’t acting as the insurer’s agent needn’t be appointed.

Step	Who acts	Deadline	Citation
File the notice of appointment	Insurer	Within 15 days from the date the agency contract is executed or the first application is submitted	MCL 500.1208a(3)
Verify the producer’s eligibility	Director	Within a reasonable time, not over 30 days	MCL 500.1208a(4)
Tell the insurer of ineligibility	Director	Within 5 days of that determination	MCL 500.1208a(4)

The insurer pays the appointment and renewal fees (MCL 500.1208a(5)). A single filing may appoint a producer to some or all insurers in a holding company system or group (MCL 500.1208a(3)).

An agent of the insured may obtain coverage through an agent of the insurer if the first is licensed, a written contract between them specifies the first agent’s authority and requires errors and omissions insurance, and the coverage isn’t a health insurance policy or a health maintenance contract (MCL 500.1211(2)).

When an Appointment Ends

An insurer that terminates a producer must notify the Director within 30 days following the effective date of the termination, whether or not the reason is one listed in MCL 500.1239 (MCL 500.1208b(1), (2)). If later review turns up information that would have been reportable, the insurer must promptly notify the Director (MCL 500.1208b(3)).

Not later than 15 days after notifying the Director, the insurer must mail you a copy. A for-cause termination goes by certified mail, return receipt requested, or by overnight delivery through a nationally recognized carrier. Within 30 days after receiving it, you may file written comments with the Director, sending a copy to the insurer at the same time. Those comments stay in the file and accompany every copy of the report that is distributed (MCL 500.1208b(4)). The statute gives you written comments, not a hearing, at this stage. Absent actual malice, those who report are shielded from civil liability (MCL 500.1208b(5)).

After Termination

If you hold property rights in the renewals, your responsibility continues until existing policies are canceled, replaced or expired, and your written agreement with the insurer governs your authority in that period. If the agreement is silent, you may keep servicing existing policies but may not bind a new risk, renew a policy or increase the insurer’s obligation without the insurer’s approval. An insurer may not cancel or refuse to renew an insured’s policy because a producer’s contract ended (MCL 500.1209(1)).

That subsection doesn’t apply to a life insurer, a life insurer’s producer, an insurer’s employee, or a producer who by contract represents only one insurer or affiliated group, if the insurer or group owns the renewal rights and the contract change causes no cancellation or nonrenewal.

Automobile and Home Producers

For automobile or home insurance only, an insurer may terminate a producer’s authority only for malfeasance, breach of fiduciary duty or trust, a violation of the code, failure to perform the contract, or submission of less than 25 home and automobile applications in the preceding 12-month period (MCL 500.1209(2)). A termination can’t be based primarily on the geographic location of the business, loss experience tied to that location, or the producer’s performance of chapter 21 obligations (MCL 500.1209(3)). Employee and exclusive producers are excepted on the same terms, and they are also outside the mailed-copy requirement of MCL 500.1208b(4) (MCL 500.1209(4)).

Keeping the Director Informed

You must tell the Director of a change of legal name or address within 30 days of the change (MCL 500.1206(5)), and of any change in your mailing or electronic mail address within 30 days after the change (MCL 500.1238(1)). A notice of hearing or service of process may be served by first-class mail to the address you reported (MCL 500.1238(2)), so a producer who moves without reporting it can miss a proceeding that was properly served.

A producer who moves to another state files a change of address and a certification from the new resident state within 30 days of the change of legal residence. No fee or license application is required (MCL 500.1206a(3)). Before doing business under any name other than your legal name, you must notify the Director (MCL 500.1211a).

License Term

A Michigan producer license remains in effect, unless revoked or suspended, as long as education requirements for resident individual producers are met by the due date (MCL 500.1206(2)). The license shows an expiration date (MCL 500.1206(4)), and your hours of study are reviewed every 2 years on a schedule the Director sets, which may stagger dates through the calendar year (MCL 500.1204c(1)).

If you let a license lapse, you may reinstate it without a written examination not later than 12 months after the lapse, but only if the lapse was for a reason other than failing to meet MCL 500.1204c (MCL 500.1206(3)). A license lost over continuing education follows the rule below.

Continuing Education

Before the review date of each 2-year period, you must attend or instruct at least 24 hours of approved classes, or complete 24 hours of approved home study or online training. At least 3 of the 24 hours must be in ethics (MCL 500.1204c(2)). An hour is a period of at least 50 minutes (MCL 500.1204c(18)(a)).

• Carryover. Up to 12 hours above the 24 may apply to the next 2-year period. Ethics hours and hours from a repeated class or coursework can’t carry over (MCL 500.1204c(13)).
• Association credit. For a review date after December 31, 2025, up to 4 of the 24 hours may be credited for active participation in a professional insurance association the Director has approved as a provider. You or your agency must be a dues-paying member in good standing, and each credit requires at least 50 minutes of participation. These hours can’t count toward ethics (MCL 500.1204c(14)).
• Other activity. For a review date after December 31, 2025, any activity the Director determines may be credited as an hour toward the 24 (MCL 500.1204c(15)).
• Proof. The program’s representative files the certificate within 30 days after you complete the program and mails you a copy (MCL 500.1204c(8)).

The Director must waive these requirements if military service prevents you from complying, or if the Director determines that enforcing them would cause a severe hardship. The Director also waives them for a producer licensed only for limited line credit insurance, and for one licensed only for travel or baggage insurance whose employment is for another purpose (MCL 500.1204c(9)). A nonresident who meets home-state requirements meets Michigan’s if the home state reciprocates (MCL 500.1204e(2)).

Missing the Deadline

If you haven’t met the requirements by your license’s expiration date, you have a 90-day grace period. During it you may not solicit or sell new policies, bind coverage or otherwise act as a producer, but you may service policies already sold and receive commissions on them. If the grace period ends with the hours still unmet, the Director must cancel the license, and you may reapply under MCL 500.1204 (MCL 500.1204c(11)).

A producer who has sold the business and hasn’t met the requirements is under the same limits, and may also receive partial commissions on policies sold by the purchasing producer. A producer still in the process of selling has that treatment for no more than 12 months after the license review date (MCL 500.1204c(12)).

Long-Term Care Training

Long-term care insurance has its own requirement. To sell it, a life or accident and health producer must complete a one-time course of at least 8 hours, then at least 4 hours of ongoing training in every 2-year compliance period (MCL 500.1204f(1), (5)). The insurer must verify the training before letting the producer sell its product (MCL 500.1204f(2)), and training in any state counts (MCL 500.1204f(8)).

Premiums Are Fiduciary Money

An agent “is a fiduciary for all money received or held by the agent in the agent’s capacity as an agent” (MCL 500.1207(1)).

• Separate account. Premiums and return premiums are segregated from your own money and may not be commingled. The account must be at a federally insured state or federally chartered financial institution, and it may bear interest (MCL 500.1207(2), (3)).
• Your own money. You may deposit your own funds only to open the account and to pay or avoid financial institution charges. Those funds must be separately accounted for and identifiable in your books (MCL 500.1207(2)).
• Return premiums. You may hold them to pay an insured’s future premiums only with the insured’s written authorization (MCL 500.1207(4)). Record every return premium due an insured or a prospect whose application was rejected or declined (MCL 500.1207(7)).
• Records. Use reasonable accounting methods that show premiums received and distributed for each insurer. Document each receipt in enough detail to show the date, the payee’s name, the amount and a description of the money (MCL 500.1207(5), (6)). These records must be open to examination by the Director (MCL 500.1207(10)).

Failing to turn fiduciary money over in a timely manner is prima facie evidence of a violation (MCL 500.1207(8)). So if Omar deposits a client’s premium in his operating account and pays the insurer late, he has commingled the money, and the delay is itself evidence against him.

A line-specific rule applies to Medicare supplement policies: you may not accept a premium by check or money order made payable to you instead of the insurer, and you must immediately give the insured a written receipt (MCL 500.1207(9)).

Commissions and Compensation

An insurer or producer may not pay a commission, service fee or other valuable consideration to a person for selling, soliciting or negotiating insurance in Michigan if that person must be licensed and isn’t, and that person may not accept it (MCL 500.1240(1), (2)). Renewal or other deferred commissions may be paid if the person had to be licensed at the time of the sale, solicitation or negotiation and was (MCL 500.1240(3)). An insurer or producer may pay or assign commissions, service fees or other valuable consideration to an insurance agency or to persons who don’t sell, solicit or negotiate insurance in Michigan, unless the payment would violate MCL 500.2024, the life, annuity, and accident and health rebating section (MCL 500.1240(4)).

Separately, an agent may not reward or pay any person for procuring or inducing business in Michigan, furnishing leads or prospects, or acting in any other manner as an agent, except as MCL 500.1211, 500.1212 and 500.1207(12) provide (MCL 500.1207(11)). Those exceptions cover solicitors, agents of the insured and refused coverage.

The two provisions meet when a producer pays someone outside the business for a lead. MCL 500.1207(11) names leads and lists no exception for MCL 500.1240. MCL 500.1240(4) names only MCL 500.2024 as its limit. Neither says which controls, so check with DIFS before paying for a lead. One case is clear: a person who urges someone to apply for a particular kind of insurance from a particular company is soliciting (MCL 500.1201(o)), and paying an unlicensed person to do that violates both sections.

Other Limits on Placing Business

• Refused coverage. If your insurers can’t immediately provide all or part of the coverage requested on a risk, you may place the refused part through another licensed agent or a state-permitted risk sharing plan. When you use another agent, you must tell the buyer in writing that the refused part isn’t in effect until the buyer receives written evidence of insurance (MCL 500.1207(12)).
• Coercion. No one may sell by intimidation or threats, express or implied, or induce a purchase through a particular agent or insurer by promising or refusing goods, loans or services, with a narrow exception for insurers (MCL 500.1207(13)).
• Loss-sharing contracts. An agent may not contract to pay policy losses from commission or premium unless insurance company adjusters or licensed independent adjusters handle the claims (MCL 500.1207(14)).
• Controlled business. MCL 500.1208 sets this limit without using that name. During any 12-month period, insurance you effect on your own property, life or other risk, and that of your employees, employer or business associates, may not exceed 15% of the total premium you effected in that period. The test counts premium, not policies, and those risks count together. If you effected $200,000 of premium, no more than $30,000 may be on them.

Lesson summary

• A producer must be appointed to act as an insurer’s agent or bind its coverage. The insurer files the notice within 15 days and pays the fee.
• An insurer reports every termination to the Director within 30 days, generally sends the producer a copy within 15 days after that, and the producer may answer with written comments within 30 days.
• Automobile and home insurers may terminate a producer only for the reasons in MCL 500.1209(2), and, apart from the listed exceptions, an insurer may not cancel a policy because a producer’s contract ended.
• Report a change of name or address within 30 days. Notices sent to your reported address are good service.
• A license stays in effect while education requirements are met. Hours are reviewed every 2 years: 24 hours, at least 3 in ethics, with up to 12 hours of carryover and no ethics carryover.
• Missing the requirement starts a 90-day grace period with no new business, followed by cancellation. The 12-month reinstatement doesn’t apply.
• Premium is fiduciary money, held in a separate account at a federally insured institution, and late turnover is prima facie evidence of a violation.
• A person who must be licensed and isn’t can’t be paid for selling, soliciting or negotiating. MCL 500.1207(11) bars an agent from paying for leads, and MCL 500.1240(4) doesn’t say it overrides that bar.