DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES

INSURANCE

GOOD MORAL CHARACTER

Filed with the secretary of state on

These rules take effect immediately upon filing with the secretary of state unless adopted under section 33, 44, or 45a(6) of the administrative procedures act of 1969, 1969 PA 306, MCL 24.233, 24.244, or 24.245a. Rules adopted under these sections become effective 7 days after filing with the secretary of state.

(By authority conferred on the director of the department of insurance and financial services by section 210 of the insurance code of 1956, 1956 PA 218, MCL 500.210, section 3(3) of 1974 PA 381, MCL 338.43, and Executive Reorganization Order No. 2013-1, MCL 550.991)

R 500.21, R 500.22, R 500.23, R 500.24, and R 500.25 are added to the Michigan Administrative Code as follows:

R 500.21 Definitions.

Rule 1. As used in these rules:

(a) “Act” means the insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302.

(b) “Applicant” means a person applying for a license as an insurance producer under section 1205 or 1206a of the act, MCL 500.1205 or 500.1206a; solicitor under section 1214 of the act, MCL 500.1214; adjuster under section 1224 of the act, MCL 500.1224; or insurance counselor under section 1234 of the act, MCL 500.1234.

(c) “Conviction” means a final judgment entered by a court upon a plea of guilty, guilty but mentally ill, or nolo contendere or upon a jury verdict or court finding that a defendant is guilty or guilty but mentally ill. However, the following are not considered a conviction for the purposes of these rules:

(i) An order of disposition entered under section 18 of chapter XIIA of the probate code of 1939, 1939 PA 288, MCL 712A.18.

(ii) A conviction that has been set aside pursuant to 1965 PA 213, MCL 780.621 to 780.624, pardoned, or otherwise expunged. For the purposes of this paragraph, “expunged” means the destruction of the criminal history record information, including the final disposition of the charge, relating to the conviction. A conviction is not considered expunged solely because the conviction is sealed, nonpublic, or otherwise not disclosable to 1 or more persons or group of persons pursuant to applicable law.

(iii) A conviction that has been reversed or vacated.

(d) “Director” means the director of the department of insurance and financial services.

(e) “Felony” means a violation, attempted violation, conspiring to violate, or aiding or abetting a violation of a penal law for which the offender may be punished by death or imprisonment for more than 1 year or that is expressly designated by law to be a felony.

(f) “Good moral character” means that term as defined in section 1200 of the act, MCL 500.1200.

(g) “Licensee” means a person licensed as an insurance producer under section 1205 or 1206a of the act, MCL 500.1205 or 500.1206a; solicitor under section 1214 of the act, MCL 500.1214; adjuster under section 1224 of the act, MCL 500.1224; or insurance counselor under section 1234 of the act, MCL 500.1234.

(h) “Misdemeanor” means a violation, attempted violation, conspiring to violate, or aiding or abetting a violation of a penal law that is not a felony or of an order, rule, or regulation that is punishable by a term of imprisonment.

R 500.22 Scope and applicability.

Rule 2. These rules do the following:

(a) Identify convictions, not already identified as a bar to licensure under the act, that create a presumption that an applicant or licensee lacks good moral character.

(b) Establish criteria and standards for the director’s review of an applicant’s good moral character.

R 500.23 Convictions for which a lack of good moral character is presumed.

Rule 3. (1) Subject to subrule (2) of this rule, an applicant is presumed to lack good moral character if the applicant has a misdemeanor conviction involving fraud, dishonesty, or breach of trust, including, but not limited to, the following:

(a) Larceny.

(b) Embezzlement.

(d) Receiving and concealing stolen property.

(e) Welfare fraud.

(f) Unemployment compensation fraud.

(2) Subrule (1) of this rule does not apply to create a presumption of a lack of good moral character if the misdemeanor conviction is excluded from the director’s review pursuant to R 500.24(2).

(3) If an applicant for licensure as an insurance producer under section 1205 or 1206a of the act, MCL 500.1205 or 500.1206a, has a felony conviction that is not listed under section 1239(1)(d) or (e) of the act, MCL 500.1239, the applicant is presumed to lack good moral character.

(4) If an applicant for licensure as a solicitor under section 1214 of the act, MCL 500.1214; adjuster under section 1224 of the act, MCL 500.1224; or insurance counselor under section 1234 of the act, MCL 500.1234, has a felony conviction, the applicant is presumed to lack good moral character.

(5) If on or after the effective date of these rules a licensee is convicted of a misdemeanor or felony identified in this rule as creating a presumption of an applicant’s lack of good moral character, the licensee is presumed to lack good moral character for the purposes of any licensing determination the director may make pursuant to applicable law. A presumption created under this subrule does not modify, limit, or otherwise affect the licensee’s rights or obligations, under other applicable law, relating to an adverse determination affecting the license.

R 500.24 Director’s review; conviction as evidence of lack of good moral character; notice; submission of certain information or documentation.

Rule 4. (1) Subject to subrule (2) of this rule, the director shall consider all of the following, as applicable and to the extent reasonably practicable based on the information available to the director, before making a determination that an applicant’s conviction is evidence of a lack of good moral character:

(a) Whether there is a reasonable relationship between the conduct relating to the conviction or convictions and the duties of the applicant if granted the license.

(b) Whether the applicant has a conviction or convictions for which a lack of good moral character is presumed pursuant to R 500.23.

(d) The number of the applicant’s convictions not described in subdivision (b) and (c) of this rule.

(e) The length of time between the date of the applicant’s conviction or convictions and the date of the applicant’s licensure application.

(f) The underlying facts of the conviction or convictions, including, but not limited to:

(i) The monetary value involved.

(ii) The applicant’s relationship to a victim.

(iii) The applicant’s age at the time of conviction.

(g) The extent to which the applicant has complied with conditions of probation or parole and has paid all fines and costs imposed as a result of a conviction.

(h) Whether the applicant disclosed his or her conviction or convictions on the application for licensure, and if the applicant did not make that disclosure, whether the applicant had good cause for the failure to make that disclosure.

(i) Any other information or documentation relating to the applicant’s conviction or convictions that the director may consider relevant.

(2) The director shall not consider any of the following convictions in making a determination that an applicant’s conviction is evidence of a lack of good moral character pursuant to this rule:

(a) A misdemeanor conviction for a violation of a traffic law.

(b) A misdemeanor that is not punishable by a term of imprisonment.

(c) For an applicant having no more than one conviction, a misdemeanor that was entered more than 5 years before the date of the applicant’s application for licensure.

(3) If the director determines that an applicant has a conviction or convictions that are evidence of the applicant’s lack of good moral character, the director shall provide the applicant notice of that determination and may require that the applicant submit any of the following in a form and manner prescribed by the director:

(a) A copy of the official court records relating to the conviction.

(b) A written statement from the applicant explaining the underlying facts relating to the conviction.

(d) Any information or documentation that may support a claim of rehabilitation pursuant to R 500.25, if the applicant intends to make that claim.

(4) At the conclusion of the director’s review, including the consideration of an applicant’s claim of rehabilitation pursuant to R 500.25 or any information or documentation provided by an applicant pursuant to subrule (3) of this rule, the director shall, in a manner consistent with applicable law, deny the applicant’s licensure application if the director has determined that the applicant’s conviction or convictions evidence a lack of good moral character and the denial is required under applicable law. If the director has determined that the applicant’s conviction or convictions evidence a lack of good moral character and a denial of the applicant’s licensure application is permitted but not required under applicable law, the director may, in a manner consistent with applicable law, deny the application in the reasonable exercise of the director’s discretion.

R 500.25 Claim of rehabilitation; submission of supporting information or documentation.

Rule 5. (1) An applicant receiving notice under R 500.24(3) may submit a claim of rehabilitation and supporting information, documentation, or a combination of both, subject to subrule (2) of this rule.

(2) An applicant submitting a claim of rehabilitation shall also submit both of the following in a form and manner prescribed by the director:

(a) A written statement by the applicant showing that the applicant has the current ability to, and is likely to, serve the public in a fair, honest, and open manner; the applicant is rehabilitated from the circumstances involved in an applicant’s conviction or convictions; or the substance of an applicant’s conviction or convictions are not reasonably related to the duties of the applicant if granted the license. The statement must include, but is not limited to, all the following:

(i) Length of time since the date of the applicant’s conviction or convictions.

(ii) Volunteer work performed by the applicant.

(iii) Employment history of the applicant.

(iv) Education of the applicant.

(v) Organizational activities and community involvement of the applicant.

(vi) Meaningful contributions made by the applicant for the well-being of other persons.

(vii) The applicant’s compliance with conditions of probation or parole and court-ordered obligations, including, but not limited to, full payment of fines and costs imposed as a result of a conviction.

(b) Two professional letters of reference from two different individuals who have worked with the applicant in a professional capacity. The letters must:

(i) Be signed by the individual serving as a reference.

(ii) Be drafted and dated within 6 months before the date of the application for licensure.

(iii) Include a statement of how the individual knows the applicant and the length of time of their relationship.

(3) In the director’s exercise of reasonable discretion, a claim of rehabilitation may serve to rebut the director’s initial determination under R 500.24 that an applicant’s conviction or convictions are evidence of a lack of good moral character.