DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES

INSURANCE BUREAU

SURPLUS LINES INSURANCE FEES

Filed with the secretary of state on

These rules become effective immediately after filing with the secretary of state unless adopted under section 33, 44, or 45a(9) 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 sections 210 and 1955 of the insurance code of 1956, 1956 PA 218, MCL 500.210, and  500.1955, and Executive Reorganization Order No. 2013-1, MCL 550.991)

R 500.1251 of the Michigan Administrative Code is amended, as follows:

R 500.1251  Surplus lines insurance fee.

  Rule 1. (1) Subject to the limitations set forth in section 1915 of the insurance code of 1956, 1956 PA 218, MCL 500.1915, A a surplus lines licensee issuing a personal or commercial surplus lines insurance policy may charge, in addition to the premium charged by an unauthorized insurer, a reasonable fee to cover underwriting and other expenses that are unique to surplus lines. the costs incurred in the placement of the insurance which exceeds $50.00 when the actual costs incurred for services performed by persons or entities unrelated to the licensee exceed that amount. The fee allowable under this rule shall be adjusted annually pursuant to the provisions of section 1915 of the Insurance Code, 1956 PA 218, MCL 500.1915. Expenses unique to surplus lines may include, but are not limited to, issuing, processing, or auditing the surplus lines policy, but only to the extent the service is provided by the licensee, or the expense is incurred by the licensee, and it is documented and verifiable. Expenses unique to surplus lines do not include costs incurred in maintaining offices and compensating the licensee’s employees. Costs unrelated to the licensee include the costs incurred in obtaining any of the following:

   (a) Government records.

   (b) Inspection records.

   (c) Financial ratings.

   (d) Consumer investigation reports. Costs unrelated to the licensee do not include costs incurred in maintaining offices and compensating the licensee’s employees.

  (2) All fees shall be itemized and the reason for each charge shall be clearly stated on the invoice issued to the insured. The licensee’s fee disclosure to the insured under section 1915(2)(b) of the insurance code of 1956, 1956 PA 218, MCL 500.1915, must include whether the fee was charged in addition to a commission.

  (3) The licensee shall provide proof of the itemized fees charged and evidence of the requisite disclosure of the fees to the director on request. The licensee shall file both of the following with the commissioner in the form and manner prescribed by the commissioner:

(a) A report of all fees in excess of the amount allowable under subrule (1) of this rule charged by the licensee.

(b) An affidavit stating that the licensee has not received compensation for the cost of these services from the unauthorized insurer.