Insurance Regulation and Licensing
Who regulates what
Michigan insurance is governed by the Insurance Code of 1956 (Act 218 of 1956) and administered by the Department of Insurance and Financial Services (DIFS). DIFS licenses producers, agencies, and adjusters, reviews forms and rates, and conducts market-conduct examinations of claim files. Chapters that matter to adjusters: Chapter 12 (adjuster licensing), Chapter 20 (unfair trade practices, including unfair claim settlement practices), and Chapter 21 (the Essential Insurance Act, governing availability of auto and home coverage).
Licensing basics
- A company or independent adjuster represents the insurer; a public adjuster contracts with and represents the insured and cannot serve the insurer on the same loss.
- Adjusters must be licensed before investigating or negotiating claims in Michigan; nonresidents usually qualify through reciprocity, and emergency catastrophe permits handle surge events.
- Licenses renew on a two-year cycle with continuing education that includes ethics hours.
- Misrepresenting policy provisions, failing to investigate, and offering settlement without a reasonable basis are unfair claim practices.
The payment clock
MCL 500.2006 requires prompt payment once satisfactory proof of loss is received. A claim unpaid 60 days after satisfactory proof bears simple interest at 12% per year unless it is reasonably in dispute - and a dispute over one item does not justify withholding the undisputed balance.
Worked example
An adjuster receives satisfactory proof of loss for a $10,000 building claim on June 1 and pays nothing until August 30 (90 days) with no genuine dispute. Thirty days of interest is owed: $10,000 × 0.12 × 30/365 = $98.63. The proof-of-loss date, not the date the claim was reported, starts the clock.
Traps
Assuming a file note satisfies proof of loss; confusing producer authority with adjuster authority; forgetting the safety nets - the Michigan Property and Casualty Guaranty Association for insolvencies and the Michigan Basic Property Insurance Association (FAIR plan) for hard-to-place property.