Michigan Surplus Lines flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Surplus lines insurance
- Insurance procured from an eligible unauthorized insurer when the full coverage cannot be obtained from authorized insurers in Michigan.
- Eligible surplus lines insurer
- An unauthorized insurer meeting statutory capital, surplus, and authorization standards and listed by the state as eligible for surplus lines placements.
- Diligent search
- A documented effort to place the full coverage with authorized insurers, including soliciting declinations from insurers writing the class in Michigan.
- Declination documentation
- The record of each authorized insurer's refusal, including insurer name, date, coverage requested, and reason for declination, retained for examination.
- Surplus lines producer license
- A license issued in addition to a property and casualty license that authorizes a producer to procure surplus lines insurance in Michigan.
- Surplus lines trust fund
- A fund that may be required of certain unauthorized insurers to protect Michigan policyholders and ensure the insurer can meet its obligations.
- Guaranty fund notice
- A conspicuous statement on the policy that the insurer is not licensed in Michigan and that the policy is not protected by the state guaranty fund.
- Surplus lines premium tax
- A tax on gross surplus lines premium, collected and remitted by the surplus lines licensee through the stamping office to the state treasury.
- Stamping fee
- A fee separate from premium tax, set by the stamping office to cover administrative costs of processing surplus lines filings.
- Surplus lines commission
- The compensation paid to a surplus lines producer, which must be disclosed and may not exceed the amount filed or approved.
- Nonadmitted insurer
- An insurer that does not hold a Michigan certificate of authority; eligible surplus lines insurers are a subset of nonadmitted insurers.
- Exempt commercial purchaser
- A sophisticated insured meeting statutory criteria that may allow broader placement options, though diligent search exemptions must be documented.
- NAIC Quarterly Listing
- A listing of alien insurers maintained by the NAIC; Michigan requires alien surplus lines insurers to appear on this list.
- Certificate of authority
- The license issued by Michigan to an insurer authorizing it to transact insurance as an admitted insurer in the state.
- Insurance Code Chapter 19
- The Michigan statutory chapter governing surplus lines insurance, including eligibility, diligent search, and placement requirements.
- DIFS
- The Michigan Department of Insurance and Financial Services, which regulates insurers and producers and administers the Insurance Code.
- Cease-and-desist order
- A regulatory order the commissioner may issue to stop unlicensed insurance activity or violations of the Insurance Code.
- Full coverage requirement
- The rule that surplus lines may be used only for the portion of coverage that authorized insurers decline to write.
- Five-year retention
- The minimum period surplus lines records, declinations, and tax documentation must be kept and produced during examinations.
- Binding authority
- The producer's power to bind coverage on behalf of the surplus lines insurer, subject to policy issuance and disclosure requirements.
- Policy delivery
- The obligation to provide the insured with the written surplus lines policy and endorsements promptly after binding.
- Unauthorized insurer
- An insurer transacting insurance in Michigan without a certificate of authority, permitted only for surplus lines or exempt coverages.
- Trust fund trustee
- A qualified institution holding surplus lines trust fund assets for the benefit of Michigan policyholders.
- Trust fund reporting
- Periodic reporting of trust fund balances to the commissioner, who may examine records to confirm compliance.
- Policyholder disclosure
- The pre-binding disclosure to the insured of surplus lines status, lack of guaranty fund protection, and identity of the surplus lines licensee.
- Policy face notice
- The required conspicuous notice on the policy stating the insurer is unlicensed and not protected by the Michigan guaranty fund.
- Gross premium tax base
- The premium amount subject to surplus lines tax, including policy fees and endorsements unless a specific exclusion applies.
- Quarterly reporting
- The typical interval for remitting surplus lines premium tax and stamping fees to the stamping office, as prescribed by rule.
- Commission sharing prohibition
- The rule barring a producer from sharing surplus lines commissions with unlicensed persons or entities.
- Continuing education
- The ongoing education requirement surplus lines licensees must complete before renewing their Michigan license.
- Excess and umbrella liability
- A common surplus lines coverage providing limits above primary policies or filling gaps for high-value or specialty risks.
- Claims practices
- Michigan unfair claims practices rules apply to surplus lines insurers, though guaranty fund protection does not.