Michigan Insurance Law and Regulation
The statutory frame
Michigan regulates surplus lines through Chapter 19 of the Insurance Code, MCL 500.1901 et seq. The Director of the Department of Insurance and Financial Services (DIFS) administers the chapter: maintaining the list of eligible unauthorized insurers, licensing surplus lines agents, receiving reports and premium tax, conducting market conduct examinations, and imposing penalties. Writing coverage with an unauthorized insurer is prohibited unless the transaction fits Chapter 19. Surplus lines is therefore a narrow exception to the unauthorized-insurer ban, not a deregulated market.
Home state under NRRA
The federal Nonadmitted and Reinsurance Reform Act makes the insured’s "home state" the sole regulator for multistate surplus lines placements. For a business, home state is generally the state of its principal place of business; for an individual, the state of domicile. If Michigan is the home state, Michigan’s eligibility, diligent search, notice, tax, and reporting rules apply even when the insured risk is located in another state.
Worked example
A manufacturer headquartered in Grand Rapids buys surplus lines property coverage for a warehouse in Indiana. Because its principal place of business is Michigan, Michigan is the home state. The producing agent must use a Michigan-eligible unauthorized insurer, document the Michigan diligent search, deliver the Michigan unauthorized-insurer notice, and remit Michigan premium tax. The risk location in Indiana does not shift regulatory control to Indiana.
Traps that cost marks
Do not assume the physical location of the risk always controls; NRRA home-state rules can point elsewhere. Do not describe surplus lines as "unregulated": eligibility, search, notice, and tax duties are enforceable. Do not assume DIFS approves surplus lines rates or policy forms; it generally does not. Finally, do not confuse DIFS with the Michigan guaranty associations, which do not back surplus lines policies.