Fiduciary Responsibility and Record-Keeping


Each individual or agency insurance producer has fiduciary responsibility for all premiums and related insurance proceeds received on behalf of insurers. Funds must be remitted to the appropriate insurer or consumer in a timely manner. The law prohibits misappropriation or theft of insurance funds collected from or owed to a consumer. A licensee may be disciplined administratively or be subject to criminal or civil prosecution for fiduciary violations.

Commingling of client or insurer funds with the monies of a producer or agency is strongly discouraged. Our office recommends that client and insurer funds be kept separate from the funds owned by the producer or agency.

Most financial restrictions and requirements and record-keeping requirements are set forth by the agency in the insurer-agency contract agreed to at the time of appointment of a producer.  The Michigan Insurance Code requires that a producer use reasonable accounting methods to record funds received in a fiduciary capacity. MCL 500.1207 states that a producer shall not accept payment of a premium for a Medicare supplemental policy or certificate in the form of a check or money order made payable to the producer instead of the insurer. By statute, a producer must immediately provide a receipt to the insured upon receiving payment of a premium for a Medicare supplemental policy.

The Code also requires that a licensee make records available to the Commissioner or regulatory staff.  It is recommended that all licensee records be maintained for seven (7) years. We may audit the records of a producer or agency to determine compliance with statutory requirements.  Licensees who do not maintain records in a manner which meets the statutory requirements may be subject to discipline including fines, suspension, or revocation.