Changes in the Michigan insurance bureau licensing process for variable contracts qualification and for marketing variable insurance products

Issued and entered May 25, 1990 by Dhiraj N. Shah, Acting Commissioner of Insurance

BACKGROUND

Significant changes have occurred in the past few years in the variable life and variable annuity products which the Michigan Insurance Bureau reviews and approves. Because of the increasing complexity of these products, the level of expertise required to market them has risen significantly. Consumer complaints received at the Michigan Insurance Bureau have called into question the competence of some agents with only a life qualification to market variable life products.

The Michigan Insurance Bureau is attempting to ensure that all agents who market variable life and variable annuity contracts in Michigan have a basic understanding of these products. Therefore, effective July 1, 1990, all agents who market variable products will be required to be licensed in Michigan with the variable contracts qualification. Licensees who currently hold the variable contracts qualification may continue to market these products without further examination or license modification. However, life agents who have been marketing variable life products without having passed the variable contracts examination will be required to either obtain the variable contracts qualification by examination or discontinue marketing variable products as of that date.

In order to obtain the variable contracts qualification, an agent must first obtain the basic life qualification. After obtaining the life qualification, the agent and the appointing authority must complete an INS-220 for variable contracts ("Application for Insurance Licensing") and submit it to ETS (Educational Testing Service) with the required fees. ETS will notify the agent as to the time, date, and location of the variable contracts examination.

(NOTE: The appointing insurer must have authority to sell variable contracts in order to appoint an agent to sell this line of insurance.)

Upon successful completion of the examination, the agent will receive a new license document indicating the additional qualification for variable contracts.

If the agent already holds a variable contracts license qualification but is selling variable life insurance for insurers without having been appointed for the variable contracts authority, the insurer must submit to the Michigan Insurance Bureau Licensing Section an INS-205 (Notice of Appointment/Cancellation) appointing the agent to sell variable contracts for that particular insurer. Failure to submit the INS-205 appointment form will place the insurer in noncompliance with Section 1201(4) of the Michigan Insurance Code when the insurer accepts variable contracts business from the licensee. However, due to the late notification of this change the Insurance Bureau will not seek administrative action against companies for noncompliance until September 1, 1990.

Effective July 1, 1990, an agent transacting any form of variable insurance must be appointed for the life and variable contracts qualification with each company for which the agent transacts variable products business. Insurers will no longer be able to accept variable life or variable annuity business from agents who do not hold a life and variable contracts license qualification. Questions relating to obtaining the variable contracts qualification should be direct to ETS at their toll free number: 1-800-533-5599.

Questions relating to the current license status or qualifications of an individual already licensed as an agent should be addressed directly to the Michigan Insurance Bureau Licensing Section at (517) 373-0234.