Surplus Lines Business Entity License

The Office of Financial and Insurance Regulation issues

A. NAME OF PERMIT OR APPROVAL:

Surplus Lines Agency License

B. STATUTORY AUTHORITY:

The Insurance Code of 1956 - Chapter 19

C. APPLICABLE REGULATION:

PA 218 of 1956 The Insurance Code of 1956

D. SUMMARY OF PERMIT/APPROVAL PROCESS:

 1.  Applicability (activities that require the permit)

If the agency advertises, binds coverage, and is paid commissions for Surplus Lines business under the agency name, the agency is required to be licensed for Surplus Lines.

 2.  Pre-Application Requirements

Resident Surplus Lines Agency

• The agency must hold a license for Property, Casualty, Property and Casualty, or Accident and Health, and be in good standing.
• The agency must have a licensed Surplus Lines producer in good standing affiliated with their agency before an agency Surplus Lines license will be issued.

Non-Resident Surplus Lines Agency

• The agency must hold a license for Property, Casualty, Property and Casualty, or Accident and Health, and a Surplus Lines license in their home state and be in good standing. The licenses will be verified on the NAIC Producer Database (PDB). The agency must obtain a non-resident Property and Casualty or Accident and Health license. It may be applied for before obtaining the non-resident Surplus Lines license or simultaneously.
• The agency must have a Michigan licensed Surplus Lines individual producer in good standing affiliated with their agency before an agency Surplus Lines license will be issued.

 3.  Application Submission Requirements

Resident and Non-Resident Surplus Lines Agency Applicants

• Complete the NAIC Uniform Application for Business Entity Insurance License/Registration.
• Specify type of entity and requested qualification on page 2 of the application.
• Mail the completed form with the FIS 0223 Fee Processing Card and a $110.00 fee in the form of a business check, cashier's check, or money order made payable to the State of Michigan. Do not send personal checks.

 4.  Procedures and Time-Frame for Obtaining Permit or Approval

The time-frame for license approval/denial is normally 60-90 days, if no further information is requested.

 5.  Operational Requirements

Renewal and Cancellation

Annually in February, each insurance adjuster, counselor, solicitor sponsor, and surplus lines receives a renewal invoice.

If the renewal invoice is returned to OFIR due to a bad address, OFIR will inactivate the license.

If the renewal invoice with payment is not received by the due date, a licensee/registrant will be mailed a notice of cancellation due to non-receipt or untimely receipt of a license renewal invoice payment. The license becomes inactive with the effective date of March 31. Receipt and deposit by the State of Michigan of a late payment after cancellation of the license has officially occurred will not restore the status of the license to active.

Prior to conducting business a new application and fees will be required, within twelve (12) months of inactive date in order to avoid any applicable pre-licensing and examination. Conducting business under a cancelled license is non-compliant with the Michigan Insurance Code, and may result in a disciplinary action.

Refunds for licensing late payments or duplicate payments will not be issued automatically nor issued for less than $100.00.

Payment of the renewal invoice does NOT generate a new license document annually. The original license is perpetual as long as the invoice is paid and the licensee is in good standing.

Appointments

The Surplus Lines licensee is not required to be appointed to a Surplus Lines insurer to conduct and bind business in the State of Michigan.

Filing the Surplus Lines Taxes

As a Surplus Lines licensee, the taxes and regulatory fees are paid on a semi-annual basis on form FIS 0270 Surplus Lines Agent Semi-Annual Report of Michigan Premiums and Tax which is available on our website under the Forms tab. The report and fees are due August 15th and February 15th for each six-month period. The taxes are due August 15th for policies placed during January through June; the taxes are due February 15th for policies placed during July through December. The total premiums written on page 1 and page 2 must balance.

If no surplus lines business has been conducted, submit the FIS 0270 Semi-Annual Report with a zero dollar amount, appropriately signed and dated by the individual licensee.

Refunds are not issued, but credits may be taken on the FIS 0270 Semi-Annual Report with proper supporting documentation. Declaration sheets are not required to be submitted with the FIS 0270 Semi-Annual Report, but may be requested.

If a Surplus Lines insurer is used that is not listed on Michigan?s list of eligible unauthorized insurers, the additional form FIS 0269 Report of Transaction with an Unauthorized Insurer Not Recognized as Eligible must be completed and submitted with the FIS 0270. The list is updated quarterly and is available on our website.

Address Changes

Michigan law (MCL 500.1238(1)) requires any agent, solicitor, counselor, or adjuster to notify the commissioner of any change in his or her mailing address within 30 days of such change. To change a mailing address submit:

• Resident producers, and non-resident producers living in states which participate in ACR: Address Change Request through the NIPR.
A fee of $3.00 shall accompany each change of mailing address to cover costs of recording such change, and is included with the NIPR fees.
• Nonresident producers living in states which do not participate in the ACR; all adjusters, counselors and solicitors: FIS 0262 Name or Address Change for Insurance Licensees. A fee of $3.00 shall accompany each change of mailing address to cover costs of recording such change. The $3.00 fee should be a check or money order payable to the State of Michigan. Attach payment to the top of the completed form FIS 0262 and send it to the address on the form.

A new license is generated and mailed automatically.

Document Requests

Accurate producer license information is available on the Insurance Licensee Locators and the NAIC Producer Licensing Database. To document licensure, companies should print a screen of the producer's license status as needed.

Use FIS 0261 Document Request to request:

• a duplicate license (to replace a license that was lost, stolen, destroyed or never received) .
• a letter of clearance. Prior to applying for licensure in another state, an applicant should research any specific statutes or rules for that state (e.g. minimum length of required resident licensure in prior state). Most states rely on verification of applicant's previous resident license through the NAIC Producer Licensing Database in lieu of original letter of clearance. Clearances are available for individual licensees only. Return the original license or complete the affidavit.
• a letter of certification. Necessary for surplus lines producer licensure in some states. States rely on verification of applicant's resident producer license through the NAIC Producer Licensing Database in lieu of original letter of certification.
• a license history. For current license, qualification, appointment and continuing education status, access the Insurance Licensee Locator for individuals and the Insurance Agency Locator for agencies.
• There is no charge for the services listed in the document requests section.

Agency Affiliations

An agency affiliation must be added or inactivated as persons join or leave the agency. The Agency Affiliation Form (FIS-0200) is used to add or inactivate the affiliation. There is no fee attached to this form.

Name Change

An agency producer that is changing the agency name but not an FEIN change is required to submit form FIS 0262 and a copy of its amended articles of incorporation/organization, partnership or new DBA filing.

A new license is generated and mailed automatically. There is no fee.

 6.  Fees

• Application/License fee - $110.00

• Mailing Address Change - $3.00

 7.  Appeal Process

Section 1239(2) of the Code, MCL 500.1239(2), states:

Before the commissioner denies an application for a license under section 1205 or 1206a, the commissioner shall notify in writing the applicant or licensee of the denial and of the reason for the denial. Not later than 30 days after this written denial, the applicant or licensee may make written demand upon the commissioner for a hearing before the commissioner to determine the reasonableness of the commissioner's action. A hearing under this subsection shall be held pursuant to the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

To appeal a denial of an application, a signed, written request for a hearing is required.

 8.  Public Input Opportunities

We encourage consumers to first attempt to resolve disputes directly with their financial service entity. If a resolution cannot be reached, our office can try to help resolve a dispute. A complaint form must be completed for for the type of financial service you are having difficulty with.

• Insurance Complaint Form and Guide to Resolving Problems
• Insurance Complaint Form (download to use typewriter feature, requires Acrobat Reader v7.0.9 or higher)
• Insurance Business-to-Business Complaint Guide

E. Contact Information:

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Creation/Revision Date:

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