Activities that Require a License FAQ
The information on this page is intended to provide a quick overview of when a license may or may not be required. It does not encompass all circumstances and is not meant as substitute for legal advice. Please refer to Chapter 12 of the Michigan Insurance Code, 1956 PA 218, for complete information. The Insurance Code is the prevailing authority as to when a license is required. Questions may be directed to the Department’s Insurance Licensing Section toll free at 877-999-6442.
If you are soliciting, negotiating or selling insurance you are required to be licensed as an insurance producer (agent).
“Solicit” means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company.
“Negotiate” means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.
“Sell” means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company.
- What activities can a Customer Service Representative (CSR) engage in without becoming licensed as an insurance producer?
- Dispensing insurance brochures and other general information (so long as there is not conversation relating to the terms of insurance or a contract).
- Disseminating buyers’ guides, applications for coverage, coverage selection forms or other similar forms in response to a request from a current or prospective policyholder.
- Providing information about the licensed insurance producer (agent) or the agency, and offering to send brochures about the producer’s services.
- Giving a current or prospective policyholder the name and contact information of a licensed insurance producer.
- Giving a licensed insurance producer the name, contact information and a message from a current or prospective policyholder.
- At the request of a current or prospective policyholder, receiving and recording information from the policyholder to give to a licensed insurance producer for response.
- Scheduling appointments for a licensed insurance producer and a current or prospective policyholder.
- Recording the responses of a current or prospective policyholders to questions on an application for insurance (so long as there is not conversation relating to the terms of insurance or a contract and the completed application is given to a licensed insurance producer to review and sign and for underwriting).
- When initiated by a current or prospective policyholder, communicating to obtain factual information necessary for a licensed insurance producer to complete a review (so long as there is not conversation relating to the terms of insurance or a contract).
- Receiving completed applications for insurance coverage for transmittal to a licensed insurance producer or for processing through an automated system developed and maintained under the supervision of an insurer or a licensed insurance producer (a CSR may not sign the license application).
- Relaying a request for additional information from a licensed producer to an insured or prospective insured.
- Receiving premiums at the recorded place of business where the payment is being made on a binder, endorsement, or existing policy for which the transaction was conducted by a licensed insurance producer. Receiving and recording an insured’s request concerning any additions or deletions to an existing policy for review by a licensed insurance producer, and preparing the appropriate endorsements or processing the appropriate changes after approval from the licensed insurance producer.
- Informing the insured as to his or her coverages as indicated in the policy records.
- Receiving telephone calls reporting additional or replacement items (vehicles, property, drivers) for policies currently in force.
- Opening mail, office filing and mailing billings.
- What activities constitute soliciting, negotiating, or selling insurance and require a license as an insurance producer?
The list below includes, but is not limited to, activities require a license as an insurance producer:
- Disseminating information or quoting rates secured by reference to a published or printed list or computer database of standard rates.
- Discussing, interpreting, or elaborating upon the information contained in an insurance brochure, application or other sales literature.
- Giving advice or describe the specific characteristics of coverages of an annuity or insurance product.
- Discussing rates, sales charges, or tax treatments of any product or attempting to answer any insurance or annuity questions.
- Soliciting customers to purchase insurance or annuity products.
- Explaining information on an insurance application or signing an insurance application.
- Receiving commission or other compensation, which varies with the volume of applications or premiums.
- Explaining, discussing, or interpreting coverage; analyzing exposures or policies; or giving opinions or recommendations pertaining to insurance products.
- Discussing the effect of age, health, or other risk-related conditions to a current or prospective policyholder.
- Counseling, urging, or advising any current or prospective policyholder to buy a particular policy or to insure with a particular company.
- Obtaining underwriting information from other sources, including but not limited to, credit agencies, SOS, other insurance agencies or companies.
- Indicating that requested coverage is or will be bound or issued.
- Preparing an application for insurance.
- Binding coverage.
- Requesting and reviewing information relating to the audit of records or loss control on underwriting verifications and inspections; requesting and reviewing the results of a physical examination of a prospective policyholder named in a submitted application; requesting and reviewing information from persons other than the applicant; deciding that the applicant meets the insurer’s underwriting criteria; approving the mailing of the policy to the policyholder.
- Signing an application or using the his/her own signature stamp.
- Receiving any compensation which varies with the volume of applications or premium.
The answers provided are not meant to be a substitute for legal advice.