Updated 01/09/26
The Agency Audit Section within the Department of Insurance and Financial Services (DIFS) Office of Insurance Licensing, Investigations, and Audits is responsible for proactively performing routine reviews of selected business entities to evaluate compliance with the Michigan Insurance Code (the Code) governing an insurance producer's fiduciary responsibilities, marketing and sales practices, licensing and appointment requirements, and other areas deemed necessary. MCL 500.249 gives DIFS the authority to examine the records of licensed insurance agencies and individuals to ascertain compliance with the applicable provisions in the Code. More information about the Code can be found on the Michigan Legislature website.
Below is a list of common questions regarding trust account reviews:
Yes, an agent may deposit their own money in the separate premium account as a cushion to cover banking fees and other contingencies. However, they must be able to clearly identify and track these additional funds.
Yes, as long as none of the insurers contracted with specifically prohibit using an interest-bearing account. Any interest earned on the premium account must be clearly identified and tracked in the agents records.
Yes, if the agent still receives and deposits premium funds into their bank account. The Code does not differentiate between agency-bill and direct-bill policies; however, MCL 1207(1) and (2) require that an agent, as a fiduciary, shall not commingle premium money with the agent's own funds.
When the agent receives the customer payment for an agency-bill policy, they should first deposit the check into the separate premium account. Once the policy is bound or effective, they can transfer the commission from the premium account to the operating account.
When an agency-bill policy is canceled midterm, the return premium the agent receives from the insurer, or another agency is often the net unearned premium which does not include the unearned commission. The agent needs to refund the amount of the unearned commission in addition to the net amount they receive. The agent will transfer the unearned commission from the operating account to the premium account and refund the gross return premium from the premium account directly to the party entitled to the funds.
No.
The Code does not require a separate account for each insurer an agent may work with. However, some insurers may require a separate account in the agency agreements.
Return premiums must be kept in the separate premium account, and an agent must have written authorization from the insured to hold them there. MCL 1207(4) allows returned premiums to be held for the purpose of paying future premiums on behalf of the insured. However, if the insured does not owe any future premiums, the agent is required to forward the return premiums directly to the insured in a timely manner.
The agent must first issue the refund in a timely manner and make reasonable attempts to locate the insured. If the agent is still not able to reach the insured, the agent must turn the money over to the State of Michigan by filing a report with Unclaimed Property within the Michigan Department of Treasury.
