November 7, 2007, Introduced by Reps. Dean, Corriveau, Scott, Virgil Smith, Byrnes, Leland, Hood, Johnson, Melton, Constan, Young, Lemmons, Farrah, Coulouris, Alma Smith, Polidori, Vagnozzi, Tobocman and Condino and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
(MCL 500.100 to 500.8302) by adding section 1241.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1241. (1) If an insurance producer or his or her
affiliate receives any compensation from a customer for the
placement of insurance or represents the customer with respect to
that placement, neither that producer nor the affiliate shall
accept or receive any compensation from an insurer or other third
party for that placement of insurance unless, prior to the
customer's purchase of insurance, the producer does both of the
following:
(a) Except as otherwise provided in subsection (2), obtains
the customer's documented acknowledgment that such compensation
will be received by the producer or affiliate.
(b) Discloses to the customer the amount of compensation from
the insurer or other third party for the placement of insurance. If
the amount of compensation is not known at the time of disclosure,
the producer shall disclose to the customer the specific method for
calculating the compensation and, if possible, a reasonable
estimate of the amount.
(2) Subsection (1)(a) does not apply to an insurance producer
who meets all of the following:
(a) Does not receive compensation from the customer for the
placement of insurance.
(b) In connection with that placement of insurance, represents
an insurer that has appointed the producer.
(c) Discloses to the customer prior to the purchase of
insurance that the insurance producer will receive compensation
from an insurer in connection with that placement or that, in
connection with that placement of insurance, the insurance producer
represents the insurer and that the producer may provide services
to the customer for the insurer.
(3) This section does not apply to a reinsurance intermediary
or a person licensed as an insurance producer who acts only as an
intermediary between an insurer and the customer's producer,
including, but not limited to, a managing general agent, a sales
manager, or a wholesale broker.
(4) As used in this section:
(a) "Affiliate" means a person that controls, is controlled
by, or is under common control with the producer.
(b) "Compensation from an insurer or other third party" means
payments, commissions, fees, awards, overrides, bonuses, contingent
commissions, loans, stock options, gifts, prizes, or any other form
of valuable consideration, whether or not payable pursuant to a
written agreement.
(c) "Compensation from the customer" does not include any fee
or similar expense as provided under section 1226 or any fee or
amount collected by or paid to the producer that does not exceed an
amount established by the commissioner.
(d) "Customer" means the person signing the application or
submission for insurance or the insured's authorized representative
actually negotiating the placement of insurance with the producer.
A person is not a customer under this section if either of the
following applies:
(i) The person is only a participant or beneficiary of an
employee benefit plan.
(ii) The person is covered by a group or blanket insurance
policy or group annuity contract sold, solicited, or negotiated by
the insurance producer or affiliate.
(e) "Documented acknowledgment" means the customer's written
consent obtained prior to the customer's purchase of insurance. For
a purchase over the telephone or by electronic means for which
written consent cannot reasonably be obtained, consent documented
by the producer shall be acceptable.
Enacting section 1. This amendatory act takes effect January
1, 2008.