Mich. Comp. Laws » Michigan Compiled Laws / Chapter 500 / Act 218 of 1956

Mich. Comp. Laws § 500.1207

Agent as fiduciary; separate accounts; examination of records; remuneration of person acting as agent; placing refused coverage; use of intimidation, threats, or unlawful inducements; agent as party to contract.

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THE INSURANCE CODE OF 1956


Act 218 of 1956


500.1207 Agent as fiduciary; separate accounts; examination of records; remuneration of person acting as agent; placing refused coverage; use of intimidation, threats, or unlawful inducements; agent as party to contract.

Sec. 1207.

    (1) An agent is a fiduciary for all money received or held by the agent in the agent's capacity as an agent.

    (2) An agent shall treat all premiums and return premiums as fiduciary money and segregate the premiums from the agent's own money. Except as otherwise provided in this subsection, an agent shall not commingle premiums or return premiums with any other money of the agent. An agent may make an initial deposit from the agent's own money to establish the separate account. An agent may make additional deposits from the agent's own money into the separate account solely for the purpose of paying or avoiding financial institution charges or fees, or both, required to maintain the separate account. Any of the agent's own money deposited into the separate account under this subsection must be separately accounted for and identifiable in the agent's books and records.

    (3) The separate account under subsection (2) must be established and maintained in any state or federally chartered financial institution that is federally insured. The separate account may be interest-bearing.

    (4) An agent may hold returned premiums in the separate account for the purpose of paying future premiums on behalf of an insured with the insured's written authorization.

    (5) An agent shall use reasonable accounting methods to record money received in the agent's fiduciary capacity, including the receipt and distribution of premiums due each of the agent's insurers.

    (6) An agent who receives fiduciary money must document the receipt of the fiduciary money in sufficient detail to determine, at a minimum, the date received, the name of the payee, the amount received, and a description of the money.

    (7) An agent shall record return premiums received by or credited to the agent that are due an insured on policies reduced or canceled or that are due a prospective purchaser of insurance as a result of a rejected or declined application.

    (8) Failure by an agent in a timely manner to turn over the money that the agent holds in a fiduciary capacity to the persons to whom it is owed is prima facie evidence of violation of the agent's fiduciary responsibility.

    (9) An agent shall not accept payment of a premium for a Medicare supplemental policy or certificate in the form of a check or money order made payable to the agent instead of the insurer. On receiving payment of a premium for a Medicare supplemental policy or certificate, an agent shall immediately provide a written receipt to the insured.

    (10) Records required by this section must be open to examination by the director.

    (11) Except as provided in sections 1211 and 1212 and subsection (12), an agent shall not reward or remunerate any person for procuring or inducing business in this state, furnishing leads or prospects, or acting in any other manner as an agent.

    (12) If an agent is unable to immediately provide, through the agent's insurers that are authorized to underwrite the coverage, all or a part of the coverage requested on a risk, the agent may obtain the part of the coverage refused by the agent's insurers through another licensed agent or through a risk sharing plan permitted by state law. An agent who attempts to place the refused part of the coverage through another licensed agent shall advise the buyer in writing that the refused part of the coverage is not in effect until the buyer receives written evidence of insurance.

    (13) A person shall not sell or attempt to sell insurance by means of intimidation or threats, whether express or implied. Except as provided in section 2077(4), a person may not induce the purchase of insurance through a particular agent or from a particular insurer by means of a promise to sell goods, lend money, or provide services, or by a threat to refuse to sell goods, lend money, or provide services.

    (14) After January 1, 1973, an insurer or an agent may not be a party to a contract under which the agent assumes any responsibility or obligation for payment, from the agent's commission or any allocation of premium to the agent by the insurer, of any losses on insurance policies sold by the agent unless the claim adjusting is done by insurance company adjusters or licensed independent adjusters.

    

    

History: Add. 1972, Act 133, Eff. Mar. 30, 1973 ;-- Am. 1990, Act 170, Imd. Eff. July 2, 1990 ;-- Am. 1993, Act 200, Eff. Dec. 28, 1994 ;-- Am. 2018, Act 449, Imd. Eff. Dec. 21, 2018 ;-- Am. 2023, Act 181, Eff. May 5, 2024

Compiler's Notes:

    Section 3 of Act 200 of 1993 provides as follows:

    “Section 3. This amendatory act shall not take effect unless the state administrative board certifies in writing to the secretary of state by December 31, 1994 that an agreement for the transfer of all or substantially all of the assets and the assumption of all or substantially all of the liabilities of the state accident fund has been consummated with a permitted transferee pursuant to the requirements of section 701a of the worker's disability compensation act of 1969, Act No. 317 of the Public Acts of 1969, being section 418.701a of the Michigan Compiled Laws.”

PopularName Notes:

Act 218
Notes of Decisions
Cited in 15 cases (2 in the last 5 years), 1984–2025 · leading case: Harts v. Farmers Insurance Exchange
Sort: Relevance Newest Treatment
Harts v. Farmers Insurance Exchange (1999) mich · cites it 3× “MCL § 500.1207; MSA § 24.11207, MCL § 500.”
Ludington Service v. ACTING COMMISSIONER OF INS. (1994) mich · cites it 3× “Specifically, we must decide whether the Commissioner of Insurance erred in concluding that the bank’s proposed business plan would violate MCL 500.1207(3); MSA 24.11207(3), MCL 500.”
First American Title Insurance v. Gaskill (In re Gaskill) (2012) miwb · cites it 6× “20 for conversion of the premiums, fraud/defalcation under Mich. Comp. Laws Ann. § 500.1207 , and breach of contract in the amount of $101,102.”
Prime Rate Premium Finance Corp. v. Larson (2016) mied · cites it 4× “Mich. Comp. Laws § 500.1207 (1). The evidence in this record does not show that Brandon acted as an agent on any of the PFAs except the two involving Canike Landscaping and Dockside Supply.”
NAS Surety Group v. Cooper Insurance Center, Inc. (2007) miwd · cites it 4× “Mich. Comp. Laws §§ 500.1207 (2), 500.1239(l)(d).”
Lawyers Title Insurance v. Chicago Title Insurance (1987) michctapp · cites it 5× “Moreover, the Insurance Commissioner concluded that respondents, other than Lawyers Title, violated MCL 500.1207(3); MSA 24.11207(3). The commissioner fined Wayne-Oakland, Lincoln and Interstate $100 for violating MCL 500.”
Thm, Ltd v. Commissioner of Insurance (1989) michctapp · cites it 2× “Section 1207(3), MCL 500.1207(3); MSA 24.11207(3), provides: Except as provided in sections 1212 and 1860 *783 and subsection (4) an agent shall not reward or remunerate any person for procuring or inducing business in this state, furnishing leads or prospects, or acting in any…”
Livingston v. Zurich Insurance (In Re Livingston) (1984) mied · cites it 2× “§ 500.1207(1). That section provides: “An agent shall be a fiduciary for all moneys received or held by him in his capacity as an agent.”
Attorney General v. American Way Life Insurance (1991) michctapp “In Szabo , our Court considered the scope of the Insurance Commissioner’s authority to investigate and examine the records of insurance agents under § 1207(2) of the code, MCL 500.1207(2); MSA 24.11207(2), and concluded: Our courts have often recognized that the insurance…”
Ludington Service Corp. v. Commissioner of Insurance (1992) michctapp · cites it 2× “11207(3), MCL 500.1207(5); MSA 24.11207(5), MCL 500.”
Heller v. Ross (2010) mied “Furthermore, producers have fiduciary obligations to collect and hold client funds, to identify and recommend suitable annuities to clients, and to offer clients the lowest rate available among potential insurers, even when a higher-priced product would pay a higher commission…”
Insurance Brokers Service, Inc. v. Marsh & McLennan (1987) ilnd “Finally, defendant argues that Section 1207 of the Michigan Insurance Code of 1956, Mich.Comp.Laws Ann. § 500.1207 (West 1983), establishes that defendant cannot be liable to plaintiff.”
Show all 15 citing cases →
— Mich. Comp. Laws § 500.1207(1) — 3 cases
Livingston v. Zurich Insurance (In Re Livingston) (1984) mied “§ 500.1207(1). That section provides: “An agent shall be a fiduciary for all moneys received or held by him in his capacity as an agent.”
Prime Rate Premium Finance Corp. v. Larson (2016) mied “Mich. Comp. Laws § 500.1207 (1). The evidence in this record does not show that Brandon acted as an agent on any of the PFAs except the two involving Canike Landscaping and Dockside Supply.”
Northern Insurance Co. of New York v. InsurAmeriCorp, Inc. (2002) miwd
— Mich. Comp. Laws § 500.1207(2) — 1 case
Attorney General v. American Way Life Insurance (1991) michctapp “In Szabo , our Court considered the scope of the Insurance Commissioner’s authority to investigate and examine the records of insurance agents under § 1207(2) of the code, MCL 500.1207(2); MSA 24.11207(2), and concluded: Our courts have often recognized that the insurance…”
— Mich. Comp. Laws § 500.1207(3) — 3 cases
Lawyers Title Insurance v. Chicago Title Insurance (1987) michctapp “Moreover, the Insurance Commissioner concluded that respondents, other than Lawyers Title, violated MCL 500.1207(3); MSA 24.11207(3). The commissioner fined Wayne-Oakland, Lincoln and Interstate $100 for violating MCL 500.”
Thm, Ltd v. Commissioner of Insurance (1989) michctapp “Section 1207(3), MCL 500.1207(3); MSA 24.11207(3), provides: Except as provided in sections 1212 and 1860 *783 and subsection (4) an agent shall not reward or remunerate any person for procuring or inducing business in this state, furnishing leads or prospects, or acting in any…”
Ludington Service v. ACTING COMMISSIONER OF INS. (1994) mich “Specifically, we must decide whether the Commissioner of Insurance erred in concluding that the bank’s proposed business plan would violate MCL 500.1207(3); MSA 24.11207(3), MCL 500.”
— Mich. Comp. Laws § 500.1207(5) — 2 cases
Ludington Service v. ACTING COMMISSIONER OF INS. (1994) mich “Specifically, we must decide whether the Commissioner of Insurance erred in concluding that the bank’s proposed business plan would violate MCL 500.1207(3); MSA 24.11207(3), MCL 500.”
Ludington Service Corp. v. Commissioner of Insurance (1992) michctapp “11207(3), MCL 500.1207(5); MSA 24.11207(5), MCL 500.”
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