MI | Michigan has released a bulletin that addresses the common practice among producers of relying on Section 1207(4) of the insurance code in order to avoid obtaining necessary appointments.
Section 1207(4) states: If an agent is unable to immediately provide, through his or her 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 his or her 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.
Accordingly, in a non-surplus lines transaction, Section 1207(4) allows a producer to obtain coverage through another licensed producer if his or her appointing insurers refuse to place the coverage. This is a limited exemption from the Section 1208a requirement to obtain an appointment.
Producers who rely on Section 1207(4) must, for each transaction, create and retain documentation explaining why they cannot place part or all of the coverage through their appointing insurer(s). This documentation should be retained and must be provided to the Michigan Department of Insurance and Financial Services upon request.