Michigan P&C Insurance Law & Regulation
The state portion of the Michigan property and casualty exam begins with who regulates insurance in Michigan and the consumer-protection rules that overlay the national coverage forms. This chapter covers the Department of Insurance and Financial Services, unfair trade practices, and the cancellation and nonrenewal protections that apply to policies delivered in the state.
The Department of Insurance and Financial Services (DIFS)
Michigan regulates insurance through the Department of Insurance and Financial Services (DIFS), led by the DIFS Director. DIFS issues, denies, suspends, and revokes producer licenses, reviews policy forms and rates, investigates consumer complaints, and enforces the Michigan Insurance Code. A frequent exam point is that DIFS, not the Secretary of State or the Department of Treasury, licenses property and casualty producers and oversees insurers doing business in the state.
Unfair Trade Practices and Producer Conduct
Michigan's unfair trade practices law prohibits misrepresenting policy terms, false or misleading advertising, unfair discrimination between similar risks, defamation of an insurer, coercion, and unfair claim settlement practices. Rebating, giving any part of the premium or commission or other valuable consideration as an inducement to buy, is prohibited. Premiums a producer collects are held in a fiduciary capacity and must not be commingled or converted. Violations can bring fines and license suspension or revocation by DIFS.
Cancellation and Nonrenewal Protections
Michigan law limits how and when an insurer may cancel or nonrenew personal auto and homeowners policies and requires advance written notice so the insured can find replacement coverage. Once a policy is seasoned beyond its initial underwriting period, cancellation is generally allowed only for defined reasons such as nonpayment of premium, fraud, or a substantial increase in the insured hazard. The exact notice periods are set by statute and can change; confirm the current day-counts with the Michigan DIFS before relying on a specific number.