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A. Explain how the rules have been coordinated, to the extent practicable, with other federal, state, and local laws
applicable to the same activity or subject matter. This section should include a discussion of the efforts undertaken
by the agency to avoid or minimize duplication.
The proposed rule implements Chapter 19 of the Code. There are no other federal, state, or local laws applicable to
the same activity or subject matter.
4. If MCL 24.232(8) applies and the proposed rules are more stringent than the applicable federally mandated
standard, provide a statement of specific facts that establish the clear and convincing need to adopt the more
stringent rules.
MCL 24.232(8), as enacted by 2018 PA 602, does not apply to the proposed rule.
5. If MCL 24.232(9) applies and the proposed rules are more stringent than the applicable federal standard,
provide either the Michigan statute that specifically authorizes the more stringent rules OR a statement of the
specific facts that establish the clear and convincing need to adopt the more stringent rules.
MCL 24.232(9), as enacted by 2018 PA 602, does not apply to the proposed rule.
Purpose and Objectives of the Rule(s)
6. Identify the behavior and frequency of behavior that the proposed rules are designed to alter.
Chapter 19 of the Code, known as the “surplus lines insurance act,” regulates surplus insurers, i.e., licensees, in the
state of Michigan. Chapter 19 contains certain conditions and requirements for licensees to charge policy fees to
insureds, see MCL 500.1915. MCL 500.1915 was amended by 2020 PA 62 to establish new fee standards for
permissible fees. The proposed rule will provide consistency with Chapter 19 by striking obsolete language from the
existing rule and defining those expenses that are “unique to surplus lines.”
A. Estimate the change in the frequency of the targeted behavior expected from the proposed rules.
Upon promulgation, the proposed rule will align with Chapter 19 of the Code, specifically MCL 500.1915. Licensees
will benefit from the consistency. It is expected that licensees will, if they have not already, have to change how they
charge fees to comply with the proposed rule as well as the amended Section 1915.
B. Describe the difference between current behavior/practice and desired behavior/practice.
Upon promulgation, the proposed rule will align with Chapter 19 of the Code. Licensees will have clarity on fee
standards and requirements so that compliance can be better achieved.
C. What is the desired outcome?
The desired outcome of the proposed rule is to achieve consistency with Chapter 19 of the Code as well as to provide
clarity with respect to permissible surplus lines insurance policy fees.
7. Identify the harm resulting from the behavior that the proposed rules are designed to alter and the likelihood
that the harm will occur in the absence of the rule.
If the proposed rule is not adopted, there would be less clarity and consistency between the rule and MCL 500.1915.
A. What is the rationale for changing the rules instead of leaving them as currently written?
Modernizing the rule will ensure alignment with MCL 500.1915.
8. Describe how the proposed rules protect the health, safety, and welfare of Michigan citizens while promoting a
regulatory environment in Michigan that is the least burdensome alternative for those required to comply.
The proposed rule protects consumers by protecting them from excessive fees. There is no additional burden to
licensees as they must already comply with Chapter 19 of the Code.
9. Describe any rules in the affected rule set that are obsolete or unnecessary and can be rescinded.
The proposed rule amends the existing R 500.1251. There are no rules in the affected rule set that are obsolete or
unnecessary and can be rescinded.
Fiscal Impact on the Agency
Fiscal impact is an increase or decrease in expenditures from the current level of expenditures, i.e. hiring additional staff,
higher contract costs, programming costs, changes in reimbursements rates, etc. over and above what is currently
expended for that function. It does not include more intangible costs for benefits, such as opportunity costs, the value of
time saved or lost, etc., unless those issues result in a measurable impact on expenditures.
MCL 24.245(3)