Michigan Office of Administrative Hearings and Rules  
MOAHR-Rules@michigan.gov  
AGENCY REPORT TO THE  
JOINT COMMITEE ON ADMNINISTRATIVE RULES (JCAR)  
1. Agency Information  
Agency name:  
Insurance and Financial Services  
Division/Bureau/Office:  
Insurance  
Name of person completing this form:  
Catherine Hart  
Phone number of person completing this form:  
248-982-9425  
E-mail of person completing this form:  
HartC4@michigan.gov  
Name of Department Regulatory Affairs Officer reviewing this form:  
Jeff Hayden  
2. Rule Set Information  
MOAHR assigned rule set number:  
2023-62 IF  
Title of proposed rule set:  
Surplus Lines Insurance Fees  
3. Purpose for the proposed rules and background:  
In its current form, the rule establishes a standard for surplus lines licensees to charge a fee of over  
$50.00. The rule specifically establishes: a) categories of costs considered “unrelated to the licensee,”  
and b) disclosure and reporting requirements for fees exceeding the $50.00 cap. MCL 500.1915 was  
amended by 2020 PA 62 to eliminate the $50.00 fee cap and to establish new fee standards and  
disclosure requirements for permissible fees. These amendments necessitate conforming amendments  
to the rule. The proposed amended rule removes language no longer relevant following the passage of  
2020 PA 62 and defines expenses “unique to surplus lines” that are permitted to be included in a  
surplus lines insurance fee.  
4. Summary of proposed rules:  
Chapter 19 of the Insurance Code, MCL 500.1901, et seq., known as the "surplus lines insurance act,"  
regulates surplus lines insurers 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 schedule standards for permissible fees. The proposed  
rule will provide consistency with Chapter 19 by striking obsolete language from the existing rule,  
and it defines the expenses that are "unique to surplus lines."  
5. List names of newspapers in which the notice of public hearing was published and  
publication dates:  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 2  
Detroit Free Press: February 7, 2024  
Escanaba Daily Press: February 7, 2024  
Lansing State Journal: February 7, 2024  
6. Date of publication of rules and notice of public hearing in Michigan Register:  
3/1/2024  
7. Date, time, and location of public hearing:  
3/7/2024 10:30 AM at Ottawa Building, Conference Room #6 , 611 West Ottawa Street, Lansing,  
Michigan 48933  
8. Provide the link the agency used to post the regulatory impact statement and cost-benefit  
analysis on its website:  
https://ARS.apps.lara.state.mi.us/Transaction/RFRTransaction?TransactionID=1489  
9. List of the name and title of agency representative(s) who attended the public hearing:  
Jeffrey Hayden, Director, Office of Appeals, Legal Research, and Market Regulation  
Huifang (Holly) Zhu, CPA, CFE, Audit Manager, Office of Insurance Licensing, Investigations, and  
Audit  
Sherry Barrett, Surplus Lines Specialist, Office of Insurance Licensing, Investigations, and Audit  
Catherine Hart, Administrative Law Specialist  
Ian McLauchlan, Administrative Law Specialist  
10. Persons submitting comments of support:  
There were no express comments in support.  
11. Persons submitting comments of opposition:  
The Department received comments indicating opposition to components of the proposed rule by:  
John H. Meetz, Director of Government Relations, on behalf of Wholesale & Specialty Insurance  
Association; and Alex Houseman, Director of Government Relations, on behalf of Big I Michigan.  
12. Persons submitting other comments:  
There were no other comments.  
13. Identify any changes made to the proposed rules based on comments received during the  
public comment period:  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 3  
Name &  
Organization public hearing  
Comments made at Written  
Agency Rationale Rule number  
for Rule Change & citation  
and Description changed  
of Change(s)  
Comments  
Made  
1
John Meetz,  
Director of  
Government  
Relations,  
Revise/broaden The original R  
the list in the rule 500.1251(1)  
naming specific defined those  
expenses incurred expenses “unique  
R 500.1251  
(1)  
Wholesale &  
Specialty  
for which a fee  
might be charged. which are not  
The current list defined expenses  
does not reflect in MCL 500.1915,  
to surplus lines,”  
the statutory  
changes in the  
law or the  
as amended by  
2020 PA 62. See  
MCL 500.1915.  
The agency  
reasonable  
circumstances  
under which a  
surplus lines  
broker would  
amended R  
500.1251(1) to  
broaden those  
expenses  
need to charge a considered  
fee. It would be “unique to surplus  
virtually  
lines,” which the  
impossible to list agency agrees  
all the items that more closely  
might be  
considered  
“unique to  
surplus lines.”  
WSIA has no  
issue with the  
rule language  
adheres to the  
legislative intent.  
The agency did  
not adopt the  
commenter’s  
suggested  
language verbatim  
excluding costs because it was not  
incurred in  
maintaining  
offices and  
compensating  
employees.  
sufficiently clear  
and contained  
undefined terms.  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 4  
2
Alex  
Revise/broaden The original R  
R 500.1251  
(1)  
Houseman,  
Director of  
Government  
Relations, Big I  
Michigan  
the list in the rule 500.1251(1)  
naming specific defined those  
expenses incurred expenses “unique  
for which a fee  
might be charged. which are not  
The current list defined expenses  
does not reflect in MCL 500.1915,  
to surplus lines,”  
the statutory  
changes in the  
law or the  
as amended by  
2020 PA 62. See  
MCL 500.1915.  
The agency  
reasonable  
circumstances  
under which a  
surplus lines  
broker would  
amended R  
500.1251(1) to  
broaden those  
expenses  
need to charge a considered  
fee. It would be “unique to surplus  
virtually  
lines,” which the  
impossible to list agency agrees  
all the items that more closely  
might be  
adheres to the  
considered  
legislative intent.  
“unique to  
surplus lines.”  
Big I supports  
maintaining the  
existing language  
regarding the  
exclusion of costs  
incurred in  
maintaining  
offices and  
compensating  
employees.  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 5  
3
John Meetz,  
Director of  
Government  
Relations,  
Wholesale &  
Specialty  
Remove language The agency  
R 500.1215  
(2)  
requiring the  
revised the  
disclosure of a  
commission as  
part of the fee  
disclosure as it  
language  
contained in R  
500.1215(2) with  
regard to  
Insurance  
Association  
would be overly commission  
complicated and disclosures to  
is not required by better reflect the  
other states.  
intent of the rule  
provision, i.e., to  
disclose whether  
the fee was  
charged in  
addition to a  
commission,  
rather than  
disclosing the  
value of any  
commission.  
4
Alex  
Remove language The agency  
R 500.1215  
(2)  
Houseman,  
Director of  
Government  
Relations, Big I  
Michigan  
requiring the  
revised the  
disclosure of a  
commission as  
part of the fee  
disclosure as it  
language  
contained in R  
500.1215(2) with  
regard to  
would be overly commission  
complicated and disclosures to  
is not required by better reflect the  
other states.  
intent of the rule  
provision, i.e., to  
disclose whether  
the fee was  
charged in  
addition to a  
commission,  
rather than  
disclosing the  
value of any  
commission.  
MCL 24.242 and 24.245  
Agency Report to JCAR-Page 6  
5
John Meetz,  
Director of  
Government  
Relations,  
To ensure  
compliance,  
reiterate the  
The existing rule R 500.1215  
cross-referenced (1)  
the fee limitations  
statutory cap on set forth in MCL  
Wholesale &  
Specialty  
personal lines  
fees within the  
500.1915(1). The  
agency relocated  
Insurance  
Association  
language of the the sentence  
new rule. referencing those  
limitations in the  
revised language  
in R 500.1251(1)  
for the purposes of  
clarity.  
6
Alex  
Either remove the The agency  
reference to relocated the  
personal lines in sentence  
R 500.1215  
(1)  
Houseman,  
Director of  
Government  
Relations, Big I  
Michigan  
the rule or  
incorporate the  
referencing the fee  
limitations  
specific personal contained in MCL  
lines language  
currently  
included in the  
law.  
500.1915(1) in the  
revised language  
in R 500.1251(1)  
for the purposes of  
clarity.  
14.Date report completed:  
4/17/2024  
MCL 24.242 and 24.245  
;