HOUSE BILL No. 4783


     May 17, 2001, Introduced by Reps. Sanborn, Richner and Bisbee and referred to the Committee on Insurance and Financial Services.


        A bill to amend 1956 PA 218, entitled

   "The insurance code of 1956,"

   by amending section 3355 (MCL 500.3355).

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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           Sec. 3355.  (1) Every agent who is authorized to solicit,

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      negotiate, or effect automobile insurance on behalf of any par-

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      ticipating member shall:

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           (a) Offer to place automobile insurance through the facility

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      for any qualified applicant requesting the agent to do so.

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           (b) If the qualified applicant accepts the offer in subdivi-

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      sion (a), forward the application and any deposit premium

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      required in accordance with the plan of operation, rules, and

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      procedures of the facility.

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           (c) Be entitled to receive, and any participating member be

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      entitled to pay, a commission for placing insurance through the


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      facility at the uniform rates of commission as provided in the

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      plan of operation.

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           (2) THE FACILITY MAY DISQUALIFY AN AGENT FROM PLACING AUTO-

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      MOBILE INSURANCE THROUGH THE FACILITY IF THE AGENT PERSISTENTLY

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      VIOLATES THE FACILITY'S RULES CONTAINED IN THE FACILITY'S PLAN OF

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      OPERATION.  THE FACILITY SHALL NOTIFY THE AGENT OF HIS OR HER

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      DISQUALIFICATION IN THE MANNER PRESCRIBED IN THE PLAN OF

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      OPERATION.  IF AN AGENT IS DISQUALIFIED UNDER THIS SECTION, THE

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      FACILITY SHALL NOTIFY THE COMMISSIONER OF THE DISQUALIFICATION.

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           (3) AN AGENT MAY SUBMIT A WRITTEN REQUEST FOR A HEARING

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      BEFORE THE FACILITY'S BOARD OF GOVERNORS OR ITS DESIGNEE NOT

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      LATER THAN 10 BUSINESS DAYS AFTER THE NOTICE OF DISQUALIFICATION

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      IS ISSUED.  IF A WRITTEN REQUEST FOR A HEARING IS RECEIVED, THE

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      AGENT'S DISQUALIFICATION SHALL BE SUSPENDED PENDING A RULING BY

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      THE BOARD OF GOVERNORS.  THE BOARD OF GOVERNORS OR ITS DESIGNEE

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      SHALL HOLD A HEARING NOT LATER THAN 10 BUSINESS DAYS AFTER

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      RECEIPT OF THE WRITTEN REQUEST FOR A HEARING.  THE BOARD OF GOV-

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      ERNORS OR ITS DESIGNEE SHALL ISSUE A RULING NOT LATER THAN 5

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      BUSINESS DAYS AFTER THE HEARING AND SHALL NOTIFY THE COMMISSIONER

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      OF THE RULING.  A RULING OF DISQUALIFICATION BY THE BOARD OF GOV-

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      ERNORS OR ITS DESIGNEE SHALL TAKE EFFECT 5 CALENDAR DAYS AFTER

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      THE DATE OF THE RULING.

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           (4) A RULING OF DISQUALIFICATION BY THE FACILITY'S BOARD OF

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      GOVERNORS OR ITS DESIGNEE MAY BE APPEALED TO THE COMMISSIONER BY

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      FILING A WRITTEN NOTICE OF APPEAL WITH THE FACILITY AND THE COM-

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      MISSIONER WITHIN 30 CALENDAR DAYS AFTER THE DATE OF THE RULING.

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      A DISQUALIFICATION RULING SHALL REMAIN EFFECTIVE DURING THE



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      APPEAL PROCESS TO THE COMMISSIONER.  UPON RECEIPT OF AN APPEAL,

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      THE COMMISSIONER OR HIS OR HER DESIGNEE SHALL PROVIDE A HEARING

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      UNDER THE ADMINISTRATIVE PROCEDURES ACT OF 1969, 1969 PA 306,

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      MCL 24.201 TO 24.328, AND SHALL APPROVE, DISAPPROVE, OR DIRECT

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      THE BOARD OF GOVERNORS OR ITS DESIGNEE TO RECONSIDER ITS RULING.

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           (5) ON AND AFTER THE EFFECTIVE DATE OF A DISQUALIFICATION,

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      THE DISQUALIFIED AGENT SHALL NOT DO ANY OF THE FOLLOWING DURING

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      THE PERIOD OF DISQUALIFICATION:

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           (A) SOLICIT, NEGOTIATE, OR EFFECT AUTOMOBILE INSURANCE ON

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      BEHALF OF ANY PARTICIPATING MEMBER THROUGH THE FACILITY.

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           (B) SUBMIT NEW APPLICATIONS TO THE FACILITY.

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           (C) SERVICE ANY EXISTING FACILITY POLICIES EXCEPT AS PERMIT-

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      TED BY THE FACILITY'S USER MANUAL UNDER PROCEDURES FOR DISQUALI-

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      FIED AGENTS.

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           (D) BE ENTITLED TO COMPENSATION FOR EITHER NEW BUSINESS

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      APPLICATIONS OR RENEWALS.

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           (E) OBTAIN ANY BINDERS OR OTHER SUPPLIES FROM THE FACILITY.

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      EXISTING BINDERS OR OTHER SUPPLIES SHALL BE SURRENDERED TO THE

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      FACILITY UPON REQUEST.

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           (6) A DISQUALIFICATION UNDER THIS SECTION DOES NOT AFFECT

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      THE DISQUALIFIED AGENT'S AUTHORITY TO PLACE AUTOMOBILE INSURANCE

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      THROUGH AN AUTHORIZED INSURER IN THE VOLUNTARY MARKET.

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           (7) THE FACILITY SHALL AMEND ITS PLAN OF OPERATION TO ESTAB-

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      LISH STANDARDS AND PROCEDURES FOR DISQUALIFYING AN AGENT FROM

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      PLACING AUTOMOBILE INSURANCE THROUGH THE FACILITY.  THESE STAN-

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      DARDS AND PROCEDURES SHALL CONTAIN AT LEAST ALL OF THE

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      FOLLOWING:



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           (A) THE ACTIONS OR INACTIONS THAT MAY LEAD TO AN AGENT'S

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      DISQUALIFICATION.

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           (B) STANDARDS AND PROCEDURES UNDER WHICH AN AGENT MAY PETI-

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      TION THE FACILITY FOR REMOVAL OF THE DISQUALIFICATION.

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           (C) THAT WRITTEN NOTIFICATION MUST BE SENT TO AN AGENT THAT

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      HAS BEEN DISQUALIFIED THAT INCLUDES AT LEAST ALL OF THE

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      FOLLOWING:

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           (i) THE REASONS FOR THE DISQUALIFICATION.

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           (ii) THE PROCEDURE TO BE FOLLOWED TO APPEAL THE DISQUALIFI-

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      CATION TO THE BOARD OF GOVERNORS OR ITS DESIGNEE.

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           (iii) THE CONDITIONS AND PROCEDURES UNDER WHICH THE AGENT

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      CAN PETITION THE FACILITY FOR THE REMOVAL OF THE

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      DISQUALIFICATION.

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           (D) A PROCEDURE UNDER WHICH THE DISQUALIFIED AGENT MAY

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      APPEAL THE DISQUALIFICATION TO THE FACILITY'S BOARD OF GOVERNORS,

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      OR ITS DESIGNEE, THAT PROTECTS THE INTERESTS OF BOTH THE AGENT

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      AND THE FACILITY.  THIS PROCEDURE SHALL INCLUDE THE OPPORTUNITY

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      FOR THE AGENT, UPON REQUEST AND PAYMENT OF A REASONABLE COPYING

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      CHARGE, TO RECEIVE ANY INFORMATION PERTINENT TO THE

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      DISQUALIFICATION.

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           (E) A NOTICE TO THE DISQUALIFIED AGENT AFTER THE BOARD OF

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      GOVERNORS' OR DESIGNEE'S RULING AS TO HOW THE AGENT MAY APPEAL

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      THAT RULING TO THE COMMISSIONER OR HIS OR HER DESIGNEE IF THE

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      AGENT DISAGREES WITH THE RULING.









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