P&CMImedium
A Michigan producer collects $4,000 in premium from a client for an admitted insurer. Under MCL 500.1207, the producer must:
ADeposit the funds into the producer's general business account and remit the net premium to the insurer after deducting earned commission
BWire the funds directly to the policyholder's mortgagee
CConvert the funds to a cashier's check payable to DIFS within 5 business days
Hold the funds as a fiduciary, accounting promptly to the insurer or insured to whom they are due
Why this is the answer
Under MCL 500.1207, all premiums and return premiums received by a producer are held in a fiduciary capacity. The producer must account for and pay the funds to the insurer, insured, or other person entitled to them. Commingling premium with personal or general operating funds violates the fiduciary duty and is also disciplinable as misappropriation under MCL 500.1239. The other options describe acts that would themselves constitute violations of MI law.
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