Unfair and Prohibited Trade Practices and Frauds

What this document is

Michigan Insurance Code of 1956, Chapter 20 - Unfair and Prohibited Trade Practices and Frauds (complete chapter, MCL 500.2001 to 500.2093, 64 sections) is a state statute published by Michigan Legislature (www.legislature.mi.gov). It is one of the Michigan documents that insurance license exam questions are written from, including michigan property & casualty, michigan personal lines practice questions. This page summarizes it and points to the official version, which is the text to rely on.

Sections cited in practice questions

Each practice answer shows the exact passage it comes from. These are sections of this document that questions cite, with a short excerpt from the source text.

• MCL 500.2012 (Unfair methods of competition or deception; combinations in restraint of trade)

  “The following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance: Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion or intimidation resulting in or tending to result in...”

• MCL 500.2005(e) (Misrepresentations; policy name or title)

  “Uses a name or title of an insurance policy or class of insurance policies misrepresenting the true nature of that insurance policy or class of insurance policies. A policy approved by the commissioner shall be conclusively presumed not to misrepresent the true nature of that policy.”

• MCL 500.2024 (Unfair methods of competition or deception; rebates and special inducements)

  “The following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance: Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any contract of life insurance, life annuity or accident and health...”

• MCL 500.2018 (False or fraudulent statements or representations as to application for insurance policy)

  “An unfair method of competition and an unfair or deceptive act or practice in the business of insurance include making false or fraudulent statements or representations on or relative to an application for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit...”

• MCL 500.2017 (Unfair methods of competition or deception; illegal inducements)

  “The following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance: Issuing or delivering or permitting agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares...”

• MCL 500.2006(1) (Payment of benefits on timely basis; interest in the alternative)

  “(1) A person must pay on a timely basis to its insured, a person directly entitled to benefits under its insured's insurance contract, or a third party tort claimant the benefits provided under the terms of its policy, or, in the alternative, the person must pay to its insured, a person directly...”

• MCL 500.2005(i) (Misrepresentations; guaranty association coverage)

  “An unfair method of competition and an unfair or deceptive act or practice in the business of insurance means the making, issuing, circulating, or causing to be made, issued, or circulated, an estimate, illustration, circular, statement, sales presentation, or comparison which by omission of a...”

• MCL 500.2026(2) (Complaint record; agent duty to forward complaints)

  “If a complaint relating to an insurer is received by an agent of the insurer, the agent shall promptly forward the complaint to the insurer unless the agent resolves the complaint to the satisfaction of the insured within a reasonable time. An insurer shall not be deemed to have engaged in an...”

• MCL 500.2027(b) (Refusal to insure solely because of prior denial)

  “(b) Refusing to insure or refusing to continue to insure an individual or risk solely because the insured or applicant was previously denied insurance coverage by an insurer.”

• MCL 500.2070(2) (Acceptance of rebate or illegal inducement prohibited)

  “(2) The amount of the insurance whereon the insured has knowingly received or accepted, either directly or indirectly any rebate of the premium or agent's, solicitor's or broker's commission thereon, shall be reduced in such proportion as the amount or value of such rebate, commission, dividend, or...”

• MCL 500.2038(2) (Findings and decision; cease and desist order)

  “(2) The filing of a petition for review does not stay enforcement of action under this section, but the director may grant, or the appropriate court may order, a stay on appropriate terms.”

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More Michigan sources

• Michigan Administrative Code R 500.1301 to R 500.1310 - Fire and Inland Marine Insurance Rates (complete rule set, 10 rules)Regulation
• Michigan Administrative Code R 500.1351 to R 500.1359 - Workers' Compensation Insurance (complete rule set, 8 rules)Regulation
• Michigan Administrative Code R 500.1371 to R 500.1387 - Advertisement of Life Insurance and Annuities (complete rule set, 8 rules)Regulation
• Michigan Administrative Code R 500.551 to R 500.560 - Standards for Safeguarding Customer Information (complete rule set, 10 rules)Regulation
• Michigan Administrative Code R 500.651 to R 500.669 - Accident and Sickness Insurance Advertising (complete rule set, 20 rules)Regulation
• Michigan Aftermarket Crash Parts Act (Act 158 of 1991), complete Act (MCL 257.1361 to 257.1364, 4 sections)State statute
• Michigan Health Care False Claim Act (Act 323 of 1984), complete Act (MCL 752.1001 to 752.1011, 15 sections)State statute
• MCL Chapter 500, Insurance Code of 1956, Chapter 20 - Unfair and Prohibited Trade Practices and Frauds (selected Secs. 500.2003-500.2026)State statute