Regulatory Roundup: Michigan Fraud Cases, Washington Restitutions, and the Aftermath of the CEO Shooting

State-by-state variations of laws, compliance protocols, industry transparency, and general regulatory culture can lend one the impression that keeping up with industry changes is a little bit like herding cats. So, what better way to wrangle some of the more localized insurance news than in a Regulatory Roundup?

On an ongoing basis, in no particular order or rank, we’re wrestling the various regulatory changes, compliance actions, and commissioner decisions into our roundup. As a disclaimer: There’s a lot going on at any given time in these here United States, so this isn’t a comprehensive picture of state-level action by any means. Think of it, instead, as a sampler platter of regulation. 

Also important to note: If we’re recapping interpretations of legal decisions, this is some armchair insurance speculation and not at all legal advice. If you need legal advice, get a lawyer. 

Rubbernecking at Michigan’s fraud cases

Not every state is as thorough in disclosing actions against licenses as Michigan, but we love the state’s candor and frank assessment of how and why some producers and businesses lose their licenses (or are denied licenses to begin with). 

The following cases are rife with outright fraud and dishonesty, but we know that’s not the only challenge carriers and agencies face in avoiding regulatory risk. So, if you want to keep your appointment and license data tight so you can focus on catching and preventing sheisters like some of the following, see how AgentSync can make your life easier.

Tea time:

• A producer (The DRLP of the agency! You know, the person who’s supposed to be on top of compliance.) and his agency lost their producer licenses after the state got a complaint from a municipality that the producer had sold the city a P&C policy and forged the city manager’s signature on payment installment paperwork. A deeper look found several policies across multiple towns that had policies thanks to forged paperwork. The producer had also illegally charged nebulous “risk management fees” on top of his commissions, as well as skimming off the top of the municipalities’ policy payments.
• A would-be mortgage loan application originator applied for a license but was afraid his outstanding debts, incurred during the early days of COVID stay-home orders, would cause trouble for this financial position. So he said the debt would be resolved through an agreement with the National Debt Relief, going so far as to attach faked documents to that effect. The Michigan Department of Insurance and Financial Services (DIFS) denied his application thanks to his fraudulent statements. Ironically, after his initial application, he applied to National Debt Relief and was granted an agreement, but the fraudulent app was a bigger concern for DIFS than the debt itself, and they denied the application.
• A producer lost his license after he failed to disclose to the state that he had pled guilty to some felonies. That alone would be a problem (check out our series on how and when to report criminal action to states!), but, on top of that, the crimes were fraud and identity theft – not a good look for someone who wants to work with peoples’ money. 
• The state received a complaint about an agency, and the DIFS reached out to get the agency’s explanation. However, the email bounced back. The DIFS then sent multiple letters of inquiry to the agency address and placed multiple calls to multiple phone numbers, with no responses. The state suspended the business license, because nobody likes to be ghosted.
• DIFS revoked the licenses of a couple of producers and their agency for insurance fraud and levied $3,000 in fines against them. Dismayed by auto insurance premium increases that went up 60 percent over the course of a year, the producers tried to get lower premiums for clients by submitting apps with fake information such as multi-policy bundles for people who only had one policy, or representing policyholders as single filers if it would net a discount.

Washington Office of Insurance Commissioner seeks power to order restitution

Right now, when a Fraudy McFraudster takes advantage of consumers and jeopardizes their financial wellbeing, the Washington OIC can order them to pay the state a fine. But the path to recompense for the consumers themselves – the real victims – must meander through the court system, provided the victims have the mental and financial wherewithal to make that happen.

Washington’s freshly minted Insurance Commissioner Patty Kuderer is testifying to the state’s legislative body in favor of a bill that would give the OIC the power to seek financial restitution for victims directly.

“Their only way to get their money back is to take the company or person to court,” Kuderer said in a news release. “Any fine we collect goes into the state general fund. It does not make the policyholder whole.”

This bill is one among the OIC’s legislative priorities of the year, and Kuderer insists it could address situations that currently stall out in what she describes as a “clogged” court system, such as:

• “When an insurance company uses rates that haven’t been approved by the Insurance Commissioner, there is no mechanism to order repayment to policyholders who have overpaid.
• “If an unauthorized insurer, like an illegal health care sharing ministry, defrauds policyholders, the Insurance Commissioner can fine the company but cannot order them to repay the money they took.
• “If an insurance agent collects premiums but doesn’t forward that money to the insurance company — leaving the policyholder without coverage — the Insurance Commissioner can’t require them to repay the money they took.”

The timing is particularly relevant as Kuderer pursues a fake health insurer that has disappeared after operating unauthorized shell companies that the state fined $100,000 for their activities but which have left more than $700,000 of unpaid medical bills for the consumers they harmed.

Alaska eases reporting requirements in wake of CEO shooting

Health insurance carriers and their executives are reeling in the wake of the murder of UnitedHealthcare CEO Brian Thompson in December by “lone wolf” Luigi Mangione. Carriers are grappling with how to address new security concerns for their executives while also balancing accountability to shareholders and consumers (after all, many carriers are publicly owned).

For instance, Alaska law requires carriers to provide the name and contact information for the person who is accountable for fielding consumer grievances against the company. To address carriers’ concerns about putting names and faces into the public sphere and potentially making it easy to target leadership, Alaska has abbreviated their grievance reporting requirements to allow executives to identify by their first names and last initial.

Other state regulatory changes

Alabama recently completed a department restructuring, which Commissioner Mark Fowler said “significantly will help us meet our mission to serve the people of our great state by regulating the insurance industry, protecting consumers, promoting market stability, enforcing the fire codes and investigating insurance fraud.” The restructure includes moving Larry Chapman to Deputy Commissioner and Chief of Staff and making Richard Fiore the Deputy Commissioner for Innovation and Operations. Congrats!

Alaska has updated its whitelist for surplus lines insurers with Bulletin B 25-01. Whitelists are public lists of nonadmitted insurers or insurers that are approved to offer insurance coverages that aren’t part of the admitted market of the state. The state also issued a bulletin to … withdraw an earlier bulletin. For anyone keeping score, they withdrew the bulletin we covered here, which forbade the depreciation of labor. And it’s that time of year: Health insurers that sell plans in the state need to submit data for the director’s report.

Colorado Commissioner Michael Conway announced more than 130,000 Coloradans chose the state’s specific Colorado Option during this year’s open enrollment on the healthcare exchange. The popularity of the plan has encouraged state politicians to advocate for its model to be the basis of federal legislation. The state also amended regulations to clarify how auto insurers must post their disclosures for changes to coverage and pricing.

Florida reminded health insurers, managed care orgs, and pharmacy benefit managers (PBMs) that Florida law allows people to refill prescriptions early when there’s a state of emergency. That includes Jan. 20, 2025, when Gov. Ron DeSantis declared an emergency thanks to the gulf winter weather system that dumped snow, of all things, on Florida and its beaches. Commissioner Michael Yaworsky said in a news release the state has added 10 P&C insurers to shore up the home insurance crisis “thanks to recent historic legislative reforms.”

Georgia is chuffed with itself after a successful first year operating a state-based exchange during healthcare open enrollment season. The state’s boasting that more than 95 percent of consumer issues that reached its call center were resolved right there, over the phone.

Illinois requires all producers to take their initial licensing exams in-person at a Pearson VUE testing center as of Jan. 17, 2025.

Louisiana Commissioner Timothy Temple issued an advisory letter reminding surplus lines insurers that policy fees are subject to state premium taxes. And if you’re like “whaddaya mean insurance with TAXES?!,” we’ve got you.

Maryland said the state recovered more than $33 million from insurance carriers and agencies on behalf of consumers. If you want to tighten your operations and avoid things like clawbacks (i.e., to see fewer of your dollars on the state’s list of “recoveries”), you might want to start by assessing your regulatory risk with a Distribution Channel Management Assessment. 😳 The state also clarified rules about when carriers have to allow credit card payments for premiums in a January bulletin.

Michigan announced new covered claims caps for 2025 and issued a bulletin to notify PBMs that they need to submit transparency reports by April 1 every year, starting in 2025.

Minnesota announced in January that it joined other states in settlements totalling more than $200 million for consumer violations with companies including Block, CashApp, Edward Jones, and Vanguard. Just a reminder that “do the right thing” often prevents a variety of costly situations.

New York kept its surplus brokers hopping, with the Excess Line Association of New York (ELANY) issuing three bulletins. One reminded surplus brokers to file “zero returns,” meaning they have to file a return even if they wrote no business in the last year. Another changed the codes for parametric and business interruption coverage. And another updated the state whitelist. 

Oklahoma has launched a grant program that’ll allow up to $10,000 per household for qualified applicants looking to harden their homes with a roof certification. Home hardening is one aspect of addressing the challenges facing consumers in this P&C market. Also, the state is handing out cease-and-desist letters to an auto warranty company, because auto warranties are regulated by the Oklahoma Insurance Department.

Pennsylvania posted a bulletin to adjust the minimum limits in effect as of Jan. 1, 2025, for who qualifies as an exempt commercial purchaser for surplus lines insurance.

Tennessee announced Zachary Crandall has taken the position of Policy Analysis Director (congratulations!). The state also celebrated a banner year for producer licensing: “Tennessee boasted 301,947 active licensed insurance producers (51,986 resident insurance producer’s licenses and 249,961 non-resident licensees) last November — the largest number of active licensed insurance professionals in state history. This shows an increase of over 25 percent during a nearly five-year span.”

Stay on top of regulatory changes with AgentSync

While these points of interest aren’t comprehensive, our knowledge of insurance producer and variable lines broker license and compliance maintenance is. See how AgentSync can help make you look smarter today; head over to the Compliance Library and wrastle up some state-by-state regulation and more jurisdictional updates. If you’re looking for a solution that builds regulations like these into your distribution channel management workflows automatically, AgentSync can help. See us in action or talk to one of our experts today.