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2019 DIFS Annual Report

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2019 DIFS Annual Report 1 2 From the Director The Honorable Gretchen Whitmer, Governor of Michigan State Capitol Building Lansing, Michigan 48933 Subject: 2019 Department of Insurance and Financial Services Annual Report Dear Governor Whitmer: The Annual Report, prepared pursuant to Section 238 of the Michigan Insurance Code of 1956, 1956 PA 218, MCL 500.238 and Section 2108 of the Michigan Banking Code of 1999, 1999 PA 276, MCL 487.12108, is a valuable reference for information about regulated entities engaged in the business of insurance, banking, and consumer finance in Michigan. The Department of Insurance and Financial Services (DIFS) is responsible for regulating Michigan's insurance and financial industries. The entities that DIFS regulated in 2019 included, 25 HMOs, 77 banks, 123 domestic insurance companies, 136 credit unions, 1,500 foreign insurance companies, 291,524 individual insurance agents, 20,833 insurance agencies, 14,377 mortgage licensees and registrants, 480 deferred presentment licensees, and 2,654 other consumer finance-related entities. This annual report is also available on the DIFS website at www.michigan.gov/DIFS under “Publications.” Sincerely, Anita G. Fox, Director Department of Insurance and Financial Services 3 Contents 5 Office Responsibilities 7 Budget and Revenue 9 Office of Consumer Services 11 Office of General Counsel Receivership Statistical 12 Information Office of Research, Rules and 13 Appeals Office of Insurance Licensing and 14 Market Regulation 16 Office of Consumer Finance 17 Office of Banking 23 Office of Credit Unions 30 Office of Insurance Evaluation 35 Entity Type Definitions 39 Regulated Entities 4 DIFS Office Responsibilities Office of Banking Responsible for all aspects of the supervision, regulation and examination of state- chartered banks, savings banks, trust-only banks, and trust departments, including processing related corporate applications and requests. The office is also responsible for examining business and industrial development companies (BIDCOs). Office of Communications – Established January 1, 2020 Responsible for creating, researching, and advancing the communications efforts on behalf of the Department. The office also oversees contact with the media, external communications including social and digital media, publication management, and education and outreach along with management of internal office communication. Office of Consumer Finance Responsible for the licensing, regulation, and examination of entities and individuals doing business under various Michigan consumer finance statutes, including mortgage brokers, lenders, and servicers, mortgage loan originators, money transmitters, deferred presentment providers, direct loan companies, motor vehicle installment sellers and sales finance companies, and other consumer finance providers. Office of Consumer Services Responsible for managing consumer information, inquiries, and complaints. This office is also responsible for overseeing the communication center, which serves as the initial point of contact for all incoming calls and visitors. Office of Credit Unions Responsible for the regulation, examination and supervision of Michigan state-chartered credit unions and responsible for processing corporate applications filed by state chartered credit unions. Dedicated to maintaining the public confidence in Michigan state-chartered credit unions, and to ensuring Michigan state-chartered credit unions provide safe, sound, and reliable financial services to their members. Office of Financial and Administrative Services Responsible for the fiscal control and compliance with state and federal financial & administrative guidelines. Duties include budget development, projections, revenue collections, employee expense reimbursements, procurement of goods and services as well as many other accounting and purchasing functions. In addition, services are provided for IT, telephones, smart devices, internal control and building administrative functions. 5 Office of General Counsel Responsible for providing legal advice and representation to the Director and DIFS staff with respect to: enforcement actions, formal administrative hearings, receivership proceedings, orders, drafting enforcement-related rules and bulletins, declaratory rulings, and processing FOIA requests. The general counsel serves as liaison with the Attorney General and other state/federal agencies. Office of Innovation and Research Seeks to expand access to insurance and financial services products by creating synergies between insurance, financial services, Insurtech, Fintech, and other entities looking to bring innovative products to Michigan. Responsibilities include assessing and understanding innovation trends, coordinating and streamlining decision making processes, and linking entities to Department resources capable of providing technical assistance. The office also provides support to the Department’s Legislative Director through legislative tracking, research, analyses, committee testimony, and legislative outreach. Office of Insurance Evaluation Responsible for all aspects of monitoring and regulating the financial condition of risk bearing insurance entities including: the processing of applications for licensure filed by insurance companies; on-site financial examinations of domestic insurance companies; ongoing financial monitoring of licensed insurance companies and working with insurance companies reporting negative trends to take appropriate corrective measures. The office is also responsible for the licensing, monitoring and examination of captive insurers. Office of Insurance Licensing and Market Regulation Responsible for licensing individual and agency insurance producers (agents), solicitors, counselors, adjusters, foreign risk retention groups, premium finance companies, purchasing groups, reinsurance intermediaries, and third party administrators. The office is also responsible for market regulation examinations of insurers, investigations and audits of insurance agents/entities, and monitoring of all surplus lines tax filings and payments. Office of Insurance Rates and Forms Responsible for enforcing Michigan insurance statutes and regulations pertaining to rates and forms submitted by insurance companies and other licensed entities. The office is also responsible for reviewing all filings relative to the Patient Protection and Affordable Care Act (ACA). Office of Research, Rules and Appeals Responsible for providing legal research to the Director and DIFS staff, including legislative research and analysis. The office is also responsible for promulgating administrative rules, processing appeals under the Patient’s Right to Independent Review Act, handling complaints under the Clean Claims Act, drafting bulletins and other formal and informal guidance, and for other special projects. 6 Budget and Revenue Fiscal Year 2019 Budget (10–1–18 to 09–30–19) Account Authorized Disbursed Unclassified Salaries 784,500 240,297 Executive Director Programs 1,075,900 375,012 Department Services 3,801,200 3,253,313 Property Management 1,245,400 986,527 Worker’s Compensation 4,200 1,811 Administrative Hearings 182,500 48,324 Insurance Evaluation 24,789,600 19,928,698 Financial Institutions Evaluation 24,633,100 19,479,351 Consumer Services and Protection 8,803,600 6,924,099 Information Technology Services and Projects 2,251,900 2,251,900 One-Time Appropriation 400,000 122,000 Total 67,971,900 53,611,332 Revenue Source Amount Financial Institutions Bank Regulation 6,608,854 Credit Union Regulation 8,817,482 BIDCO 7,000 Debt Management Fees 38,068 Money Transmission Services 1,459,671 Mortgage Licensing 4,445,251 Credit Card 850 Motor Vehicle 104,100 Consumer Financial Services 531,416 Regulatory Loan 285,942 Deferred Presentment 1,911,999 Civil Service Assessment & Central Control Departments -232,729 Insurance Penalties 630,105 Reimbursement for Administration of Receiverships 143,258 Company Admissions 79,214 Service of Process 30 Premium Finance Company 10,600 Licensing 7,818,669 Third Party Administrator 19,900 MEWA Fees/Assessments 53,276 Commercial Information Sales 12,652 7 Commercial Market Standards 50 Continuing Education Program 637,857 Assessment/Regulatory 18,884,428 Captive Insurance 665,703 Financial Examination Fees 201,582 HHS Federal Grant 90,438 Civil Service Assessment & Central Control Departments -785,597 8 Office of Consumer Services Communication Call Center The communication call center handled 79,488 calls. *Of the calls handled by the call center, 55,638 came in on the toll-free line. Consumer Outreach In 2019, the Outreach Program visited 17 counties across the state reaching over 8,300 consumers. Consumer Complaints Type Number Insurance 4,974 Non-depository 505 Bank and Trust 32 Credit Union 286 Total Complaints 5,797 Consumer Complaint Statistics – Insurance by Line Type Number Accident and Health (A/H, HMO, AFDS and Clean Claims) 2,147 Annuity 133 Auto 1303 Essential Insurance Act (84 Auto, 37 Home) 121 Homeowner 457 Life 341 Other (Work Comp, Liability, Fire & Allied Lines, Regulatory, and Misc.) 472 Total Insurance Complaints 4,974 Total Consumer Inquiries Type Number Calls Handled by Analysts 10,089 Rapid Response 190 Written Inquiries 2,240 Legislative/Executive Constituent Calls and Emails 528 Recoveries Type Number Insurance $6,751,634 Consumer Finance/Bank/Credit Union $914,331 Total Recoveries $7,665,965 9 Life Insurance and Annuity Search (LIAS) Requests Received 1,251 Policy Matches 559 Claims Paid: Annuity 25 $4,525,693
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