www.michigan.gov/DIFS ANNUAL REPORT 2020 A YEAR IN REVIEW From the Director The Honorable Gretchen Whitmer, Governor of Michigan State Capitol Building Lansing, Michigan 48933 Subject: 2020 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 2020 included: 25 HMOs, 77 banks, 123 domestic insurance companies, 136 credit unions, 1,500 foreign insurance companies, 318,223 individual insurance agents, 21,771 insurance agencies, 17,432 mortgage licensees and registrants, 444 deferred presentment licensees, and 2,494 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 2 Table of Contents 4 Office of Responsibilities 7 Budget and Revenue 9 Office of Consumer Services 11 Office of Communications 12 Office of General Counsel 13 Receivership Statistical Information 14 Office of Research, Rules and Appeals 15 Office of Insurance Licensing and Market Regulation 17 Office of Consumer Finance 19 Office of Banking 25 Office of Credit Unions 33 Office of Insurance Evaluation 39 Entity Type Definition 3 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 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, budget development, projections, revenue collections, employee expense reimbursements, procurement of goods and services as well as many other accounting and purchasing functions. This office is also responsible for IT (system 4 development, network and end-user support, equipment, software, web design, etc.), human resource liaison services, telecommunications (phones and smart devices), internal controls, facilities, and other administrative functions. 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. This office is also responsible for the prevention of criminal and fraudulent activities in the insurance and financial services markets through the Fraud Investigation Unit. 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. 5 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 2020 Budget 10/01/19 to 09/30/20 Account Authorized Disbursed Unclassified Salaries 816,200 480,154 Executive Director Programs 941,900 114,115 Department Services 3,823,300 2,862,298 Property Management 1,283,500 1,017,490 Worker’s Compensation 2,900 811 Administrative Hearings 182,500 36,138 Insurance Evaluation 26,316,300 23,854,649 Financial Institutions Evaluation 24,968,600 18,795,029 Consumer Services and Protection 11,301,600 4,286,516 Information Technology Services and Projects 2,276,000 2,276,000 Total 71,912,800 53,723,200 Revenue Source Amount Financial Institutions Bank Regulation 5,439,438 Credit Union Regulation 8,871,273 BIDCO 7,000 Debt Management Fees 19,497 Money Transmission Services 1,346,019 Mortgage Licensing 5,361,006 Credit Card 800 Motor Vehicle 100,980 Consumer Financial Services 326,563 Regulatory Loan 333,715 Deferred Presentment 1,985,019 Civil Service Assessment & Central Control Departments -308,342 7 Insurance Fines & Penalties 497,474 Reimbursement for Administration of Receiverships Company Admissions 222,028 Service of Process 64,835 Premium Finance Company 30 Surplus Lines Taxes 10,000 Licensing 17,206,997 Third Party Administrator 8,351,453 Multiple Employer Welfare Arrangement Assessments Commercial 19,625 Information Sales 51,618 Commercial Market Standards 24,109 125 Continuing Education Program 660,055 Assessment/Regulatory 24,517,147 Captive Insurance 659,367 Financial Examination Fees 228,258 HHS Federal Grant 193,506 Civil Service Assessment & Central Control Departments -634,720 Note: Amounts rounded to the nearest dollar. 8 Office of Consumer Services Communication Call Center The communication call center handled 82,910 *Of the calls handled by the call center, 61,121 came in on the toll-free line. Consumer Complaints Type Number Insurance 5,035 Non-depository 597 Bank and Trust 26 Credit Union 277 Total Complaints 5,935 Consumer Complaint Statistics - Insurance by Line Type Number Accident and Health (A/H, HMO, AFDS and Clean Claims) 1,852 Annuity 121 Auto 1,644 Essential Insurance Act (83 Auto, 38 Home) 121 Homeowner 469 Life 359 Other (Work Comp, Liability, Fire & Allied Lines, Regulatory, and Misc.) 469 Total Insurance Complaints 5,035 Total Consumer Inquiries Type Number Calls Handled by Analysts 13,870 Rapid Response 329 Written