Michigan Department of Insurance and Financial Services Director Patrick McPharlin is warning insurance producers against the prohibited practice of “sliding.”
According to DIFS Bulletin 2018-12-INS, the practice is “defined as an agent’s failure to fully disclose all the details of, and obtained informed consent to, the purchase of all products and services being included in an insurance transaction.”
McPharlin said he had found that some insurance producers in the state are engaging in the practice. That is, they are rolling the charge for additional products and services into the cost of the policy premium without disclosing the additional charges to the customer.
Sliding is a form of misrepresentation and is prohibited under Michigan’s insurance code. Examples of such misrepresentations prohibited under the code include, but are not limited to:
- Representing to an applicant that a roadside assistance product is part of a DIFS-approved insurance product when it is not;
- Representing to an applicant that a roadside assistance product is required for the purchase of automobile insurance, when it is not;
- Representing to an applicant that any ancillary coverage or product is required in conjunction with the purchase of insurance when such coverage or product is not required;
- Enticing customers to sign up for an auto club membership by failing to fully explain and disclose what is being signed or agreed to;
- Enticing customers into signing up for insurance coverage without fully explaining all coverages included and the cost for each;
- Representing to an applicant that an ancillary coverage, service or product is included as part of an insurance product or without additional charge, when it is not or when such charge is in fact required;
- Failing to accurately disclose the cost of insurance as charged by the insurer;
- Failing to fully explain the details and separate cost of an ancillary product offered in conjunction with the sale of insurance; and
- Charging an applicant for an ancillary coverage or product, in addition to the cost of the insurance coverage being applied for, without the informed consent of the applicant.
The DIFS director may take action against producers/agencies that practice sliding or otherwise make misrepresentations in connection with an insurance-related transaction. Penalties could include restitution, fines and the suspension or revocation of a producer and/or agency license.
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