Michigan Financial and Insurance Services Commissioner Frank M. Fitzgerald announced three measures today that reduce unnecessary regulatory burdens on the financial institution and insurance industry.
The measures eliminate the examination requirement for variable contract licensure, rescind Credit Union Bulletin 84-1, and waive Section 17(1) of the Michigan Credit Union Act.
Variable Contract License –
In order to sell variable contract insurance products in Michigan, a person hold an insurance agent license, qualify with the federal National Association of Security Dealers, and meet the state life insurance and variable contract qualifications. The life insurance qualifications are administered through the Office of Financial and Insurance Services by license application, state life insurance exam, and appointment to write products from a qualified and admitted insurer.
Variable contract qualifications also are administered through OFIS and entail application, a state variable contract exam, and appointment from an insurance company admitted for life and variable products. Beginning April 1, 2001, the variable contract state examination will no longer be required.
The elimination of this exam is possible because the NASD qualifications cover the same requirements of the state variable contract exam. In addition, the elimination of the exam brings Michigan in line with other states to achieve uniformity for agent licensing.
Michigan is currently one of a few states that requires a state variable contract exam. Credit Union Bulletin 84-1 – In effect since 1984, this bulletin prevented a credit union from earning any net income from insurance products and services. The bulletin remained in force even though state credit union laws and rules were amended in 1995 and 1996 to allow credit unions to receive remuneration in connection with making insurance programs available to members.
Rescinding this bulletin removes a financial disincentive to Michigan state-chartered credit unions to provide insurance services to their members. As a result, more credit unions may choose to offer insurance products and services. Credit unions that decide to offer insurance products and services must do so in conformance with state and federal laws.
Section 17(1) of the Michigan Credit Union Act – This section of the Credit Union Act deals with periodic transfers to a credit union’s required reserves. The National Credit Union Administration recently enacted new rules that apply to all federally insured credit unions.
These new rules fundamentally supercede Michigan’s Credit Union Act and rescinded a federal law that was essentially the same as Section 17(1) of the Act. Research by OFIS staff found that state-chartered, federally insured credit unions attempting to simultaneously comply with both sets of regulations would encounter duplicative or conflicting requirements and restrictions.
Those conflicts would result in needless regulatory and administrative burdens on credit unions. By waiving this section, required reserve standards for Michigan-chartered, federally insured credit unions are simplified and potential conflicts or confusions that could occur between Michigan and federal law are eliminated
“With the creation of OFIS last April, Michigan citizens are well served in these areas,” commented Fitzgerald. “Combining the regulation of financial institutions, insurance, and securities allows OFIS to look at issues that cut across industry lines to better serve Michigan citizens.”