State RegulationsMI specificDifficulty 3/5
After an existing Michigan insurer receives an information statement showing that one of its policyholders is about to replace her policy, an agent of that existing insurer makes a routine reinstatement offer following a recent late premium. Under R 500.601, how is this activity classified?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
R 500.601 defines conservation as attempts by the existing insurer or its agent to keep existing coverage in force after receiving the replacing insurer's information statement, but it expressly excludes routine late-payment and reinstatement offers. A routine reinstatement offer tied to a recent late premium is ordinary policyholder service, not a conservation effort, so the special conservation proposal-filing obligations do not attach to it.
Why the other options are wrong
- B) Activities excluded from the conservation definition carry no conservation filing duty; the reinstatement offer is routine service.
- C) The policyholder initiated the replacement, and a routine reinstatement offer by the existing insurer is not itself a replacement transaction under R 500.601(c).
- D) Twisting requires misrepresentation to induce a lapse or surrender under M.C.L. 500.2005(f); a routine reinstatement offer involves no misrepresentation.
Memory hook
Routine reinstatement is service, not a conservation fight.