State RegulationsMI specificDifficulty 3/5
An existing Michigan insurer learns that a policyholder plans to replace her policy with coverage from another company. The insurer's agent then urges the policyholder to keep the existing policy and presents a proposal to maintain it. Under Michigan rules, this activity is:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Michigan Administrative Code R 500.601 defines conservation as attempts by the existing insurer or its agent to keep existing coverage in force after the insurer receives the replacing insurer's information statement. Conservation is a recognized, lawful activity; the rules simply subject it to discipline, including filing the conservation sales proposal just as replacement proposals are filed. Only routine late-payment and reinstatement offers are carved out of the definition, so deliberate retention efforts fall squarely within it.
Why the other options are wrong
- A) Conservation is expressly permitted under the Michigan rules; it is not treated as prohibited solicitation.
- C) The existing insurer's retention efforts are a recognized activity, not an unfair trade practice, so long as the rules are followed.
- D) Only routine late-payment and reinstatement offers are excluded from the definition; a deliberate retention proposal is conservation, not exempt routine service.
Memory hook
Conservation keeps the policy; routine reinstatement is not conservation.