Becoming An Insurance Broker: Michigan's Requirements And Steps

If you're interested in becoming an insurance broker in Michigan, there are a few key steps you need to take. Firstly, it's important to understand the role of an insurance broker, which is to act as an intermediary between insurance companies and consumers, helping clients find the best insurance policies to suit their needs. The next step is to decide on your education; while a college degree is not mandatory, it can enhance your career prospects and provide a solid foundation for your role. You'll then need to meet pre-licensure requirements, which include submitting your fingerprints, taking the necessary exams, and applying for your license. Once you've obtained your license, you can start building your clientele or applying for jobs with insurance agencies. It's also worth noting that most states require continuing education to renew licenses, so be sure to stay up to date with any changes in the industry.

Meet basic eligibility requirements

To become an insurance broker in Michigan, you must meet the following basic eligibility requirements:

Age

You must be at least 18 years old, which is the minimum age to apply for a license in most states.

Background Check

You must be able to pass a background check. In Michigan, the Department of Insurance and Financial Services (DIFS) will carry out several background checks to ensure you meet the state's insurance producer regulations. While your application won't be automatically denied if you have a felony conviction, it will be denied if you don't report it. DIFS recommends that candidates do not apply if they have been convicted of a felony within the last 10 years, especially if it involves violence, criminal sexual conduct, or a financial crime.

Criminal History

You must be free of any fraud or felony charges.

Financial Status

You must not owe any federal or state income taxes and must not have any past-due child support payments.

Education

While a college degree is not required to obtain an insurance broker license in Michigan, it can be beneficial. Although not common, some colleges and universities offer insurance and risk management courses. Degrees in financial services, economics, business administration, marketing, accounting, and business law can also provide a good foundation for a career in insurance brokering. Additionally, courses in communications, psychology, and sociology can contribute to your success in this field.

Pre-Licensing Requirements

You will need to complete a pre-licensing education course that meets the requirements of the Michigan Insurance Code. The minimum required hours of instruction will depend on the type of insurance you plan to sell. For example, Life/Limited Life insurance requires 20 hours, while Property and Casualty insurance requires 40 hours.

Complete pre-licensing requirements

To become an insurance broker in Michigan, you must complete pre-licensing requirements. This includes submitting your fingerprints and taking a qualifying exam. The broker exam covers state laws and insurance products. If you plan to work with multiple types of insurance, you may need to take several exams.

In Michigan, the pre-licensing education course must meet several provisions under Michigan Compiled Laws § 500.1204a. The most important of these is the minimum required hours of instruction, which vary depending on your line of work:

• Life/Limited Life: 20 hours
• Accident & Health: 20 hours
• Life and Health: 40 hours
• Property and Casualty: 40 hours
• Personal Lines: 20 hours of Property and Casualty
• Property, Casualty, and Personal Lines: 40 hours of Property and Casualty

After finishing a program of study that meets the requirements of the Michigan Insurance Code, you will be granted a certificate of course completion. This will be sent automatically to the Michigan Department of Insurance and Financial Services (DIFS) office by your course provider.

Pass a background check

To become an insurance broker in Michigan, you will need to pass a background check as part of your license application. This is a necessary step to ensure that you meet the insurance producer regulations of the state. While a felony conviction may not automatically disqualify you, it is important to disclose it on your application. The state of Michigan strongly recommends that candidates do not apply if they have been convicted of a felony within the last 10 years, especially if it involves violence, criminal sexual conduct, or a financial crime.

To facilitate the background check, you will need to submit your fingerprints, which can be done electronically. This process may vary depending on your state's specific requirements. The background check will review your criminal history and ensure that you meet the necessary standards to become an insurance broker.

In addition to the background check, the licensing authority will also review your application and conduct further checks into your past and prior contacts. This comprehensive evaluation helps ensure that you meet the eligibility criteria and possess the necessary character and integrity for the role.

It is important to note that the background check is just one aspect of the licensing process. Other requirements may include completing pre-licensing education, passing a licensing exam, and fulfilling any additional state-specific criteria. Make sure to review the requirements for Michigan specifically, as they may differ from other states.

Get an insurance broker bond

An insurance broker bond is a legal requirement for becoming an insurance broker in Michigan. It is a form of protection for your future clients, safeguarding them from potential acts of fraud, such as price manipulation, and ensuring you develop lawful strategies to assist them. The bond also protects the broker, as it guarantees they are financially capable of paying any claims made against them.

The cost of an insurance broker bond varies depending on the broker's financial strength, including their personal credit and business financials. Typically, these bonds cost between 1-15% of the required bond amount.

You can get a free quote for an insurance broker bond online, which will involve a soft credit pull. This will not affect your credit score. You can also speak to a surety bond expert to get a quote.

Once you have received your quote, you can apply and get approved, sign the surety agreements, and receive your bond. If you have bad credit, it is still possible to get an insurance broker bond, but the rates will be higher.

It is important to note that some states require the company to hold the insurance broker bond, while in other states, individual brokers must insure themselves. Therefore, it is essential to check the specific requirements for Michigan.

Pass the broker exam

To pass the broker exam in Michigan, you must complete a pre-licensing education course. The number of required hours of instruction will depend on the type of insurance you plan to sell. For example, if you want to sell life insurance, you'll need 20 hours, while a property and casualty licence will require 40 hours.

After completing your pre-licensing education, you'll need to take and pass the relevant Michigan insurance license exam within 12 months. All insurance exams in Michigan are multiple-choice and cost $41 per attempt. The exams are administered by PSI, and you can schedule and pay for your exam online or by phone.

The passing grade, or "cut score", varies depending on the insurance line. For example, the cut score for the Property and Casualty exam is 74%, while the cut score for the Accident and Health exam is 76%.

If you don't pass the exam on your first attempt, you can reschedule and try again. However, if you don't pass the exam within 12 months of completing your pre-licensing education, you'll need to redo the coursework before retaking the exam.

Frequently asked questions