Which requirement must an insurer fulfill when refunding excess and unearned premiums?

The requirement for insurers to file formulas for refunding excess and unearned premiums is crucial for ensuring transparency and adherence to regulatory standards. When a policyholder cancels their insurance or when there is a reduction in coverage, the insurer must calculate the amount of premium that is deemed unearned. By having a formalized formula filed with the regulatory authority, the insurer ensures that the process for calculating refunds is standardized and fair across different policies and circumstances. This can help in avoiding disputes and ensuring that policyholders receive the correct amount without unnecessary delays.

The other options do not reflect the established requirements under Michigan insurance regulations. The absence of a requirement for refunding premiums fails to recognize that policyholders are entitled to refunds for unearned premiums upon termination of a policy. A stipulation that refunds must be issued within 30 days provides a timeframe but is not about the need for insurers to establish clear refund formulas. Notification to policyholders about potential refunds, while advantageous for customer relations, is not a regulatory obligation tied directly to the refunding process itself.