General Wisconsin Insurance Laws

Examination Costs

- Paid by examinees - Annual billing for examinations are used to fund the costs of adminstering the examinations maximum annual billing for any insurer cannot exceed 1% of net premiums earned - costs due: 10 days after the examinee has been served with a detailed account of all the costs on a charge back basis - march 1st of each year for annual billings

Commissioner of insurance

- Supervise insurance business - licensing -approve policies and forms -enforce insurance laws; impose penalties for violations - conduct examinations, investigations, and hearings

(Dept of ins. regs) 20 days

- for an aggrieved person to request a rehearing - for the commissioner to act on a petition before it is considered denied

3 Main Parts of Wisconsin Insurance Law regarding marketing

1. The licensing of insurance intermediaries 2. Regulation of insurance marketing practices 3. Compensation of insurance intermediaries

Duration of license

A license remains in effect until - it is revoked, suspended, or limited by the commissioner -voluntarily surrendered by agent - death - court decision of mental competency

Intermediary

A person who assists another in - placing insurance/annuities - advising about insurance needs and coverages - negotiating insurance or annuities - soliciting insurance or annuities on behalf of another person (Place, Advise, Negotiate, Solicit)

Controlled Business

Any coverage written on a producer's own life, health or property, and/or that of the producer's immediate family or business associates. Licensee not allowed to collect commissions on controlled business above the state specified limit.

False Advertising

Advertisements cannot include any untrue, deceptive, or misleading statements that apply to the business of insurance misrepresenting: - terms, benefits, and conditions - any dividends to be received from policy - financial condition of any person or ins co - the true purpose of an assignment or loan against a policy

Re Hearing

An aggrieved person may request a re hearing within 20 days after the original hearing and a final order is issued - the commissioner may grant a re hearing only if there was a material error of law or fact, or if new evidence is discovered. If the commissioner does not act on the petition within 20 days after its filing it is considered denied

Monetary Forfeiture

Any person who violates an effective order, ins statute, or rule may be required to pay the state double the amount of any profit gained from the violation in addition to any other forfeiture imposed

Criminal penalties

Any person who violates an insurance statute or rule of wisconsin can be fined up to $5000 or imprisoned up to 3 years or both. Corporations can be fined up to $10,000

Monetary forfeiture

Any person who violates an insurance statute, aids a person in violating an insurance statute, or permits a person over whom they have authority to violate a statute must pay the state $1000 per violation

Monetary forfeiture

Any person who violates an order specifically issued to them may be reqd to pay the state up to $1000 per violation. Each day the violation continues is considered a separate offense

Misrepresentation

Any written or oral communication about any insurance contract, business, company, or agent, which contains false or misleading information

Insurers

Appoints producer to act as an agent - files notice of agent appointment, pays appointment fees

Boycott/Coercion/intimidations

Can't create a monopoly coercion: to require that the applicant purchase insurance from a specific insurer

Grounds for disapproval

Commissioner may disapprove a form if the form - is inequitable, discriminatory, misleading, deceptive, obscure, or encourages misrepresentation - provides benefits or contains other provisions that endanger the solidity of the insurer - fails to provide the exact name and addresss of the insurers home office - violates an issued statute or rule After a hearing, if the commis. finds that an approved form would be disapproved if it were newly filed, they may order that within 30-90 days, use of the form must be discontinued or appropriate changes must be made

Producer appointments

Each insurer must report all appointments and termination of appointments to the commiss. Before an intermediary transacts any business of insurance, they must submit an application on/ before the date of appointment. appointment is effective 15 days prior to the date on which the appointment is entered on the licensing system

Regulation fees

Each licensed individual agent must pay a biennial fee of 35 if resident, 70 if non resident. Lincenses expire on the last day of the month of the agents birth every other year

Purpose of regulation for intermediary licensing

Encourage improvement in the professional competence of intermediaries Preserver and encourage competition at the consumer level Limit adverse effects of imperfect competition on the cost of insurance regulate marketing practices

Fair credit reporting act

Established procedures that consumer reporting agencies must follow iot ensure security and validity of records. - protects consumers against the circulation of inaccurate or obsolete info

Regulation: insurer responsibility

Every insurer is liable for the acts of its agents Insurance company remains responsible while the agency contract remains in force and during the time the insurer has made reasonable efforts to recover its policy forms

(Dept of ins. regs) 3 years

Examine domestic insurers and licensed rate service organizations

Privacy

For nonpublic personal financial information: consumer must give written or electronic authorization. - a current copy of the privacy policy and practives must be given to each consumer at least every 12 months For medical records: individuals who collect this info are limited by statute

Privacy of consumer info

Graham- leach- Bliley act: company may not disclose personal info to a third party except for if: - the company clearly and conspicuosly discloses to the consumer in writing that the info may be disclosed to third party - consumer is given the opportunity before the time that info is disclosed, to direct that info not be disclosed to a third party - the consumer is given an explanation of how the consumer can excercise a nondisclosure option

Hearings

If the commissioner suspects that an insurer or its agent has committed a violation or is engaged in an unfair trade practice, they may issue a statement of charges and hold a hearing for any purpose deemed necessary

Marketing practices

Insurers and insurance producers may not engage in any trade practice that is determined to be an unfair method of competition or an unfair/deceptive act or practice in the business of insurance

Reporting of actions

Interm. required to notify the commissioner in writing of any of the following within 30 days - any formal administrative action against the intermediary taken by any states insurance regulatory agency - any initial pretrial hearing date related to any criminal prosecution of the intermediary taken in any jurisdiction - felony or misdem. conviction - any lawsuit filed against licensee or the licensee's business in which there are allegations of fraud, theft, misrepresentation, or embezzlement involving the licensee

Retention of electronic records

Laws that require that a record be retained may be satisfied by keeping the info set forth on the record as an electronic record

(Licensing and Appointment Requirements) 18

MInimum age to apply for insurance license

Record Keeping

Main purpose: Protect policyholders -each intermediary must maintain records for a 3 year period (incl. cash reciepts, disbursements, commission statements, personell and policyholder records)

Violent crime control and law enforcement act of 1994

Makes it illegal for any individual convicted of a crime involving dishonesty, breach of trust, or the VCCLEA to work in the business of insurance affecting interstate commerce without recieving written consent in a 1033 waiver from an insurance regulatory official - anyone convicted of a felony involving breach of trust who also engages in business of ins will be fined and/or imprisoned for up to 5 years

Cancellation

Midterm: except for new policies or excess liability policies (provide at least $1mil of liability coverage per person or per occurrence in excess of required coverage), insurance policy may not be cancelled by the insurer prior to the expiration of the agreed term or 1 year from the effective date of policy or renewal, whichever is sooner. notice: any midterm cancellation based on permissible grounds may only be effective if a written notice was given to the policyholder at least 10 yrs prior to cancellation for worker's comp insurance: cancellation notice must be at least 30 days.

Sharing commissions

No ins/interm may pay any consideration or reimburse out of pocket expenses to any person who is not licensed at the time of any insurance transaction

Managing general agents

Person who: Manages all or part of the insurance business of the insurer - acts as an agent of the insurer - produces and underwrites in any one quarter or year an amount of gross direct written premium that equals or is more than 5% of the policyholder surplus as reported in the last annual statement of the insurer - adjusts/ pays claims in any one quarter or year in excess of 3% of the policyholder surplus as reported on the last annual statement

Ren ewal

Policy must be renewed unldess - the insurer has maild or delivered a notice of intent not to renew the policyholder at least 60 days before the expiration date - a notice of cancellation or nonrenewal for nonpayment of premium must be mailed or delivered between 10 to 75 days prior to expiration explaining the effect of nonpayment

Insurance Security fund

Purpose: Protect policyowners, insureds, beneficiaries, and anyone entitled to payment under an insurance policy from excessive delay and loss in the event of liquidation of insurers, and by assessing the cost of such protection among insurers For life insurance: the funds obligation on a single risk, loss, or life, regardless of the number of policies or contracts may not exceed $300,000 The aggregate liability of the fund for a single risk/ loss for property, liability, or disability insurance may not exceed $5000 Fund is not obligated to pay a claimant an amount greater than the insurer's loss obligation under the policy intermediaries may not use the funds protection in any manner as a reason for buyers to buy ins from them

Examinations

Purpose: to ensure that companies remain solvent, conduct the business of insurance in compliance with state laws and regulations pertaining to licensing Commissioner is required to examine every domestic insurer and every licenses rate service org. every 3 years - rate service org: any person, other than an employee of the insurer who assists the insurer in making or filing rates every examinee must make available all accounts, records, documents, evidences of transactions on demand

Fair rating Practices

Rating: an approach used by insurers to accept substandard risks by increasing the premium due to the increased risk involved Not unfair: - cancelling or refusing to renew a policy of a person convicted of an offence if the offense that led to the conviction is directly related to the risk insured - classifying risks only for the purpose of statistical data development - underwriting only the class of risks that are specified in the insurers articles of incorporation - selling a rate based on the record of all drivers of an insured automobile - selling a rate based on the number of ppl living in a household

Disposal of records

Records containing personal info must be disposed of so that no unauthorized person has access to the information any violators subject to fine up to $1000. any unauthorized person who obtains and intends to use disposed records may be fined up to $1000 or imprisoned for up to 90 Days

Changes in status of intermediaries

Significant changes regarding intermediary status in insurance matters must be reported to the commiss. within 30 days Must also notify within 30 days of any felony or misdemeanor conviction, or any disciplinary action taken by any state regulatory agency

Insurance agent

an intermediary who acts on behalf of the insurer he/she represents

Temporary licenses

The commissioner may issue a temporary license as an intermediary for a period of up to 12 months (1 year) to the personal representative of a deceased, mental/physically disabled intermediary/ active military - to give time for the sale of the goodwill of a business - for the recovery or return of the intermediary to the business - to provide for the training and licensing of new personnel for the interm.'s business -may not be extended beyond initial period - commissioner may limit the authority of any temporary licensee, may require an examination

Enforcement procedures

The commissioner may obtain a temporary or permanent injunction or restraining order for any violations of insurance laws. If a person does not complay with an order issued within 2 weeks after the commissioner has given notice, the commisioner may issue a compulsive fine of up to $5000 each day the violation continues - after hearing, commissioner can fux with licensing of intermediary if they think they wilin

Hearings

When warranted, the commissioner will hold a disciplinary hearing before issuing an order. When an order is issued without a hearing, any person aggrieved by the order may demand a hearing in writing, within 30 days after the date on which the order was mailed the commissioner must conduct a hearing within 10-60 days after service of the demand

Illegal inducement

Unlawful to pay, offer, or accept any of the following as an inducement to buy ins: - any special favor or advantage in dividends or benefits - any stocks, bonds, securities, or accrued dividends or profits - anything of value not specified in the insurance contract - absorption of tax by the agent, broker, or insurer

Regulation: use of policy forms

Unless exempt under the statutes, all policy forms and rates used by insurers in this state must be filed with and approved by the commissioner. - Deemed approved if no action has been taken within 30 days after filing or within a 30 day approved extension

License revocation

When an interm's license is revoked for any reason other than nonpayment of fees, the commissioner may specify a time period of 5 years or less during which the intermediary may not apply for a new license If revoked for nonpayment of fees/failure to comply with continuing education, the intermediary may reapply immediately

Appointment Termination

When the appointment of an individual agent is terminated, the insurer must notify the commiss. with appropriate formes prior or within 30 days after the termination date. They must also notify the interm. in writing within 15 days of filing termination that they are dunzo If the insurer finds out that the terminated intermediary was involved in any ins violations, they must submit completed expansions and documentation in writing within 30 days of the termination

Payment of claims

a claim is considered overdue within 30 days after the insurer received full or partial written notice. overdue payments charged 12% simple interest per year additional evidence/oproof of loss: pmt not considered overdue until 30 days after receipt of such info

Twisting

a misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner to his or her detriment, to cancel, lapse, switch policies, or take out a policy with another insurer

Reinsurance Broker

a person other than an officer or employee of the ceding insurer (purchases reinsurance) who solicits, negotiates, or places reinsurance on behalf of an insurance company

anniversary cancellations

a policy may be issued for a term longer than 1 year or an indefinite term as long as there is a clause in the policy providing for cancellation by giving a 60 day notice prior to anniversary date - an insurer may refuse to renew or cancel a policy solely because of the termination of an insurance mkting inter.'s contrtact with the insurer only if the notice of cancellaton or nonrewnewal contains an offer to continue/renew policy if the policyholder makes a written request prior to the cancellation date

warranty

a statement made in an insurance application by the insured that is the absolute truth affirmative warranty: an express or implied positive representation that affirms an existence of a fact at the time the policy was entered into promissory warranty: a warranty in which certain things will be done or not be done after policy takes effect

General duties and powers of the commissioner

administering, interpreting, and enforcing ins laws of wisconsin - must act promptly on all matters presented before them Laws made by wisconsin legislature commissioner issues a declaratory order when new law changes occur

Returning indicia of agency

agents cannot refuse or fail to promptly return all indicia of agency (characteristic marks, tokens, materials) to any insurance company they represent whenever the company requires it

Compensation of agents and controlled business

an agent may accept compensation from the insured or the insured and another source for the purchase of insurance or advice regarding insurance needs only if the agent clearly discloses to the applicant in writing - the amount of compensation to be paid by insured excluding commissions - the fact that the compensation will be paid by another source, if applicable

Regulation: Solvency

an insurer is able to pay its debts and meet its obligations. a solvent insurers assets must exceed not only its liabilities, but also the greater of either any capital and surplus required by law or the insurer's authorized and issued capital stock

Renewal with altered terms

an insurer may offer to renew the policy on less favorable terms or at higher premiums if the insurer notifies the policyholder] - at least 60 days prior to renewal dte, the terms and premiums take effect on the renewal date - within 60 days prior, the terms and prems take effect 60 days after the renewal date notice must include a statement of the policyholders right to cancel: if canceled within 60 day period, return premium payments or additional premium charges will be calculated proportionately on the basis of the old prem rates

Insurance Broker

an intermediary who acts in the procuring of insurance on behalf of an applicant for insurance or an insured (DOES NOT act on behalf of insurer except to collect premiums)

Rebating

any inducement offered to the insured in the sale of insurance products that is not specified in the policy. both offer and acceptance of a rebate is illegal include: - rebates of premiums payable on the policy - special favors or services - advantages in the dividends or other benefits - stocks, bonds, securities, and their profits

Reinsurance Manager

any person who has authority to bind, or manages all or part of the assumed reinsurance business of a reinsurer and acts as an agent for the reinsurer

Embezzlement punishment

anyone acting as an officer,director, agent, etc. who is convicted of embezzling funds faces fines and imprisonment. - if amount embezzled was less than $5000, prison time may be reduced to one year

Disciplinary period of revocation

begins on the date of termination of license of the intermediary, ends when a new one is reissued

Rules defining unfair trade practices

can be defined by the commiss. after hearing prohibited unfair trade practices: - offer or grant any special advantage - any offer to deposit money to offset requirements of a loan - any offer to sell or sale of any capital stock - offer to pay part or all of premium - the extension of the grace period in a group policy or more than 45 days in an individual policy

Extra charges

extra charges over the amount of the actual premium and premium financing charges cannot be charged as stipulation for the protection of property or security interest in property

Marketing firm Forfeiture

firm: a person that markets insurance but does not include an insurer a firm is liable for a forfeiture of up to $1000 for violations by an insurance agent in connection with an insurance policy or group certificate obtained through or from the firm

(Dept of ins. regs) 10-60 days

for the commissioner to give hearing after a request

Effect of insurers knowledge

if an insurer acquires knowledge of sufficient facts to constitute grounds for rescission after the policy is issued, the insurer may not rescind the policy unless they have notified the insured within 60 days after acquiring info or within 120 days if the insurer determines that is necessary to secure addtl medical information

Policyholder Records

include insurance transactions such as applications, requests for changes, claims, and complaints Intermediaries must also retain policyholder records of termination or lapse for 3 years Inter. Must maintain the records at their place of business recorded with the commissioner, and must notify the commissioner of a change of address, business or residence within 30 days of the change

Place of business and records maintenance

interms. must maintain a place of business in wisconsin accessible to the public

Surplus Lines Agent/Broker

licensee able to place insurance with unauthorized users. The commissioner may issue a surplus lines license to an agent or broker if the applicant shows he/she has the competence necessary to deal with the problems of surplus lines insurance. Commissioner may require the agent/broker to supply a bond of up to $100,000. Surplus lines agent also responsible for collecting the 3% tax paid by policyholders and keeping these funds in a separate account not mixed with any other funds

Policy readability

minimum score of 40 on the flesch reading ease test or equivalent

Continuing education

must be completed within 1 year of due date, then the license will be reinstated effective on the date of revocation

Notice of Proof of loss

must be provided as asap to the insurer and within 1 year after the time required by the policy - 1st class postage prepaid is considered a sufficient method of notice

Influencing employers

no ins/int may encourage, persuade, or attempt to influence any employer to refuse/terminate employment of any person in connection with an insurance contract

Immunity

no liability against any insurer, auth. rep., agents, ee, or any firm, person, or corp furnishing info to the insurer relating to the reasons for canc/nonre.

Use of official Position

no one holding a position in govt may use decision making power to coerce a person to purchase an insurance policy from a particular insurer or angent

Immunity from prosecution

no person is excused from attending, testifying, or giving evidence on the grounds that the testimony or evidence required from that person may tend to incriminate them or subject them to a penalty or forfeiture

fraud

one who makes false statements or commits fraud can be imprisoned for up to 10 years - if the activity jeopardized the security of the accompanied insurer, the punishment can be up to 10 years

Certificates of Insurance

outlines the contract provisions and benefits. must include a notice of the insured's right to file complaints with the office of the commiss.

home solicitation selling

personal solicitation of insurance by an agent at the residence or place of business of the buyer, or away from the agents regular place of business - includes direct and indirect contacts by telephone, person to person, or in writing for the clear purpose of selling insurance

Churning

replacing insurance policies for the sole purpose of making commissions. The original policy values are used to purchase another insurance with the same insurer for the purpose of earning additional premiums, fees, or commissions. illegal if the producer cannot demonstrate that the replacement will benefit the insured

Home solicitation selling disclosures

required of all the insurance intermediaries or their representatives when making home solicitation of insurance - include agent name, name of company, statement that insurance is being sold, the name of the insurer the agent represents, and the type of insurance being solicited Purpose: to make sure that the presentations are not misleading and deceptive

(Licensing and Appointment Requirements) 20 hours

required prelicensing education

Graham leach bliley act

requires 2 disclosures to a customer 1. when the customer relationship is established 2. before disclosing protected info

Investigative consumer reports

similar to consumer reports. The info is obtained thru an investigation and interviews with associates. - these reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested. agency has 5 days to provide consumer with additional info when requested

Proper exchange of business

the forwarding of insurance business from one agent to another when the forwarding agent is not able to place the business with any of the companies for which the agent is listed due to capacity problems, or if the company refuses to accept the risk or hardship conditions imposed on the insured conducted under following circumstances: - the forwarding agent is licensed for the lines of business that are being exchanged - the receiving agent is licensed in the line of insurance involved in the exchange - both forwarding and receiving agent sign the application

effect of notice to agent

the ins co is considered to be notified if the company's authorized agent has been notified and provided with sufficient info to identify the policy in question

Specific knowledge

the insurer is assumed to know any fact material to the risk or which violates a condition of the policy if the agent issued the policy or trasmitted the application to the insurer knew the fact at that time, or any of the companys agents learn of the fact after/during the course of transacting business with the policyholder knew the fact pertained to the policy

incorporation by reference

the practice or making one document a part of another

misrepresentation

the use of false, misleading, or deceptive oral or written statements to describe the terms or benefits of any policy by an intermediary a misrep. by the applicant is a false statement made to influence the insurer to accept a risk or fix a premium (material misrep)

(Dept of ins. regs) 2 weeks

to comply with an order before a penalty is issued

(Dept of ins. regs) 30 days

to request a hearing after an order is issued without a hearing

Binders and oral contracts

valid in wisconsin for up to 30 days

collusion

when an agent and policyholder or insured act together to deceive or defraud the insurer

acts of agent

when the agent fails to perform a required act in the time or manner allowed and has apparent authority - the insurer is still obligated under the policy whether or not the agent knew he/she was within their scope of authority

Claim format

within claim, prompt or promptly: within 10 consecutive days of receipt

Consumer reports

written/oral info regarding consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, etc